VOLUME 3 | 2018

THE CENTER OF COMMERCE

the innovators CASE STUDY: 2 QSR Company INFORMATION QSR customer upgrades their fraud COVER detection to enable a new mobile RESULTS: application launch

PROBLEM: When this customer launched a new version of their mobile app, they saw fraud spikes that decrease & ANALYTICS called for new tools. 80% in fraud. SOLUTION: The Advanced offering of Fraud Detect was implemented with a machine learning QSR- industry model, a rules engine, and Case 14 SOLUTIONS Manager. First Data also implemented a capability $200K allowing this customer to test the model at saved after fees. DATA AT THE SPEED OF COMMERCE different scoring thresholds. The innovators Building the new retail frontier. 19 bonus: SPECIAL section Unlocking Merchant Innovation Using machine learning to combat fraud. Shopping is about to get interesting.

8 Mobility Hits Its Groove 44 Fintech & Bank Fusion

10 Outsmarting Fraudsters 47 The Power of Partnerships

12 Rewards Revolution 48 Payments Everywhere

35 The New Big Data 50 Gen-Z Rising

39 Food for Thought 54 Financial Literacy in the Gig Economy

40 Tackling the Pay Gap

download the digital magazine At: FirstData.com/Connected

Not sure about you, but our dogs are always finding innovative new ways to get our attention. Through this issue of Connected, we take a look at how partnerships, changing consumer landscapes, and fraud breakthroughs are fetching innovative ideas across industries ­– Labonardo da Vinci and Thomas Pugison would be so pleased. As you’re reading, keep an eye out for the pooches and pups hidden throughout the pages and count them up. Then, send your total to [email protected] by First Data® Analytics Solutions can June 30, 2018. We’ll gather all the correct answers and randomly select How well do help you make data-driven decisions five winners to receive a $200 Gyft® digital gift card. based on customer spending habits Sniff them all out! to help you retain loyal customers Say hello to Melody, the best friend of you know your CONNECTED Managing Editor, Lexi Koutrelakos. and attract new business. customers? To learn more, visit: FirstData.com/spendtrend FirstData.com/Connected 3 In the 1960s, banks had a cool idea. They wanted to make it easy for their customers to shop and pay at many different retailers using a single card Executive Editor from a single line of credit. No more hassling with different charge cards from Mia Shernoff multiple retailers, or having to deal with cash or checks. From this important consumer demand birthed the modern network credit card industry. Editor-in-Chief Euphemia Erikson Having an idea is just the first step in turning an unmet need into a valuable Executive Design Director Executive Creative Director Managing Editor innovation. But, translating the idea into a workable, scalable and secure Jamie Kasman Christopher Sanna Lexi Koutrelakos solution is where true innovation happens.

Senior Art Director Deputy Editor Associate Editor First Data® has quietly delivered such innovative breakthroughs over and over again. Greg Gatlin Brad Rhoads Keitha Maciel In the beginning, First Data built the infrastructure for interoperable card Graphic Designers & Illustrators Jason Abbott, Brahndi Asadi, Jeff Bell, Greg Hildebrandt, payments that we still use today. That infrastructure allows financial Joseph Sigillo, Mark Watkinson institutions to issue and manage cards from any brand safely, securely and with great efficiency. First Data also built the capability for consumers to Copy Editor/Proofreader use those same cards to shop nearly anywhere, anytime, in any currency, Angela Jackson using any network. Today, these systems host more than 1 billion cards and 6 million merchants around the world. Every second of every day, consumers “It takes a diverse Production Manager Macrae Cain rely upon First Data to conduct commerce, completing more than $2.5 trillion in transaction volume annually. First Data built a new way to get something Senior Copy Editors important done – one of the most impactful, enduring and transformative network of Amy Chan, Francine Dalton, Jameson Cox, Wesley Fowler, Chris Howland, Krista Lee, innovations of the 20th Century. Julie Lyons, Jaime Mercer, Jean Park, Melanie Skotarski, Chantelle Uischner, Julia Wolfe Today, the pace has accelerated, demanding more from all involved. Darwinian forward-thinking Contributing Writers Anita J. Finkelstein, Lisa Schoolcraft, Robyn Ware survival can’t be assured, because the ecosystem is no longer static. Customers are disrupting the core ecosystem by making new, moment-to-moment choices. Contributing Photographer In response, financial institutions and businesses must hyper-accelerate their leaders working Christopher Amaral own innovation to meet these rapidly evolving demands.

Special Thanks Innovation is all about execution. No one company, no matter how big or together across Chris Abele, Alexander Avramenko, John Blevin, Michael Borda, Dori Bright, Kelly Coughlin, agile, can innovate alone. Every innovator chooses their partners wisely. Brooke Charron, Chris Crawford, Joseph Delsoin, Christopher Demetriades, Michael Douglas, It takes a diverse network of forward-thinking leaders working together Ian Foley, Greyson Ford, Julie Kontes, Craig McGuire, Sean McNeece, Janeen Millsaps, across companies, industries and regions to turn an idea into a value-creating companies, Kate Nicola, Seth Perlman, Greg Piel, John Staple, Oliver St. George, Rick Stone innovation success.

Connect with First Data In this issue of Connected magazine we look at The Innovators – those moving industries and beyond ideas to execution, using partnerships, the speed of technology and a little spark of intuition to capture, create and define our tomorrows. FirstData.com First Data Corporation @FirstData regions to turn First Data is the right partner for these times. We stand at the intersection where financial institutions, businesses, merchants and consumers all connect Connected magazine is a publication of the First Data Corporation, 5565 Glenridge Connector NE, Atlanta, GA 30342. to conduct commerce. Our role in the ecosystem is vital and our perspective an idea into a and expertise allow us to help turn good ideas into powerful innovations. Reproduction of any part of the publication is strictly prohibited without prior consent from the publisher. ©2018 First Data Corporation. All Rights Reserved. The First Data® name, logo and related trademarks and service marks are owned by First Data Corporation and are registered or used in the U.S. and many foreign countries. The Clover® name and logo are trademarks owned by Clover Network, Inc., a wholly owned subsidiary of First Very simply: First Data executes. value-creating Data Corporation, and aree registered or used in the U.S. and many foreign countries. All trademarks, service marks and trade names referenced in this material are the property of their respective owners. See Sources for additional trademark information. How can we help you succeed? Printed in Atlanta, Georgia U.S.A. innovation success.”

Barry McCarthy First Data, EVP, Head of Network & Security Solutions

Connected is produced in cooperation with Atomic Wash, a branding and marketing agency. AtomicWash.com

4 First Data | Connected | Volume 3 FirstData.com/Connected 5 Peter O’Halloran Just as “no man is an island,” the success of a company does not stand on a single person. First Data, VP, International eCommerce This is especially true at First Data®, where every employee is considered an “Owner-Associate.” This not only gives them a Peter is responsible for First Data’s eCommerce strategy and the stake in the company, but also makes everyone accountable for company growth. Thankfully, the collective expertise of our commercialization of the eCommerce value proposition throughout EMEA, APAC & LATAM. This includes partnership formations, top- team supports our ability to innovate and deliver solutions that help drive the new world of connected commerce. line eCommerce revenue growth through existing First Data sales channels, and increasing the addressable market through product innovation and client acquisition.

Seth Perlman Chris Abele Barry McCarthy First Data, VP, Global Head of Strategy First Data, Director, Corporate Strategy First Data, EVP, Global Head of Network & Security Solutions Seth has been with First Data since 2014, and from his home base in Corporate Strategy Director helping to chart new paths of growth A 13-year veteran of First Data, Barry has run most of the firm’s Silicon Valley, he has his finger on the pulse of the rapidly evolving for First Data. Always interested in digging into the latest in businesses and is known for his ability to deliver strong revenue world of fintech. He and his team develop growth strategies for all payment technology. and profit growth through innovation. He served previously as an of the company’s business lines globally. Seth frequently presents executive at Procter & Gamble, Wells Fargo, Verisign and Silicon First Data’s insights about commerce innovation and financial Rishi Chhabra Valley micro-payments start-up, MagnaCash. He currently oversees services trends to clients and industry partners around the world. First Data, VP, Information & Analytics Solutions Network and Security Solutions (NSS), one of the firm’s three Rishi joined First Data in 2013 and is responsible for building, publicly reported segments. NSS hosts many of the firm’s value- David Ridenour commercializing & launching the next era of Big-Data and data- added solutions that help clients protect, grow, and operate their First Data, Director, Universal Commerce Solution Consulting driven solutions powering multi-channel commerce and customer business more efficiently. NSS is a $1.5 billion revenue portfolio David serves as Head of First Data’s Universal Commerce Solutions ® ® engagement for Merchants, Retailers, Financial Institutions and of solutions including: Gyft and Gift Solutions, TeleCheck , group, which is responsible for enabling our clients’ digital ® ® ® third-party institutions. He has spent over 12 years in the financial ConnectPay (ACH), TRS Collections, RAPID , FRIS strategies. David has been with First Data for 10 years and is a ® ® institutions and payments industry building analytical solutions and Fraud Detect fraud solutions, Money Network , seasoned payments veteran; having worked in a variety of roles Secure ® ® ® to optimize the use of payments data and enable cross-channel STAR Network , TransArmour , debit processing, Apiture from fraud, point of sale, issuing services, loyalty and analytics. commerce at multiple pioneering and leading companies. online and mobile banking, tokenization for mobile payments, Prior to First Data, David was a top-performing sales executive in and government solutions. the marketing automation space with Oracle. Commerce Glenn Fodor First Data, SVP, Head of Information & Analytics Solutions Sandy Mollett Dania Ruiz-Paramo Glenn Fodor joined First Data in August of 2014 as Senior Vice First Data, SVP, Head of Network & Security Solutions First Data, Senior Account Executive President and is head of Information and Analytics Solutions (IAS). Operations & Controls for a Dania is currently an Account Executive within the National The reports and insights that IAS compiles are frequently referenced Sandy has over 30 years of experience in IT, Operations, Product Retail Vertical, overseeing 12 strategic accounts. Having spent in the press, including the Associated Press, CNBC, Wall Street Journal, Development, Project/Program Management, Strategy and Business 20 years with First Data, Dania has supported hundreds of Reuters, Bloomberg TV, and more. Previously, Glenn was a Partner Development. She has driven some of First Data’s largest strategic national merchants in both technical and relationship roles. Connected and Senior Equity Research Analyst at Autonomous Research, a initiatives and is named on over 25 issued patents. Sandy served boutique research firm focusing on the financial and payment on the Executive Planning Group for FinTech Atlanta. She is also Mark Schulze technology industries and has held equity analyst roles at Morgan President of the AGLCC (Atlanta’s LGBT Chamber of Commerce). First Data, VP, Business Development & Co-founder of Clover World Stanley, UBS and JP Morgan. Sandy was honored by the Georgia Diversity Council as one of 2017’s Former product guy, now a Business Development leader for “Most Powerful & Influential Women”. Mobile, Web, Android, and iOS. Scott Mackay Guiding your business into the future is First Data, VP, Digital Commerce Solutions Dom Morea Nandan Sheth no easy task. It makes sense to partner Scott’s focus is on directing the development of digital commerce First Data, SVP, Head of Gift Solutions First Data, SVP, Global Debit Solutions with an experienced leader that knows solutions, targeting innovations that meld the traditional Currently, Dom oversees First Data’s prepaid Closed Loop Nandan is a seasoned innovator with over 20 years of FinTech components of financial services and payments with emerging product suite, Gift Solutions, spanning processing, card program experience within large corporation and high-growth, venture next-generation technology inside mobile, marketing, and web-enabled technologies. He also manages management and robust digital services. He was formerly capital-backed companies. He is the founder of three disruptive and out. the commercialization and sales processes necessary to bring these First Data’s SVP, Business Development, where he was responsible FinTech ventures: CollectionsX, Harbor Payments, and Acculynk. new solutions to market. for the creation and growth of enterprise-level transformational His expertise includes cross-border commerce, online/mobile mobile commerce and loyalty solutions initiatives and he headed commerce, debit/alternative payments, B2B receivables/payables, Our innovative solutions enable Anthony Marino First Data’s Innovation Lab & User Experience team. and online bill pay. First Data, EVP, Global Head of Human Resources commerce to be conducted more Anthony S. Marino is the global Head of Human Resources for Nigel Motyer Mia Shernoff securely and intelligently across the First Data. He is a thought leader in the human capital management First Data, SVP, Head EMEA Acquiring First Data, EVP, Global Head of Marketing globe, helping you deliver better space having served in senior roles with some of the world’s largest Nigel has a wealth of experience in the card payment business, Strategic marketing, product management, digital account corporations. He is a frequent lecturer and has written several having held a number of senior roles during his 30-year career. acquisition, and brand innovation executive with over 20 years experiences to your customers and articles on people and performance-related topics. In 2007, Nigel was part of the management team that created the of global payments, and FinTech industries, with focus on B2B drive more value to your business. AIB Merchant Services joint venture and he later became General business development. Manager. Having previously been a member of the Board of Directors of AIB Merchant Services, Nigel currently sits on both the Board of Meagan Johnson directors for ICICI Merchant Services, First Data’s joint venture in Generational Expert India and the Board of First Data Europe. In February of 2018, Nigel Megan Johnson is a professional speaker and generational was elected to Visa’s Client Advisory Council. expert who has chronicled the rise of Gen-Z in her book, Generations, Inc. She’s a bright, funny, and delightfully obnoxious Generational Humorist! FirstData.com

FirstData.com/Careers

6 First Data | Connected | Volume 3 Technology Not only are they catching the customers where they Average number of are, but they’re also able to hyper-personalize the user orders placed per experience. Through loyalty programs, customers can get month on Amazon 3 a drink made exactly the way they like it at Starbucks®.

David Ridenour Average time per day spent on Facebook First Data’s Director of Universal Commerce Solution Consulting

Ridenour, First Data’s Director of Universal Number of visits to Starbucks in January 2018 55 Time spent streaming music on Commerce Solution Consulting. MINUTES Spotify per week “Not only are they catching the customers ||| |||| || || where they are, but they’re also able to | 11 hyper-personalize the user experience. 12 HOURS Through loyalty programs, customers can get a drink made exactly the way they like it at Starbucks®.” Like planets clustered around a star, physical retailers are aligning themselves Both Ridenour and Mackay are helping Average hours per week with online giants. With First Data’s help, design personalized experiences through spent watching Netflix both Google and Amazon have compiled connected car platforms that learn an impressive list of traditional brick-and- from passive inputs, using artificial 18 mortar clients who can now offer their intelligence. “GM gives merchants access customers voice-ordering over to its head units, which can track [the car smart speakers. owner’s] shopping habits at fuel stations, restaurants, and retailers,” Mackay says. In turn, Amazon and Google have expanded “First Data® then links payments from their footprints into the physical world, the car to those merchants for a giving them the ability to deliver goods seamless experience.” with even more immediacy than before, and leveraging retail locations to deliver All these solutions require some device products and accept returns. to make them work. But, are we close to Amazon’s Alexa and Google Assistant a truly device-free solution? Absolutely. were smarter than Siri and they were “We’re bringing together mobility Apple already allows facial-recognition multifunctional, with better common- solutions on any platform,” says Mackay. technology to authorize payments from Mobility language capabilities. And, because they “For instance, Ford® says it’s no longer an a smartphone. And in Japan, Alibaba’s weren’t app-based, they were able to automobile manufacturer, it’s a platform Ant Financial has experimented with deliver personalized connected experiences for consumers in motion. So, we’re here facial recognition at KFC™ kiosks where across every device that a consumer owned. to help [them] with their payments customers paid for their meals with Google Assistant is accessible with connections. That means, you can now just a look, no smartphone needed.4 Hits its Google Home smart speakers, on phones, bring the virtual assistants with you, and computers, tablets, smart watches, smart pay at the pump with, say, Google Pay.” Of course, there are ample, and displays, connected TVs, and in your car.1 Amazon might be taking mobility to its justifiable, concerns about privacy. It started with Siri, almost seven years ago. Google saw the potential of multiplatform furthest extremes. They completed their For instance, consumers might not be The first widely-adopted virtual assistant, virtual assistants early in the game when acquisition of Ring®, the video doorbell thrilled when Amazon correctly alerts she – um, it? – gave us access to our apps it bought Nest® back in 2014. Today, a service, just a few months after buying the them to restock bath soap or toilet paper. Groove ® 2 through voice commands. It was more user can remotely set their thermostat, Blink home security unit. On the surface, But, as the world becomes more mobile, seamless than typing but less intuitive. The dim lights, or access security cameras those purchases could look like more and as we become more accustomed menu of available commands was limited. from anywhere in the world. moves to secure Amazon’s dominance to sharing our shopping experiences, Still, there was something excitedly Star within the smart home market. But, all merchants will seize any opportunity Advances in Artificial Intelligence It’s not noisy or sudden. There’s no Trekkian in our ability to project our will Mobility is also extending into streaming those cameras also give Amazon access to to cater to the new mobile consumer.  Steve Jobs pacing a giant stage in a black across open air, even if it was just to say, services. “Now, you can be listening to consumer information. Down the road, that are ushering in a new era of turtleneck holding up alien technology to “Hey Siri, play Firework.” Spotify® or Sirius XM® in your house technology could allow Amazon (with your cheering fans. But, if you listen closely, you over Amazon Echo, then have that same permission) to scan your home for needed In This Article: personalized experiences and can hear the opening salvo of revolution – But, while Siri, and later Microsoft’s channel follow you as you walk to your items, like cereal or toothpaste, and alert one that’s killing the app and freeing up Cortana, remained app interfaces, car, and for the whole ride into work,” you when it’s time to restock.3 #MobileShopping cross-platform convenience. our mobile shopping experience. It’s being competitors like Amazon and Google had says Scott Mackay, First Data’s Vice #ArtificialIntelligence driven by advances in artificial intelligence different ideas. Amazon sought innovative President of Digital Commerce In other words, these platforms, which #VirtualAssistants and a new generation of virtual assistants ways to sell more stuff on its online Solutions, who’s working to connect help make everything more mobile, work #RuleTheWorld that we can now access without our marketplace – and Google … well, Google the clients on First Data’s long list of in both directions. “Corporations can now #SmartTechnology  Brad Rhoads smartphones or tablets. wanted to take over the world. formidable partners. look at consumers holistically,” says David

8 First Data | Connected | Volume 3 FirstData.com/Connected 9 $ $ Merchant outlets protected by ® 8.45BILLION 40%GROWTH BILLION189 + TransArmor which encrypts 1.50 and tokenizes consumer data MILLION both in-flight and at-rest.5

Current scale of annual Current Compound Annual Growth Total annual commerce on fraud on the dark web1 Rate (CAGR) of the dark web1 the dark web by 20201 First Data®: Fighting Fraud with End-to-End Solutions The New Face of Fraud The Security & Fraud Solutions team that Jackson Reported improvement in Forget unkempt, pale figures in dimly lit rooms filled with computer screens. Today’s heads up at First Data, continually develops fraud detection by a big-box fraudsters wear business suits. They work in real offices, keep regular hours, and openly and innovates products that help issuers and 80% retailer using Fraud Detect®.5 market their products and services. “The reality is, it’s become big business,” explains merchants prevent, detect and mediate fraud. REPORTED ® EJ Jackson, SVP & GM, Security & Fraud Solutions at First Data . “It’s moved away from We encrypt and tokenize card data for over 170 this lone individual on their computer wearing a hoodie to organized groups who are billion transactions a year, while Fraud Detect® collaborating, using cutting-edge technology and leveraging machine learning to defraud analyzes and scores incoming transactions businesses as much as they can – and doing it out in the open.” to help identify fraud before it happens 80% of the time. “By combining our access to big data, with machine learning and a 200+ person Amount of time it takes cybersecurity team that actively monitors the Fraud Detect to deliver a dark web, we can identify fraud more quickly risk assessment score for than ever, dramatically reducing fraud, and SECONDS.5 a transaction to ensure fraud costs for merchants,” says Jackson. it does not impede the Outsmarting customer experience.5 fraudsters on an ever-changing battlefield  Anita j. Finkelstein  GREG GATLIN The New Direction of Fraud Prevention Jackson’s team is also working with solutions that render stolen data useless. FirstSense™ improves fraud alerting for financial institutions by mining the dark web and using machine learning to identify stolen data much earlier in the resale cycle. The goal is to warn institutions when their data is in the hands of criminals, so they can scrub accounts The percentage of web applications that before they reach the dark web marketplace, lowering their value to Trustwave scanning services tested in 2016 fraud organizations.5 Jackson believes the breadth of data First Data 2 99.7% that displayed at least one vulnerability. works with is what ultimately enables his team to outsmart fraudsters. VULNERABLE “Having access to such a large set of global data from credit cards, debit cards, and gift cards provides us with massive truths that machine learning can use to make better and better decisions, which helps us identify and prevent potential fraud better than ever.” Estimated cost for cybercriminals to Fraud as a Lucrative $ infect 1,000 vulnerable computers Career Choice 2 5 with malvertisements. The biggest fraud organizations now recruit PER AD top talent from universities. “The stigma of this sort of endeavor seems to be gone, and the financial rewards are greatly motivating,” points out Jackson. “It’s not perceived as a Dark market value of a single criminal activity. In some cases, it might not , $ individual identity (name, SS#, be illegal in the locality they are in, or if it is 3 800 130 99% 3 FINANCIAL INSTITUTIONS LOCAL CURRENCIES ACCURACY 20 DOB, address, phone number). illegal, it’s not enforced.” So, he says, the risk PER IDENTITY of getting caught is low. “In many places, the local government turns a blind eye. They not The number of Financial Institutions The number of local currencies After identifying a compromised Bank only advocate it, they promote it, because it’s that use First Data Security & Fraud First Data processes payments in Identification Number (BIN) First Data in their state’s interest to allow the activity to Solutions to protect their data and their for merchants in over 40 countries, can accurately identify compromised Number of cybercrime organizations go on for the economic benefits.” in Russia, generating a black market customer’s data.6 across all networks, all brands, Personal Identification Numbers. 30 6 CYBERCRIME valued at $2B per year.4 and all payment methods. ORGs

10 First Data | Connected | Volume 3 FirstData.com/Connected 11 Industry Trends has given brands from big analyze individual customer specifically to take advantage box retailers to financial data, they’re able to use it to of the special discounts, institutions new opportunities send personalized instant rewards programs benefits, When delivery to use them as rewards and rewards, discounts, or and for the ease of online is purely digital, incentives that can both gain promotions when they’re shopping that come with and retain customers. most relevant. branded currency.3 merchants can move much more Rewards “The gift space is really For example, Chick-fil-A may Morea points out that evolving because of the send a promotion at the end merchants are not the only nimbly to set up influence of connectedness,” of a work day to a customer ones looking to branded promotions. Revolution explains Dom Morea, SVP, Head who traditionally comes in currency as a way to engage of Gift Solutions at First Data®. for dinner, and Starbucks today’s consumers and Dom Morea “The ability of mobile to track, may send an instant reward increase customer loyalty; SVP | Head of Gift Solutions | First Data send, and store data enables us whenever their system receives financial institutions (FIs) are The humble gift card has evolved to deliver branded currency to a geo-location alert that a also jumping into the game. of branded currency that many from a quick and easy gift to a consumers in a way that goes frequent customer is near one First Data’s Gift Solutions is U.S. companies are enjoying. powerful form of branded currency. beyond standard gift-giving or of their locations. helping FIs provide value-added gift-receiving.” services by integrating with Acquiring and keeping To make it even easier for their online banking website or customers has gotten harder, Not only can digital gift cards merchants to reward their mobile app allowing customers so First Data continuously be delivered more quickly to customers, First Data’s to purchase gift cards. innovates to deliver solutions elicit an instant response, they technology delivers a seamless that help keep customers’ are also more cost-effective. experience across all devices – “FIs are moving tender off the attention. If the growing “When delivery is purely so, if the consumer receives an debit or credit card, and also question among consumers, digital, merchants can move offer at home on their tablet, it delighting their customers in a particularly Millennials, is much more nimbly to set up will automatically connect to new way,” he explains. There “what’s in it for me?”, branded promotions,” says Morea. “If our their car dashboard and then are also plans to soon use currency seems to be one of the clients want to run a promotion directly to their smartphone gift cards to settle up with or best answers. with branded artwork and when they hop out. When they regain the trust of disgruntled animation and put it on a walk in to redeem the offer, it’s customers. “If a bank has a “Ultimately, if merchants are mobile device or the web, we right there in their hands. remit of a nominal amount, not engaging in ways that help can do it in weeks, rather than rather than writing a check consumers feel appreciated the months it would take to set “We’ve seen great traction to the consumer – which is and save time and money,” up in a brick-and-mortar store.” with Starbucks,” Morea says. costly – they might send a said Morea, “they probably “I think that experience is one branded card for $15. It’s cost- aren’t going to catch the “What’s really driving the that is beginning to take hold efficient and fast, the bank gets interest of Millennials or any rewards revolution is the for other companies as well. a payable off their books, and other generation making up technology First Data® It’s becoming the norm to everyone’s happy because the their customer base today or developed that connects gift connect stored value or consumer gets their money.” in the future.”  card programs to loyalty branded currency to loyalty programs and facilitates an and then engage with The next step, says Morea, in-app mobile experience customers through push is expanding the value of where users can track their notifications or the mobile app.” branded currency globally. Gift cards have always create incremental sales, and balances and manage their As the world becomes more held a special place in bring in new customers. Today, earned points.” Morea points And, reports show that digital and connected, the our hearts. They make gift cards are the newest form out that brands including merchants can thank opportunity for brands to break excellent stocking stuffers, of branded currency, able to Starbucks®, Chick-fil-A®, and Millennials, at least in part, into international markets they save us in last-minute influence purchasing decisions PetSmart™ have all integrated for the branded currency is growing. And with scale gift situations, and they’re the by equipping customers with the technology into their apps. revolution. According to First that includes a footprint in 55 perfect addition to our brother’s incremental spending power. Data’s 2017 Prepaid Consumer countries, First Data® can help birthday card when we have no Basically, once a customer Insights Study, this group of them do it. In This Article: idea what to give him. In the world of “branded uploads their digital or ‘eGift’ 21- to 36-year olds account currency,” coupons, gift card into the app and starts for the sharpest rise in gift In the coming years, the #GiftCards But gifting is only a small part cards, and loyalty points using it to make purchases, card purchasing.2 Plus, they’re company hopes to begin #Gyft

of the evolving gift card story. have become as valuable to their spending is tracked, less focused on purchasing engaging more with global #Millennials They have become powerful merchants, and to consumers, and their loyalty points are gift cards simply as gifts. sales teams and merchant- #Reward tools for persuasion – able to as cash itself.1 While they’ve automatically credited. Since Morea says Millennials are acquiring businesses to help #Recognize build brand loyalty, drive down been around for years, the the merchant can see and self-purchasing gift cards them derive the same benefits shopping cart abandonment, growth of digital and mobile  Stephanie Gilman  Christopher Sanna

12 First Data | Connected | Volume 3 FirstData.com/Connected 13 Cover Story

Right now, in Silicon Valley and start-up incubators in New York, Amsterdam,

Tokyo and a hundred of other cities around the globe, business leaders are

cracking open corporate DNA and rearranging the code. This isn’t the laissez-faire

evolution of MBA textbooks. This is human intervention – designed to change the

consumer experience and conquer natural selection. This is innovation.

Building the New Retail Frontier

 Brad Rhoads  Christopher Sanna

14 First Data | Connected | Volume 3 FirstData.com/Connected 15 An influx of It’s become a game of one-upmanship on “That’s the goal. Retailers – both offline With the help of First Data®, Domino’s For those who want to try DIY, Lowe’s® and online – now want to control last- also built a Baby Registry12, the natural partnered with Porch, an innovative 24/7 a global scale, with superpowers burning mile delivery to consumers,” Chris Abele successor to Domino’s Wedding Registry,13 support service that connects customers resources, explains. As the Director of Corporate that lets friends send pizza and pizza- with experts who can help with home through limitless resources working to Strategy at First Data®, he stays connected themed gifts to new parents improvement projects. Customers can with evolving commerce trends. “This is and newlyweds. hire contractors directly through the site,16 money and survive by becoming the first, the best, what consumers want. They want it today, request personal, guided instructions on within hours. They want it at their door, The last-mile delivery concept also installations and assemblies, or chat to get the biggest, and the strongest. and they are willing to pay for it.” transformed Millennial-favorite IKEA®. quick advice and ideas. manpower is The “assemble-it-yourself” furniture Along the way, the rulers of retail have evolved into tech giants offering So, whether consumers are purchasing maker bought the innovative start-up Lowe’s was also the first retailer to goods and services far outside of their traditional verticals. And, they’re through big retailers, or getting restaurant TaskRabbit, which allows users to submit use virtual reality (VR) to run home energizing the delivering them, along with a string of innovative user experiences food delivered to their door using requests for services they need, like dog- improvement clinics.17 It offers the all zeroed in on the same objective – creating a fortress inside their experience-minded mobile apps, like walking or housesitting, and then wait for Holoroom How To experience, providing customer’s homes. GrubHub, Uber EATS, and DoorDash®, pre-screened taskers to bid on the job. on-demand DIY clinics to customers. They creation of First Data® is designing the technology Now, assembling IKEA furniture is a top also jumped in the augmented reality What at first seemed like a natural extension of a business model that’s keeping the payment process not TaskRabbit service.14 (AR) game. Following in the footsteps of is revealing itself as a tactical fistfight. Google jumped in first with only easy and seamless but also behind the Amazon’s AR View,18 they launched the new, innovative Google Express, which allows customers to order nonperishable curtain and out of view. Abele says, “The Envisioned app last October. Both use AR groceries from partner stores and receive them in just a few days. The more nuts and bolts activities like payments to generate sales by allowing customers innovation? You can do it from any connected device, just by saying, are blended into the overall consumer This is what the to digitally place a piece of furniture inside technologies “Hey Google!”1 experience, the better.” Of course, home their home to see how it looks before food delivery isn’t a novel idea. Pizza shops consumers want. purchasing it.19 “In the last year, we’ve Next, one of Google’s partners, Walmart®, decided it would be better have boosted sales for decades with seen AR evolve to be much more than a They want it today, at a pace we to bring perishable and nonperishable groceries to your door in hours doorstep delivery. The 30-minutes-or-less way to chase virtual monsters in Pokemon instead of days.2 And, it found an easy way to make it happen by model evolved into online ordering and within hours. Go,” says Seth Perlman. As First Data’s tapping into the expanding matrix of Uber drivers, rather than creating mobile apps now used by every major Global Head of Strategy, he and his team haven’t seen a fleet of its own.3 pizza chain. They want it at their keep on top of new technologies that are reshaping commerce. “It could prove to And then, there’s Amazon. It bought an entire enterprise, Whole Foods®, But Domino’s realized early-on that door, and they are be a powerful tool to remove uncertainty since the which already accepted the most online grocery orders.4 It linked those innovation was its path to differentiation. It willing to pay for it. and doubt about a potential purchase. orders to the Alexa/Echo universe, and sped them to your house in famously transformed into a tech company Especially for categories such as apparel under an hour,5 and shipping is free for Prime Members6 (Hint: half of (that happens to make pizza). For starters, Chris Abele and home goods, where it can be hard to 7 Space Age Whole Foods® shoppers were already Prime Members). For good it was the first pizza chain to take orders Director | Corporate Strategy | First Data make a buying decision based only on a measure, it added Amazon Meal Kit, to give customers the option of over smart speakers like Amazon Echo and two-dimensional thumbnail image.” having items bundled into ready-to-prepare dishes, pulling hungry Google Home, as well as Apple Watches, With IKEA encroaching on its turf, Amazon and Cold War shoppers away from meal-kit delivery innovator Blue Apron.8 Facebook and Twitter (remember the pizza created Amazon Home Services, to offer Technological advancements are also emoji tweet)?10 And now, even its app is customers a new and simple way to buy impacting the way people give gifts. What making headlines with a “no-click” feature and schedule professional services such started as simple paper gift certificates has arms race of that orders for you in just 10 seconds.11 as furniture assembly, house cleaning, evolved into instant and engaging digital and appliance repair directly on Amazon. experiences. With help from First Data®, com.15 It also allows Amazon to sell home Walmart® is using unique app technology to the 1960s. improvement products like flooring, offer reloadable eGift cards like Basic Blue, carpeting, and drywall to customers who which once purchased can be reloaded not aren’t comfortable with the do-it-yourself only by the owner, but also by friends and (DIY) concept. family as a “gift” for new occasions.20

16 First Data | Connected | Volume 3 FirstData.com/Connected 17 Bonus Special Section And, Walmart Pay isn’t just a mobile wallet, it also stores receipts and purchase histories. Users can also reload their own cards for easy checkout at the store.

“In addition to last-mile delivery and service, another trend shaping the evolution of retail right now is consumer brands going directly to market,” says Abele. “Big brands like Tide® are selling over their own websites and making deals to sell to consumers on Amazon.” UNLOCKING After striking a direct-to-consumer deal last summer, Nike® became a top-selling brand MERCHANT on Amazon. “We are looking to improve the Nike consumer experience on Amazon by elevating the way the brand is presented INNOVATION and increasing the quality of product storytelling,” Nike’s CEO Mark Parker told investors during a conference call.21 USING

Parker says Nike® also plans to begin selling 22 MACHINE on Instagram, a platform the company already dominates in terms of followers. Nike’s tone-perfect use of emotive and LEARNING aspirational imagery captures the spirit of Instagram, generating loyalty and brand recognition.23 It will likely use Instagram’s In some Nordstrom stores, customers FOR FRAUD Shopping-Tags feature to turn those can go to a special Lancôme counter followers into buyers, allowing Instagram where their skin tone is analyzed with a users to simply click on Nike’s posts to get technology called Le Teint Particulier. It information and links to the product.24 precisely matches base colors, which are then mixed on the spot from thousands Social media and mobile-focused marketing of pigments to create the perfect makeup are keys to selling direct-to-consumer foundation shade for each customer.26 products. Innovative user experiences draw customers in and keep them satisfied. “The next retail frontier,” says Perlman, Take, for example, Gatorade’s GX Platform, “will be the delivery of a consistent, which uses a patch on athletes’ skin to personalized experience to every monitor sweat output and electrolyte consumer regardless of where they are or loss. It uses the data to recommend a what device they’re holding.” He says that personalized formula for Gatorade’s First Data® is working with retailers of all “fuel bottle,” which, in-turn, records how sizes to provide the payments capabilities much Gatorade the player has taken in, and robust analytics they need for the next helping them stay hydrated.25 era of commerce.

Think about it, the technologies that In This Article: emerged during the Space Age are still with us, affecting how we live, work, and interact with our world. This new #ThinkFast explosion of technology delivering #DriveChange commerce innovations that are changing #Collaborate everything about how we shop and pay, will #InvestInlearning undoubtedly have a long-lasting effect on #Strategy retail sales and the consumer experience.

18 First Data | Connected | Volume 3 FirstData.com/Connected 19 © 2018 First Data Corporation. All Rights Reserved. Bonus Special Section

Chapter 01 INTRODUCTION MERCHANTS ARE EVOLVING THEIR BUSINESS MODELS

The world of Fraud results in: Shopping is about to get interesting.

eCommerce » Losing money to chargebacks and If merchants have learned one thing in spending time disputing them. lost $60 billion » Declining legitimate customers due the past few years, it is customers are in fraud in 2017.1 to poor fraud controls. clamoring for continuous innovation. » Losing stolen goods and the money And beneath this spent on shipping. » Bottlenecking order fulfillment with massive figure manual reviews. THEY’RE of surveyed shoppers last year told » The threat of being labeled a SHOPPING 51% Deloitte that they planned to do more there’s a world of “high risk” merchant. ONLINE. holiday shopping online than in stores.2 additional pains. While fraud teams focus on fighting waves of new fraud, innovation teams on the other side of the organization are focused on creating THEY’RE BUYING $2.6 billion new revenue streams, and keeping up with WITH THEIR The biggest shopping day last year was not Black Friday, changing customer expectations. PHONES. but Cyber Monday – and a third of the $6.6 billion consumers spent that day was via mobile phones.3 As the decade nears its close, merchants are trying to solve for risk and business opportunity at the same time, and they’re building bridges across their organizations to THEY’RE USING $500 billion have big conversations. In this ebook, we’ll try NEW PAYMENT The volume of payments via wearables is to move the conversation forward. METHODS. expected to exceed $500 billion by 2020.4

Read on to discover:

The North Face spent one year training the AI algorithm » The most pressing trends in business and THEY’RE LEANING ON behind its “Expert Personal Shopper” so it could make fraud that are shaping the future of retail. VIRTUAL SHOPPING ASSISTANTS. 365 recommendations about clothing for consumers.5 » Success stories of customers who have innovated their fraud detection systems with Fraud Detect®, a comprehensive fraud detection solution utilizing a machine Now that Amazon’s 20-year patent on 1-click learning platform. AND THEY’RE payments has expired, merchants are looking for » Actions merchants can take now to be BUYING THINGS 40% ways to capitalize on fast payments. Shopify Pay proactive in a changing world. WITH ONE CLICK. found that increasing checkout speeds by 40% led to an 18% higher conversion rate for returning shoppers.6

20 First Data | Connected | Bonus: Special Section © 2018 First Data Corporation. All Rights Reserved. © 2018 First Data Corporation. All Rights Reserved. Unlocking Merchant Innovation Using Machine Learning For Fraud 21 Bonus Special Section

Email selling Cross-channel shopping IoT is here to stay Merchants Twenty years after Amazon “Omnichannel” has gone from The Internet of Things has patented 1-click orders, and a differentiator to a given in just gone from a buzzword to a have to get two years after social media a couple years. Merchants are Commerce reality. For example, companies like Pinterest searching for ways to integrate Brita Water is connected to creative introduced instant “buy” all their channels to provide Amazon’s Dash Button and buttons, merchants are seamless movement between orders new filters automatically to remain looking for the next trend in them. According to Google, 65% when they’re needed. And instant payments. of people shopping online will HP might be resuscitating its competitive. begin a purchase with one device lagging printer business in part For example, the startup Rebel but complete it within another.8 thanks to Instant Ink, which is trying to turn email into a monitors printer ink levels and merchant-owned channel by Merchants aren’t just integrating sends customers new cartridges THE LATEST enabling customers to make digital channels, but physical before they run out.11 purchases from inside their channels too. For example, INNOVATIONS IN emails, rather than having to Commerce newcomers like click through to a web browser. Bonobos and MM. LaFleur are COMMERCE ARE Making it easier for customers to expanding their online presence complete purchases can create into showrooms, so users can EXCITING FOR a great customer experience use physical stores as part of and increase revenue. their buying journeys. CUSTOMERS, BUT Voice-based shopping Wallets THEY ALSO BRING Thanks to voice selling, In-store mobile payment Amazon’s Alexa could create volume is anticipated to grow ON UNIQUE AND $10 billion in revenue by 2020.7 from $75 billion in 2016 to $503 And now that Target and billion in 2020.9 Mobile wallets NEW CHALLENGES Walmart have partnered with accounted for almost a third Google to allow voice shopping of Starbucks transactions last WHEN IT COMES TO through Google Assistant, voice year!10 Wallets can improve the computing has become an merchant-customer relationship FIGHTING FRAUD. important new revenue platform by providing an easier way – but only for a select few of to pay and a new avenue for the most giant merchants. personalized promotions. For example, Starbucks “cracked Small and mid-sized merchants the code” of wallets by offering might be shut out of the voice irresistible enticements through platform for now, but they can its mobile app, like the capability optimize their SEO for voice so of ordering coffee ahead of time they show up on searches over to skip the line in the store. voice assistants.

22 First Data | Connected | Bonus: Special Section © 2018 First Data Corporation. All Rights Reserved. © 2018 First Data Corporation. All Rights Reserved. Unlocking Merchant Innovation Using Machine Learning For Fraud 23 Bonus Special Section

Chapter 02 FRAUDSTERS ARE EVOLVING THEIR BUSINESS MODELS TOO FRAUD TYPES FRAUD TECHNIQUES

Triangulation fraud Bot attacks Merchant fraud used to be simpler: someone waiting in line at the Here’s how this works: a fraudster sells legitimate products Fraudsters create customized bots, often with the help over an auction account, like eBay, and a customer buys the of "build your own bot" websites, that use programming Fraudsters return counter with an item they stole. Today, merchant fraud is product. The fraudster receives the money, then orders the scripts to choose products at merchants and try to buy part of a teeming, underground economy of coordinated financial same item from a legitimate retailer, pays for it with a stolen them with a velocity that's not humanly possible, using crime. Fraudsters are leveraging every tool at their disposal to steal card, and ships the item to the buyer. The fraudster gets stolen credit card information. Feedzai has discovered bots are using the money, the customer gets the product, and the retailer that can add to carts five times faster than humans, and from merchants. They’re using advanced technology and leveraging sees a normal-looking order. It's only when the chargeback bots can be programmed to open fraudulent accounts as advanced the complexity of the payments ecosystem itself. comes a few months later from the victim of the stolen well.12 These bot attacks are concentrated on items that are credit card that the retailer discovers the scam. on sale, have just launched, or are particularly easy to sell. technology. Perhaps the most important tool that fraudsters leverage is adaptation. The signature characteristic of today’s financial Sleeper fraud Address malformation fraud crime is that it’s always evolving. Here’s a look at the most pressing This is a kind of first-party fraud, when criminals open When a fraud system detects and blocks a fraudulent accounts in bad faith using their own identities or creating address, fraudsters will outsmart the fraud controls with fraud types and techniques, many of which didn’t even exist a fictitious ones. In sleeper fraud, criminals will try to simulate a “malformed address.” They’ll write the address in such decade ago. normal profiles for months or even years to fool fraud a way that the system can’t detect (e.g. “R0ad” instead controls. They may even create fake social media accounts of “road”), but in a way that the human delivering the associated with these fictitious identities to increase the air package will still be able to recognize. of legitimacy. Then they'll switch their behavior to fraud in an instant.

THE NEW ECOSYSTEM OF FRAUD Chargeback fraud Prefix phone pattern fraud Here a customer will intentionally request a chargeback Fraudsters will “spoof” local area codes in order to on a legitimate purchase. The customer might say the item look legitimate. They’ll imitate local merchants and fool Bot wasn't delivered, the item isn't as advertised, the item unwitting customers into giving their personal information. Reshipper attacks was returned without a refund being processed, or they Fraudsters use this same technique to impersonate the IRS fraud don't remember making the purchase. In friendly fraud, and scare people into betraying their own credentials over customers will make disputes like these, but because they the phone. Address genuinely are mistaken about the purchase, or possibly malformation because someone in their family made the order without fraud telling them. Offline fraud Reshipper fraud Synthetic ID fraud Triangulation This criminal enterprise is run by an operator who recruits Identity thieves create new identities using a combination HARD TO DETECT TO HARD fraud unwitting “reshipping mules” through work-at-home job of real and fabricated information. For example, many scams. They’re promised thousands of dollars a month just will use the social security numbers of children to evade Buy online pick Synthetic to receive and reship packages. The operator sells access to discovery. Fraudsters will also fabricate entirely fictitious up in store fraud ID fraud his mules to card thieves, who use stolen card information information. They’ll nurture these identities to appear to purchase products from merchants, ship them to the legitimate, for example, by creating fake social media mule’s address, and have them reshipped. The card thieves accounts. And they’ll use these identities to steal lines of sell the goods on the black market, and the operator credit, open fake accounts, and steal goods. receives a cut.

Prefix phone Buy online pick up in store fraud Offline fraud pattern fraud Sleeper fraud Fraudsters will select this option at online checkout, How can it be possible to see a charge you don’t recognize and then call the merchant asking to have it shipped to when the card was in your possession the whole time? them after all. This is a way for fraudsters to bypass fraud Fraudsters can easily buy a small device that clones your screens, because merchants consider in-store pickup card in a moment. They’ll clone your card into a copy that orders less risky. Fraudsters also like committing this kind looks just like the real thing, and use it at points of sale to Chargeback of cross-channel fraud because they count on merchants steal from your line of credit or your debit account.

SIMPLE TO DETECT TO SIMPLE fraud keeping separate, siloed systems for internal and online purchases. For example, an in-store employee may not see that a customer bought 20 of the same item with 20 different identities.

EXISTING EMERGING

24 First Data | Connected | Bonus: Special Section © 2018 First Data Corporation. All Rights Reserved. © 2018 First Data Corporation. All Rights Reserved. Unlocking Merchant Innovation Using Machine Learning For Fraud 25 Bonus Special Section

At Feedzai, the fraud analyst Joel Carvalhais Key data A closer look analyzed the evolution of a fraud ring that attacked a large commerce client with account breaches and at the evolving takeovers (ATO). ATO fraud is growing rapidly, costing $2.3 billion in 2016 alone.16 When Aite credential dumps 1 BILLION tactics of ATO asked financial institutions to name their biggest fraud investment priority, their top answer was: that are fueling ACCOUNTS COMPROMISED fraudsters. retail ATO.17 Yahoo! data breaches all this fraud. of 2013 and 201413 Feedzai’s analysis demonstrates this ring of ATO fraudsters evolved their tactics in three stages in order to evade detection.

AS CYBERCRIME HAS

EVOLVED INTO BIG BUSINESS,

DATA BREACHES ARE 100 MILLION Fraudsters used stolen credentials from the Yahoo! and LinkedIn data breaches to take over customers’ PayPal INCREASING IN BOTH SIZE STAGE ACCOUNTS COMPROMISED accounts to steal their card information. Then they used the same stolen credentials to log into the merchant. Fraudsters AND IMPACT, DISRUPTING Linkedin data breach of 201214 targeted a whitelist of “good customer” accounts that were 1 auto-approved for orders. They ordered goods under these ORGANIZATIONS AND LOWERING customers account and sent them to reshipper addresses. CONSUMER CONFIDENCE. STAGE Fraudsters tried to appear legitimate by changing the billing address field to match the shipping 1.4 BILLION 2 address of reshippers. STOLEN CREDENTIALS discovered by the security STAGE 15 Fraudsters began to modify every major firm 4iQ in 2017 account field, like username and email address, in order to appear even more 3 legitimate and outsmart the merchant’s rules.

26 First Data | Connected | Bonus: Special Section © 2018 First Data Corporation. All Rights Reserved. © 2018 First Data Corporation. All Rights Reserved. Unlocking Merchant Innovation Using Machine Learning For Fraud 27 Bonus Special Section

Chapter 03 HOW THESE CUSTOMERS ARE FIGHTING FRAUD IN A CHANGED WORLD CASE STUDY: Legacy 1 Petroleum Company technology Petroleum customer solves fraud BEFORE: Rules can be effective for stopping certain known behaviors, but crisis resulting from new mobile app simply can’t rules can reach their limit when it comes to imagining adaptive human behavior. PROBLEM: increased detect these When a leading petroleum merchant launched 32% fraud via A model-based approach can uncover interactive relationships in a new mobile application, fraud rates spiked at mobile app newer forms data that rules and humans alone will miss. And unlike rules, models 32%. This customer faced a critical choice: get can account for changing human tactics as fraud behavior evolves. fraud under control, or shut down the app and of fraud. lose out on the new business opportunity. First Data has been deploying Fraud Detect, its machine learning- based fraud detection platform, with national merchants, and SOLUTION: AFTER: the results are in. By combining machine learning models with the First Data deployed its Premium offering of existing rules, its customers are increasing fraud detection without the Fraud Detect platform, with a customized adding any friction or alarm. machine learning algorithm and an advanced <1% case manager. This product is purpose-built for fraud rate This adaptive fraud-fighting technology doesn’t just stop criminals high-touch, high-risk, immediate fulfillment sales. after deploying in their tracks. It also enables cross-functional innovation efforts to Fraud Detect explore new business opportunities without incurring new risks.

Use case: Fraud Detect® OVER Improvement in accurately mobile application detecting fraudulent transactions Mobile App deployed with minimal fraud controls, 80% before they happen. fraud rate spikes at 33% Engaged First Data® to deploy Fraud Detect Implemented device fingerprinting �in late September ’16 Number of fraud risk triggers Fraud 33% 32% Detect analyzes to determine fraud Interim strategy deployed to create � + risk score for every transaction. 50 sophisticated rules to suppress fraud. 150 Three full time fraud analysts. October ’16 20% Machine learning 16% 14% 14% models deployed FRAUD RATE Amount of time for Fraud Detect in February ‘17 CURRENTLY AT to deliver a score that enables a 8% 9% ‹ . 7% 05 6% 6% <0.1% merchant to assess risk of fraud. SECOND 4% 3% 3% 1% .74% .78% .96% .67% .46% .26% .09%

APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN

2016 2017 2018

Data defined as the aggregate amount of chargebacks by original transaction date divided by total number of transactions for a specific month.

28 First Data | Connected | Bonus: Special Section © 2018 First Data Corporation. All Rights Reserved. © 2018 First Data Corporation. All Rights Reserved. Unlocking Merchant Innovation Using Machine Learning For Fraud 29 Bonus Special Section

CASE STUDY: 2 QSR Company QSR customer upgrades their fraud detection to enable a new mobile RESULTS: application launch

PROBLEM: When this customer launched a new version of their mobile app, they saw fraud spikes that decrease called for new tools. 80% in fraud.

SOLUTION: The Advanced offering of Fraud Detect was implemented with a machine learning QSR- industry model, a rules engine, and Case Manager. First Data also implemented a capability $200K allowing this customer to test the model at saved after fees. different scoring thresholds.

CASE STUDY: 3 QSR Company A flood of fraud followed a new wallet launch RESULTS:

PROBLEM: A QSR customer launched an auto-reload wallet. Gift card fraud poured in, along with an unusual 20,000 volume of balance inquiries on stored value fraudulent transactions cards. Criminals were launching account blocked in the first takeovers, using stolen credentials to access month alone. stored value accounts and purchase items fraudulently.

SOLUTION: A global model was delivered via a First Data gateway and auto-reload host.

30 First Data | Connected | Bonus: Special Section © 2018 First Data Corporation. All Rights Reserved. © 2018 First Data Corporation. All Rights Reserved. Unlocking Merchant Innovation Using Machine Learning For Fraud 31 Bonus Special Section

Chapter 04 Conclusion ACTIONS MERCHANTS CAN MEET FRAUD DETECT TAKE NOW First Data’s Fraud Detect Solutions is a The half life of comprehensive, state-of-the-art fraud innovation prevention solution with real-time fraud is decreasing. scoring and machine learning capabilities.

Businesses and fraudsters alike are changing in a Rules provide a static approach to dynamic human Designed to reduce a merchant’s overall exposure with greater agility through a fully integrated new digital economy. For merchants who wait to behavior, because their thresholds cannot change to and cost of card-not-present payments fraud, modeling and run-time environment. update their limited, existing technology, things over time. For example, a human fraudster will Fraud Detect provides a highly differentiated are only going to get worse – not better. quickly discover a velocity threshold for a rule that value by leveraging leading-edge technology, Unlike traditional rules-based solutions relying on says, “Block when greater than four transactions in the company’s information assets, and global hard-coded rules thresholds, the machine learning Here are five actions we recommend taking to get a 30 minute period.” Also, rules can be limited by distribution. Fraud Detect has been developed platform uses profiles to compute thresholds ready for a new decade of both risk and opportunity. yes-or-no threshold ranges, whereas models can in partnership with Feedzai, an industry-leading that are updated with each incoming transaction recommend a broader range of actions, depending AI technology and fraud science company as it happens. The merchant is afforded access 1. Have big conversations across your organization on the merchant’s tolerance for risk. specializing in real-time, machine-based learning to a single fraud prevention solution, including Fraud teams and business teams have never to analyze big data and minimize risk in the both rules engine and machine learning, to make been so linked. In large organizations, it can take 4. Think “fast” financial industry. payment and operations safe across all channels. a concerted effort to start having meaningful, In this changing world, speed is king. Merchants ongoing conversations about the interconnected need to prioritize speed as a goal in order Fraud Detect is designed as an offering to a effects fraud and new business have on each to outpace the rapid progression of today’s merchant who is exposed to the growing fraud other. For example, new fraud tools will need to be fraudsters. For example, they need to consider threats in eCommerce and card-not-present integrated seamlessly with new products so they how quickly their machine learning system can channels. The underlying objective is to create don’t add friction. And new business explorations allow for the training and deployment of new a centralized solution meeting the very high will need to account for the explorations of new models. And merchants should consider how expectations of retailers for system accuracy, fraud tools. Merchants should start operationalizing quickly a vendor can be up and running so they performance and flexibility. these conversations as soon as they can, so they can begin stopping new fraud as soon as possible. transform their mode from reactive to proactive. The success of Fraud Detect is tied 5. Make your people better to three key business objectives: 2. Have big conversations across fraud teams, too The most fundamental benefit of machine Even among fraud teams, silos can exist. For learning is that it makes humans better. For » Reduce potentially fraudulent transactions, example, digital fraud teams and in-store fraud example, while rules can only make a “yes or no” thereby reduce chargeback activity. teams will sometimes work in isolation. Cross- decision about transactions, machine learning » Improve customer satisfaction by reducing channel fraudsters will quickly discover these models can provide a range of possible actions false decline rates. organizational communication gaps and find ways based on customized risk thresholds. This arms to outsmart disjointed fraud teams. manual reviewers with all the information they » Improve the efficiency of resources dedicated need to make a decision, and leaves the power to managing at-risk transaction case reviews. 3. Begin investing now in machine learning in their hands. Merchants should seek machine A hybrid approach to fraud detection, which learning systems empowering their fraud teams to With Fraud Detect, merchants can successfully combines machine learning models and rules, will make informed decisions. Additionally, merchants address issues surrounding fraudulent transactions, identify many more fraudulent transactions for a should seek systems with easy-to-use human reducing the number of flagged orders requiring given alarm rate. Merchants who continue to rely interfaces, like drag and drop dashboards and review and significantly lowering false positive on rules alone will be lapped by today’s fraudsters. intuitive case managers. rates. Fraud Detect adapts to newer fraud patterns

32 First Data | Connected | Bonus: Special Section © 2018 First Data Corporation. All Rights Reserved. © 2018 First Data Corporation. All Rights Reserved. Unlocking Merchant Innovation Using Machine Learning For Fraud 33 Analytics SourcesSources

37245415455.376 1 https://1 https://www.pymnts.com/global-fraud-index/www.pymnts.com/global-fraud-index/

2 https://2 https://www2.deloitte.com/us/en/pages/www2.deloitte.com/us/en/pages/ Fraud consumer-business/articles/holiday-retail-sales-consumer-business/articles/holiday-retail-sales- consumer-survey.htmlconsumer-survey.html Stops Here. OVER THE LAST 3 https:/3 https://www.cnbc.com/2017/11/28/a-record-6-/www.cnbc.com/2017/11/28/a-record-6- point-59-billion-spent-online-on-cyber-monday-point-59-billion-spent-online-on-cyber-monday- making-us-history.htmlmaking-us-history.html FEW YEARS, BIG DATA

4 https://4 https://www.tractica.com/research/wearable-www.tractica.com/research/wearable- payments/payments/ 63193940430.300 HAS GROWN INTO 5 https://5 https://www.computerworld.com/www.computerworld.com/ FPO article/3026449/retail-it/the-north-face-sees-ai-article/3026449/retail-it/the-north-face-sees-ai- as-a-perfect-fit-video.html A LARGE AND 6 https://medium.com/@hollyc/amazons-1-click-6 https://medium.com/@hollyc/amazons-1-click- AD SPACE patent-just-expired-what-this-means-for-other-patent-just-expired-what-this-means-for-other- ecommerce-sites-effcf01078a5ecommerce-sites-effcf01078a5 FORMIDABLE BEAST.

7 http7 s://https://www.cnbc.com/2017/03/10/amazon-alexa-www.cnbc.com/2017/03/10/amazon-alexa- voice-voice-assistan-could-be-a-10-billion-mega-hit-by-assistan-could-be-a-10-billion-mega-hit-by- 20202020-research.html-research.html NEW ADVANCES

8 https://feedzai.com/blog/online-mobile-retail-8 https://feedzai.com/blog/online-mobile-retail- rises-bot-fraud/rises-bot-fraud/ 4605352875.21 IN ARTIFICIAL 9 http://9 http://www.businessinsider.com/the-mobile-www.businessinsider.com/the-mobile- payments-report-market-forecasts-consumer-payments-report-market-forecasts-consumer- trends-and-the-barriers-and-benefits-that-will- INTELLIGENCE, influence-adoption-2016-5

10 htt10 ps https://www.geekwire.com/2017/mobile-payment-://www.geekwire.com/2017/mobile-payment- now-accnow-accounts-30-starbucks-transactions-company-ounts-30-starbucks-transactions-company- 461678458425.78 MACHINE LEARNING postposts-5-7b-revenue/s-5-7b-revenue/

11 https://11 https://www.marketwatch.com/story/www.marketwatch.com/story/ how-hp-is-trying-to-resuscitate-a-dying-how-hp-is-trying-to-resuscitate-a-dying- Reduce Risk. AND PROCESSING business-2017-06-30business-2017-06-30 Reduce Cost. 12 https://feedzai.com/blog/online-mobile-retail-12 https://feedzai.com/blog/online-mobile-retail- 6786487056.125POWER ARE LEADING rises-bot-fraud/rises-bot-fraud/ Reduce Fraud.

13 https://en.wikipedia.org/wiki/Yahoo!_data_13 https://en.wikipedia.org/wiki/Yahoo!_data_ For one client, we reduced breachesbreaches * TO THE CREATION fraud from +30% to 1%. 14 https://en.wikipedia.org/wiki/2012_LinkedIn_hack14 https://en.wikipedia.org/wiki/2012_LinkedIn_hack Whether it’s at the pump, in the car, via their 15 https://medium15 https://medium.com/4iqdelvedeep/1-4-billion-.com/4iqdelvedeep/1-4-billion- OF INNOVATIVE phones, online, or in-store, your business clear-text-credentials-discovered-in-a-single-clear-text-credentials-discovered-in-a-single- database-3131d0a1ae14database-3131d0a1ae14 needs solutions to secure your customers’ data and prevent fraud, while letting them 16 htt16 p s:https://www.javelinstrategy.com/press-release///www.javelinstrategy.com/press-release/ 0762715423.35 APPLICATIONS THAT pay the way they want, frictionlessly. Help identity-identity-fraud-hits-record-high-154-million-us-fraud-hits-record-high-154-million-us- victims-2016-16-victims-2016-16-percent-according-newpercent-according-new protect your business from fraudsters in our fast-changing, mobile, social and digital 17 17 USE BIG DATA TO https://www.aitegroup.com/report/financial- SOURCESSOURCES world using real-time fraud scoring and institution-fraud-trends-ato-and-application-institution-fraud-trends-ato-and-application- ® fraud-rising-rapidlyfraud-rising-rapidly machine learning with Fraud Detect . TRANSFORM THE Think what we can do for you. WAY WE LIVE, WORK, © 2018© 2018 First First Data Data Corporation. Corporation. All AllRights Rights Reserved. Reserved. TheThe First First Data Data® name,® name, logo logo and and related related trademarks trademarks andand serv serviceice ma marksrks are are owned owned by byFir stFirst Data Data Corpo Corporationration andand are are reg registeredistered or useor usedd in thein the U.S U.S.. an dand man manyy fo reignforeign SHOP AND PLAY. coucountries.ntries. All Alltrad trademarks,emarks, servi servicece ma marksrks and and trad tradee  Brad Rhoads namenamess refer referencedenced in thin isthis mat materialerial are are the the pro propertyperty of of theirtheir respecti respectiveve owne owners.rs. Learn more at FirstData.com/frauddetect 12201968.50 *Based on the results of client use case. FirstData.com/Connected 35

[02] In the United States, the [06] National Cancer Institute Chhabra’s applications are takes it a step further. It is now used by thousands recommending a patient of merchants who turn to database that uses big [04] First Data’s Clover Insights data to predict outcomes Under the Obama tool to track their sales and of certain treatments. 2 administration, NASA learn how they compare Rather than creating costly [03] created the Big Data with others in their same [01] and time-consuming new Of course, that happened Challenge, opening the [05] vertical, or in the same zip trials for each procedure, already. And, they got it process up to public Fodor says, having massive code, or in different parts researchers will simply right 83% of the time. The universities and research amounts of data with no plan of the country. He’s helped back-reference the data for researchers say they can groups. Through this is counterproductive. He everyone from single-owner subjects.3 Much of the become even more accurate program, collective recommends a measured businesses to the largest of the credit for the rise of what as they continue to gather decisions can be made approach, tailored to the employer in the world. ONE 6 we’ll call Big Healthcare more data points. about keeping what’s individual business owner biggest users of this goes to the adoption of important, and then on how that answers their most “Transactions don’t lie,” Electronic Health Records, Pandora, for example, best to access the data.11 basic needs. says Chhabra. “So, we help new big data is the now used in 94% of gathers 450 different data Remember, storing data is with forecasts and quarterly American hospitals.4 points for each song in its costly, as is transmitting “The challenge is, you have reports using real data healthcare industry. catalogue (what it calls it millions of miles across all this data. How do you boil based on actual purchases, Now, shifting gears, think the song’s genome). It space. The first step is to it down to concise, actionable not analysis from outside For hospitals about the way we access then employs a team of decide what data to create information that helps make sources. I’m showing them music. Streaming services musicologists to make before ever committing to business decisions that will all purchases in each struggling to contain like Pandora, Apple Music predictions about what storage and analyses. allow me to either grow category, not something and Spotify® have almost songs subscribers will like.7 revenue or cut costs?” extrapolated from a survey, costs, internal data 200 million subscribers NASA’s Big Data Challenge Fodor explains that you can or website clicks.” worldwide tuning in, Utilities are also looking in many ways mirrors grow data in many ways. from patient records, spurring billions of neatly to predictive models to what First Data does for For instance, by selling more In the end, big data is only digitized data points. 5 improve outputs. The most businesses. Every day, stuff, retaining customers as good as the tools that go along with external Throw in YouTube and other aggressive studies have First Data hears from better, or by gaining new with it. That’s true if you’re free services, and you have been done, unsurprisingly, dozens of businesses customers. That’s when you helping markets understand data like weather a huge set of data available in California, where the who want to know how to see the lightbulb come on. how long the fidget-spinner to analyze which songs state is developing a make better sense of their We tell them how to craze will last (turns out, forecasts and holidays, each customer segment smart grid.8 transactions. “When we do each of those things. not very long), or where you likes, including details like initially approach them with That’s what our analytic should open a new franchise can be the key to how long each listener Teams at the University of solutions, it’s daunting,” tools accomplish.” without cannibalizing your samples a track before Southern California (USC) says Glenn Fodor, who runs current customer base. As predicting admission moving on. are studying, among other First Data’s Information and Rishi Chhabra helps these tools evolve, we’ll things, how to use big data Analytics Solutions division. design and implement continue to see the new big rates. This helps The real challenge is to see for the optimal integration of “They say, ‘this is a lot of those analytic tools for data used in big, new ways – if data analysis can predict renewable energy sources stuff, what do I do with it?’ ” First Data. And, he’s done even bigger than predicting them make better which songs will be hits or like solar into the existing his homework. “I personally the sickest beat in Belgium misses. But, that would take grid. Their Deep Solar visited with hundreds or the song of the summer operations decisions a long, complicated study project analyzes weather of merchants, just to in Spain. by university researchers, patterns and usage data understand what we could like predicting staffing in someplace like Antwerp, to regulate the intake of do to delight them. But their where soulless algorithms private solar sources.9 questions were more basic, [07] needs, as Paris would be applied and XY more human. ‘Just please scatter charts studied to The National Aeronautics tell me how much money In This Article: hospitals recently scientifically predict the and Space Administration I make each day.’ It’s very position of dozens of songs (NASA), which has been hard for them to figure #BigData did with the help of on Billboard’s Dance collecting weather data these things out. So, we #MachineLearning 1 Hit charts. and mission data points for start there.” #ArtificialIntelligence machine learning. decades, has a different #DataAnalysis problem. They have too #BigDataChallenge much data, and they have to store all of it, and then figure out how to use it.10

36 First Data | Connected | Volume 3 FirstData.com/Connected 37

GLOBAL Data Analytics CURRENCY FOR WHAT LANGUAGE DO YOU SPEAK? THOUGHT Capitalizing on the Data Behind Dining  Anita j. Finkelstein

Knowing that weekend sales “Clover Insights is able to view of the current business For merchants using the Clover at ice cream shops are higher track and simplify their sales climate and trends without POS solution, Clover Insights when it rains1 isn’t just a fun data for them – and turn it into sharing sensitive data on can deliver even more granular fact to know for Becky Sunseri, useful information,” explains specific customers or information. Chhabra explains, owner of Tin Pot Creamery Chhabra. In addition to providing individual merchants.” “Since restaurants upload their in the Bay Area. It’s the kind daily sales data, the software menus into Clover, we can track of insight that enables her to produces charts and graphs And, having access to all of this individual SKUs to provide make better staff scheduling that track the data over time, data, along with analytics, is specific insight on what items decisions, order the right generates heat maps to incredibly useful for SMBs. Tin sell best and when they sell amount of inventory, and create show merchants where their Pot Creamery’s, Sunseri says best, as well as which items are the right marketing strategies. customers live, and creates Clover Insights enables her to typically purchased together. It’s the same for any small weather-based reports to help see her data in a way that makes We even can tell them exactly business owner – understanding merchants understand how it actionable. “It’s very hard as a which items sell best based on what’s going on both inside and different conditions impact business owner to spend all that the weather.” outside of their business can sales performance. time digging into the data – and make, or break, their success. not have anxiety over whether According to Sunseri, these But, what makes Clover I’m analyzing it correctly.” kinds of insights are exactly That’s where Clover Insights Insights truly unique is that it what restaurants need to drive comes in. An analytical not only provides merchants She says Clover Insights helped growth. “Seeing the stories software tool created by with analytics on their own her select the right spot to open behind my data is incredibly First Data®, it’s helping thousands businesses, but also offer a second shop. Seeing how helpful.” This is great to hear of quick service and casual insights into how other far customers were traveling because, as Chhabra explains, dining restaurants make better businesses are doing – a to her first store, she selected it’s also exactly what First Data business decisions by tracking capability Chhabra says is key a location close to those who was hoping to accomplish their data, simplifying it, and to helping merchants gauge traveled furthest, grouping them when they developed it. “In this presenting it as useful insights. their success. “By allowing together without cannibalizing world of big data, we wanted merchants to benchmark her original customer base. “I to simplify it – and become an While big businesses have the themselves against other was able to be confident … that advocate for small business.”  resources to collect, analyze, businesses, they can see how I wasn’t going to be poaching and use their data to help they are doing in comparison customers from myself.” guide operational decisions to restaurants in their same zip and marketing strategies, Rishi code or in their same vertical.” Sunseri also points out that Chhabra, Vice President of because she can access her Information & Analytics at Clover offers merchants these data from anywhere, she can First Data, explains that SMBs insights by harnessing the make better decisions faster. “I – especially restaurants – rarely power of First Data’s payment can check from my mobile or at In This Article: have that same bandwidth. “The processing network. Chhabra home and really see, in real- Currency is the language of commerce. When owners are too busy making points out, “We process billions time, what’s going on with my #DataAnalysis Attract. consumers shop, whether in-store or online, they burgers, shakes, cookies, of transactions from millions store. It not only shows me how #MachineLearning want you to speak their language. They expect coffee, or whatever it is that they of merchants every day. By I am doing by the day, but by the #ArtificialIntelligence #CompetitiveAnalysis frictionless experiences, no matter where they are sell, to spend time tracking and aggregating this data, we can week and month, and that allows #CustomerBehavior Expand. in the world. First Data’s Global Currency Solutions analyzing their data.” give merchants a big picture me to forecast.” help make it easy for customers to shop and pay in their own currency, enabling a better customer Connect. experience and increased revenues. Now you’re talking. To learn more, visit: FirstData.com FirstData.com/Connected 39 2 41 3 FirstData.com/Connected Since the 2017 Women’s March March Women’s Since the 2017 there’s the globe, rippled around willingness public been an increased to engage in discussions about perhaps But, issues. women’s two are activism lost in this new might facts: women unchanging be winning seats in government, not gaining seats in the but they’re no matter what And, boardroom. on the corporate are rung they still get paid less women ladder, than men for the same work.

Equality News organizations and women’s advocacy groups are looking ahead to the November election and predicting this could be of “The Year withthe Woman,” a record number of women running for officeat all levels government.of And they’re just not running – they’re winning – along with more people color of and more members the of LGBTQ community.

Mark Watkinson + joseph sigillo joseph + Watkinson Mark

Robyn ware + Anita j. Finkelstein j. Anita + ware Robyn

Tackling Tackling the Pay in Gap Tech and Beyond



Pays  First Data | Connected | Volume 3 | Volume Data | Connected First 40 On the Escalator The divisions are starkest in achievement, or time with military service, and other Mia Shernoff, Global Head On the Escalator the tech industry, which has the company. If not, the real factors. Groups gather to of Marketing for First Data, made headlines recently for work begins. “It’s not as easy discuss workplace issues has witnessed the company’s Sandy Mollett being a “boys’ club” that shuns as just looking at Person A and and share stories about their efforts first-hand. “The sign of Dania Ruiz-Paramo gender equality. Women Person B. You must analyze personal lives. a great company is when you occupied less than a quarter all the variables. It takes a don’t notice gender differences of computer-related jobs as considerable amount of time Today, 4,000 employees in in roles and titles,” she says, of 2016. Those women who did to do this and to make sure 11 locations take part in “We have a culture that have jobs were paid just 79% we’re moving forward in a ERGs. Providing a place where champions diversity and equal of men’s salaries.4 But many very thoughtful way.” employees can find peers and pay, and it feels like we are companies, including First Data®, safely voice their concerns good at that.” have been taking active steps and triumphs not only to address the problem. Build benefits members, but the As the demand for top female 2 Versus Buy whole organization. talent increases, Marino says Anthony Marino, First Data’s Recently, First Data shifted he feels companies with Since she joined First Data® three decades ago, Head of Human Resources, its hiring strategy. Rather programs to make women feel When Dania Ruiz-Paramo applied for a job at Sandy Mollett has seen the corporate culture and his team are working to than going outside the Gender-Neutral comfortable and valued will First Data® straight out of high school, the change first-hand, and she’s helped the company identify issues and close the company to “buy” top talent, 4 Newborn Leave rise to the top. “Companies company gladly enlisted her as a representative grow. Given the opportunity to compete on a gender pay gap for good. “I First Data now looks for Programs that don’t do this won’t be able in the customer service department, where her more level playing field, Mollett rose through the grew up with four older sisters existing employees with With women comprising to compete,” he says. “For us as ability to speak both English and Spanish was corporate structure to become one of the highest- and have two daughters as growth potential to “build” almost half of First Data’s a company, we’ve got to have highly coveted. Over the next 20 years, Ruiz- ranking owner-associates at First Data. She’s does our CEO Frank Bisignano, and promote from within. employees, Marino says it great programs for women, Paramo picked up more highly coveted skills now Senior Vice President, Head of Operations so for us, pay equity is a very While this new “build” model was key for the company and an environment where and expertise that propelled her to the position and Controls for Network and Security Solutions personal and passionate appeals to all employees, it to have a strong maternity they feel safe, energized, and she holds today, Senior Account Executive. (NSS). What makes Mollett’s story even more issue,” he says. works especially well to help leave program. Last year, capable of succeeding.” Initially, she was tapped to be a customer service remarkable is that for most of her tenure at retain female employees, and he and his team, along with representative, but quickly started to work with the First Data, she kept her true sexual orientation “We’re setting course to be it gives them a clear path to Christine Larsen and Cindy “Women are already 50% of Blank Financial Paper group, where she ordered secret from her fellow employees. “Coming out one of the first Fortune 500 advance within the company. Armine, launched an initiative our workforce. We want them blank official checks and money orders. She’s professionally was extremely difficult for me,” companies to achieve pay that offers maternal, paternal, to look at First Data and not since been given the opportunity to tackle national Mollett says. “Like so many, I felt coming out would equity,” he says, “and not As Marino explains, First Data and adoption leave benefits, only be able to say, ‘First Data sales for the entire suite of First Data solutions. limit my ability to grow and succeed in my career.” because it’s a legislative is finally in a place where it so all parents, regardless of is a company where I love to She says she understood from the beginning that reason as much as it’s just can spend time on growth gender, have time to enjoy work,’ and hope that someday it was her responsibility to take charge of her But, just about four years ago, there was a change the right thing to do.” and development of its own their growing families and their son or daughter will want career, and that’s what led to her success. in First Data leadership that brought a new talent. “When I got here, our to develop a better life-work to follow in their footsteps,” focus on diversity and inclusion, with CEO Frank Marino outlines four of the transformation required many balance. “We did our research Marino says. “To me, that “Every boss I have had at First Data prepared me Bisignano declaring himself the Chief Diversity most effective strategies new skills, so 70% of the time and decided if we were would be the best proof we’re for where I am today,” says Ruiz-Paramo. “Any job Officer. Mollett says, “that was just what I needed – and programs First Data has we would go to the external going to do it, we’re going doing a great job, having them or role I wanted was there for the taking, so long my safe path!” She came out and introduced her in place to help build and market for talent. I’d like to to do it right. Now, we have recommend our workplace to as I worked hard for it.” Ruiz-Paramo says there colleagues to her wife of 26 years. That change, nurture a culture of equality see us flip that. I’d like to grow one of the best programs the next generation who will was great value in growing up with the company— and her newfound openness, helped her become throughout the company. and promote our own 70% of out there.” follow in their footsteps.” the only place she’s ever worked—and that an even stronger leader at work and in the the time and make outside First Data rewarded her with loyalty and Atlanta community. She founded and co-chaired hires more the exception than Shernoff says she gives opportunities. “Loyalty isn’t something you usually First Data’s Atlanta Diversity and Cultural Council Analyze. the rule.” Marino points out that the same advice to all new see these days. Most companies value external (ERG Steering Committee), is an active member 1 Identify. Act. implementing initiatives employees she meets, experience. But a few years ago, there was a big of the Women’s Leadership Council and serves For a company with over has enabled First Data particularly women. “Have shift at First Data culturally, and now we’re making as the Atlanta Executive Sponsor of UNITY – 24,000 employees, identifying Employee Resource to increase employee confidence. New ideas are the changes we need to make.” First Data’s LGBT ERG. And through that pay inequalities is an ongoing 3 Groups (ERGs) satisfaction and cut attrition needed and encouraged in connection, Mollett was asked to become the process. Marino’s three-step Almost five years ago, by half. The company has high-tech companies, and She says there’s one thing she’s glad hasn’t Corporate Relations Board Chair for the Atlanta plan involves analyzing First Data established also been recognized for diversity is a catalyst for changed: “First Data always gives you the chance Gay and Lesbian Chamber of Commerce and took employees with similar job employee-led resource groups its efforts. First Data was innovation. Be aware of our to earn what you want to earn, if you want it bad the helm as President of the Chamber in May. titles and comparing their to create a sense of inclusion included in Bloomberg’s business and knowledgeable enough.” Ruiz-Paramo says, “It’s the perfect place compensation, identifying for all employees and to 2018 Gender Equality Index, about the role you play. Then, to thrive if you really want to. But you’ve got to “Companies and CEO’s have the power to legitimate gaps, and once support diversity across and designated as one of speak up, share your ideas, want it.” influence how we do business in our communities – confirmed, strategizing the entire company. These DiversityInc’s “25 Noteworthy and contribute.”   Brad Rhoads leading by example,” says Mollett. “When we band plans to close them. groups encourage employees Companies.” The company together, companies big and small have the ability to connect with each other also earned a place on the to influence corporate diversity in powerful and When his team identifies a and with First Data clients Dave Thomas Foundation’s positive ways.” gap, they look to see if it can who share common interests List of “Top 100 Best #UnchartedWaters be legitimately explained by based on their gender, race, Adoption-Friendly Workplaces.” #EqualPay performance, experience level, sexual orientation, disabilities, #EmployeeLoyalty  Brad Rhoads #TrailBlazer #OneFirstData

42 First Data | Connected | Volume 3 FirstData.com/Connected 43 Technology relevant to the consumer,” says Nigel So, banks have stepped up, have started There are Motyer, who heads up First Data’s Direct to “shake off” the old stodgy perceptions Acquiring Business in EMEA and sits and are beginning to innovate in on the Board of Directors at First Data response to consumer needs. Recently, certain things Europe. “Why did PayPal® become so major banks collaborated to create their all-pervasive? Because it was the only own fintech P2P platform called Zelle®, method of payment that you had on which allows account holders to transfer Fintech in life that eBay – and the consumer loved eBay.” cash instantly over apps or online. you expect to Consumers also love a new way to pay Meanwhile, the fintech world is actively their friends and family, via person-to- seizing ground once monopolized by person micropayments. Early versions banks. SoFi® is an online company that Bank Fusion be boring. allowed for easy payments via text provides personal loans, mortgages, messages. Now, person-to-person and student loan refinancing, mostly For example, rice cakes, micropayments live on a platform nearly targeting Millennials.5 GreenSky® offers waiting rooms, stories indistinguishable from social media, a instant loans for home improvements,6 about rocks – and certain no-go zone for banks.4 and Avant® offers loans to consumers things that you hope will with low credit scores.7 be boring like visits to the “Banks, traditionally, were very slow dentist and travel by plane. to adopt new technology. They were First Data®, a leading fintech and not reluctant to jump into these new areas,” a bank, is a player in the space as well, Along the boring/non- says Motyer. “I worked at a bank for giving consumers more options for boring continuum, we many years, and there was a great managing their money with Money want our banks to nervousness about social media. But Network®, their comprehensive electronic be steadfast and reliable. that’s all changing.” Consumers today payment delivery solution. A consumer choose banks for their service, without can receive their pay electronically, So, really, we kind of want banks to be bias as to whether they’re traditional easily manage finances using the boring. They control our life savings, brick-and-mortar or all online. Money Network® Mobile App, and mortgages, and college loans – you know, choose from multiple no-cost important stuff. So, it’s hardly surprising options for accessing wages.8 that even during an explosion of Wall Street fintech investments, banks have In Europe, there’s been a massive stuck to what they’ve historically done I worked at a bank for acceleration in fintechs vying for a best: store, protect, and loan money. many years, and there share of traditional bank services due to new rules that have come into effect. But now, new technologies and a was a great nervousness This January, the Revised Payments changing consumer environment are about social media. Services Directive (PSD2) ushered in forcing banks to act more like fintechs mandatory open Application Program and vice versa. The result is a hazy But that’s all changing. Interface (API) protocols for banks, fusion of the two, with new battle lines allowing third-party vendors to push or and even reluctant cooperation. Nigel Motyer pull payments and data directly to and Board of Directors | First Data Europe from customer accounts.9 Early fintech pioneers like Quicken® and MS Money reimagined the banking experience for first adopters in the emerging digital age (Quicken first came out 34 years ago).1 They relied on partner banks to make their data available in proprietary formats that could then be manipulated into electronic spreadsheets.2 Over the years, these companies added services like electronic billing and online bill pay, but the banks themselves took a little longer.3

Now, changing consumer habits are making it clear to banks, either get with the times or lose business. “It’s come into sharp focus that banks need to become

 Brad Rhoads  Jeffrey Bell + brahndi Asadi

44 First Data | Connected | Volume 3 FirstData.com/Connected 45 Business

First Data’s Vice President of International eCommerce. “They’ve got Banks that embrace all of these companies coming in with requests, and now with their servers open banking will being interconnected, they’re on the lookout for anything nefarious.” profit from a potential But despite the caution, banks are revenue uplift of 20 seeing great incentive to innovate. An Accenture study found “banks that percent, whereas embrace open banking will profit from a potential revenue uplift of 20 percent, those failing to do so whereas those failing to do so risk losing 30 percent to disruptive industry risk losing 30 percent players by 2020.”11 to disruptive industry With that much at stake, the number players by 2020. of fintech newcomers is growing. A Capgemini fintech report identified THE POWER Accenture $110 billion in new capital since OF 2009. And nearly 90% of the fintechs surveyed, say they want collaborative PARTNERSHIPS With PSD2, and an earlier effort in the partnerships with traditional firms.12  Brad Rhoads  greg gatlin U.K. called Open Banking,10 regulators are seeking to break the monopoly on So, to reassert some control, and to The revised Payment Services Directive DVR itself; rather, it was TiVo’s user-interface to communications is now at the heart of the financial services enjoyed by banks and avoid being disintermediated, most of (PSD2) is a wake-up call for traditional software that created the look and feel of latest rush for partners. First Data® is bringing even major credit card providers such as Europe’s largest banks have created financial institutions. Over the last 30 years, digital recording, providing the template that together major players across verticals to Mastercard® and Visa® – both of which their own fintech incubators, from Europe’s banks have plodded along with the companies still emulate today.3 showcase their desired brands right in the are based in the U.S. Now, any vendor which they can home-grow and same centuries-old business model while car’s cockpit. with at least one EU-registered entity implement new technologies. Citi, financial technology companies (fintechs) Satellite programmer DirecTV® understood can apply to become a Payment Initiation Barclays and ING have some of the most have nipped at the crumbs left behind. The the implications immediately, and rather than Since First Data already works with companies Service Provider (PISP). prolific.13 The EU is also working on a tide has turned, and now, those fintechs can spending several years and millions of dollars we all know and love to help create secure and draft plan to create a regional fintech However, a separate study commissioned match the banks’ massive financial resources. to create its own device, it partnered with TiVo frictionless mobile app payment experiences “PISPs have the ability to initiate a incubator with cybersecurity topping the by First Data reveals a silver lining: And, more importantly, they have access to to provide DVRs to its 10 million subscribers.4 for customers, we’re bringing them to the party payment on behalf of somebody else,” list of its priorities.14 greater challenges create greater the banks’ hard-won customer lists. As Simultaneously, the creators of TiVo recognized as well. Soon, those same app experiences will says Motyer. “And, if you register as opportunities. The report says the a result, a study by PwC shows 82% of that they essentially had a firmware product. be replicated on the console, where menus, such, you can open up your checkout Based on the Capgemini report, banks open API concept has applications that financial industry incumbents are now They understood that their limited manufac- rewards cards, and wallets will be preloaded payments to allow that person-to-person believe this hybrid is a winning strategy will lead to innovations in all areas of looking to form partnerships in order to turing expertise couldn’t compete against for seamless integration. or peer-to-peer payment. So, you can because customers vastly prefer banking, and soon, third parties will maintain their dominance.1 established electronics makers, so TiVo’s see bigger merchants like Amazon® traditional bank brands over startups. begin to overlay their advancements in founders quickly formed partnerships with In all of these cases, it’s the interface that’s becoming a PISP.” “They are all focused on the idea of – if fraud protection, analytics, and even IT.16 This is nothing new. When legacy industries established electronics firms Thomson and drawing consumers, and it’s the area where we have to publish these APIs, what are confronted with a rapidly changing tech- Samsung to capture more markets.5 legacy firms need the most help. But is that Banks have been inundated with can we do to leverage our own APIs to If that’s true, bankers could soon be nical landscape, forming partnerships makes the moral of this story? After all, Apple is one requests from all sorts of merchants provide value-added services to our loosening their ties, unbuttoning that absolute sense. Companies in the mature That partnership blueprint is alive and well in of the biggest companies in the world, its wanting to register as PISPs and under customers?” says O’Halloran. top button, and rockin’ some Aviators. stages of their lifecycles have an established other industries. After redesigning car dash- interfaces will continue to redefine how we strict rules governing their actions, customer base, excellent name recognition, boards to accommodate costly navigation interact digitally for generations, and yet, Nike they are obligated to provide the APIs. But, becoming more like fintechs access to capital and a wide range of prod- systems, automakers struggled to mirror the and other big players are essentially brand That’s raising serious concerns among won’t be easy, according to a new In This Article: ucts. What they lack is startups’ ability to be user interfaces of the new smartphones. marketers, not manufacturers. Not even traditional banks in regards to customer report by Accenture and the Partnership nimble, innovative, lean and disruptive.2 Worse, car buyers began rejecting the added Coca-Cola® bottles its own soft drinks.8 These security and fraud. Have we mentioned Fund of New York. Not only does it costs of expensive and less intuitive in-car titans do what they do best, and then bring in First Data has a suite of best-in-class confirm that their methodical corporate #ElectronicBanking It’s a truism born out over decades of inno- navigation systems in favor of mobile apps.6 strong partners to realize their final vision.  security and fraud tools for businesses culture clashes with the entrepreneurial #MobilePayments vation, and one that repeats itself across a So, major manufacturers partnered with Apple of all sizes? – Yes, shameless plug. speed of fintechs, but it also shows #P2P range of industries. Just think back to the CarPlay and Android Auto to transport those they are reluctant to toss out #Innovate In This Article: year 2000 when VCRs became (practically) apps into the head unit.7 “They’re quite nervous, as you’d decades-old infrastructure and #fintech obsolete. Cheap DVD players were flooding #TideHasTurned suspect,” says Peter O’Halloran, update their technology.15 the market, and a startup called TiVo rolled Bringing this cycle full circle, the space #BrandMarketing out a new type of Digital Video Recorder inside the automotive head unit that controls #PSD2 (DVR). The disruptive innovation wasn’t the everything from infotainment and navigation

46 First Data | Connected | Volume 3 FirstData.com/Connected 47 Digital Commerce

The drivers also love it, because they get from the action. And, Clover continues to paid immediately upon request. The app innovate, with products like Clover Flex, The automatically charges the total fare to a mobile POS which can be carried straight the passenger’s card, which is processed to stadium seats or restaurant tables scene via First Data’s dynamic routing engine without the need for customers to stand A Glimpse Behind the Curtain through the lowest-cost payment network. in lines, and Clover Go, a smartphone- At any point, the driver can instantly compatible POS that can take any type deposit their profits into their bank of payment and wirelessly connects to is a account via their debit card. The rideshare desktop POS. “Merchants are rethinking companies residual is also automatically how they do business,” Schulze says, classic. calculated and retained.1 There’s no “with these devices, they can check back-office processing, no timecards, and people out in the aisles.” no employee checks to cut – just easy The magical, larger-than-life automatic payments. Booker, which can be found in the Clover wizard from “The Wizard of Oz,” App Market, is an app that allows salons is finally exposed by Toto. The Processing via the lowest-cost network and spas to schedule appointments, tiny dog pulls back a curtain is an added benefit itself. “Gig economy manage customers, send appointment to reveal … a human being? merchants love our highly differentiated reminders and yes, handle payments. A carnival showman who’s marketplace solution, as it helps them Accessible to both the salon and optimize payments from the rider to customers, the app keeps payment frantically pulling at levers, the driver,” Sheth says. “When a rider’s information on file to make customer spinning dials and barking payment comes through from any debit checkout faster and easier, and allows into a microphone, all to keep card, First Data’s dynamic routing engine customers to make advanced deposits up the illusion of being “great determines the most cost-effective route and pay for products online. and powerful.” Hopelessly, he and processes the payment in real-time. bellows, “pay no attention to that For drivers it means instant cash flow, In the medical sphere, there’s CareCloud, so they can buy gas, food, or pay for which enables patients to check in, fill out man behind the curtain!” repairs. It’s a seamless experience for the paperwork, and pay without stopping at His reasoning is simple. If Dorothy and merchants, drivers, and riders. We make the front desk. her friends are jolted away from their user everything happen behind the curtain.” experience to contemplate how it’s all done, Next up on the horizon, says Schulze, will they’ll grow disenchanted – and all the be technology that enables consumers to magic will dissolve into simple mechanics. use smartphone facial-recognition apps We make everything to pay for merchandise and services in Today, in the “real world” of commerce, happen behind the store without having to hit a checkout merchants are seeking solutions that can the curtain. lane. These innovations are already in trial deliver that same magic to customers. Nandan Sheth runs, he says, pointing out that Google is One way to do it is by making the actual SVP | Debit Solutions | First Data testing facial-recognition payments in the payment process frictionless – something Bay Area. that is completed securely in the Today, countless other gig-economy background by using customer account companies like Rover, a dog-walking First Data is working hard behind the information on file. service; TaskRabbit, a personal concierge scenes to make all of these payment service; and Airbnb, a peer-to-peer home solutions a reality, pulling the levers, “Marketplaces and gig economy merchants rental marketplace are using hidden and spinning the dials to make the want payments to disappear into the payments as a competitive advantage. user experience – as Dorothy might background, not be an additional feature,” say – magical.  says Nandan Sheth, Senior Vice President “Brick-and-mortar merchants are also of Debit Solutions at First Data®. looking for ways to keep point-of-sale (POS) payments out of sight”, says Mark Schulze, Ride-sharing companies, with the help of Co-founder of Clover and Vice President First Data, were some of the first to pioneer of Business Development at First Data. this type of frictionless commerce as a To deliver this type of experience, Clover way to engage customers. Travelers simply has teamed up with Bypass Mobile which In This Article: summon a car with their app, accept the allows customers to pay for food and other cost, and ride to their destination. When concessions right from their seats at more #UserExperience  Lisa Schoolcraft they get there, they hop out without than 300 sports and entertainment venues. #SeamlessPayments  Wizard: Greg Hildebrandt stopping to pay the driver – no awkward Customers can then skip the checkout line #CloverFlex  Collage: Christopher Sanna moment searching for a few bucks to leave and retrieve their food from a special pick #Booker as the tip. up counter to cut down their time away #CloverGo  Brad Rhoads  Greg Hildebrandt  Christopher Sanna

48 First Data | Connected | Volume 3 FirstData.com/Connected 49 Consumer Trends

THE COMING CONSUMER STORM: LINKSTERS’ IMPACT ON RETAIL, COMMERCE, AND PAYMENTS

 Brad Rhoads + Anita j. Finkelstein  Christopher Amaral  Christopher Sanna

50 First Data | Connected | Volume 3 FirstData.com/Connected 51 but for some reason over “It’s beneficial for companies Because they’ve never known head directly to the store. understand that they also Generational marketing the past 30 years, to reach out to them an unconnected world, they Two-thirds of them say they want to “save the world.” each time a new age group today because they’re automatically gravitate to frequent stores more if they’re is identified, merchants and already making demands social media and look to able to check ahead of time.7 They are much more socially is not a new concept. advertisers begin a frantic on household spending,” trusted influencers to help active, more accepting of scramble to figure out what says Meagan Johnson, a them form their opinions. “Physical stores are gender equality and LGBTQ they want and how to connect professional speaker who “YouTube is the sweet spot responding by becoming rights, and much more open with them. Before there were calls herself a generational for them, where they go smaller, but also more to all points of view than Millennials there was Gen X, humorist. Johnson chronicled to get information about profitable per square foot,” generations past.9 and before that, there were the rise of Gen-Z in her book, brands,” says Johnson. “When says Glenn Fodor, who heads the Baby Boomers – each Generations, Inc. companies latch on to social up Competitive Intelligence A perfect example of the group with a unique set of media influencers to sell at First Data®. “By using way Linksters are brushing expectations, experiences, The first generation in history products, Linksters are very algorithms based on online aside the “seen-and-not- generational history, that has had easy access to suspicious. They’ll go to purchases in the local area, heard” notions of their lifestyles, values, and the Internet, smartphones, YouTube to find out if those stores can tailor their stock elders can be found with the demographics that influence apps and social media influencers are being paid to with only the products in the students at Parkland High their buying behaviors.1 since birth, technology sell the brand.” highest demand. Customers School. Politicians and other heavily influences how they observers were amazed when And now, just as marketers approach each other and the students responded to were beginning to feel the marketplace. And she Of course, Gen-Z’s notoriously their school shooting with they’d mastered marketing points out the Linksters, astonishing clarity and cause. to Millennials, along came as she likes to call them, flitting attention spans are They used their mastery of Generation Z (or Gen-Z), which already control $600 billion often perceived negatively and social media to organize, includes anyone aged 2 to 19. in U.S. sales. “Some older protest, and, yes, be heard.10 Once Women’s Wear Daily Millennials remember using blamed on their obsession with proclaimed this group to be dial-up modems to get online, By recognizing this as a key “the next big retail disruptor,” and Wi-Fi wasn’t available social media, but research has differentiator, merchants can the frenzy began all over everywhere,” Johnson says. found differently. look for opportunities to tailor again. Then, the research “Linksters though, have been their Gen-Z marketing to tap group J. Walter Thompson linked-in from day one.” into their passion to do good, Intelligence proclaimed them Of course, Gen-Z’s notoriously can then order online and pick and to right what’s wrong.11 to be “Millennials on steroids.” Linksters value authenticity flitting attention spans are up at the store the same day.” No wonder retailers are above all else. Johnson says, often perceived negatively Like any other generation, freaking out.2 “This generation wants to and blamed on their To accommodate Gen-Z’s they’re just navigating the know, ‘how is this product obsession with social media, need for speed, Amazon world they live in. Merchants But, according to generational like me?’” She explains but research has found says it’s using real-time who embrace their need for expert David Stillman, that they are resistant to buying differently.5 A company customer shopping data to authenticity, their dedication characterization is misleading something that has a heavy that’s now part of Accenture keep shelves stocked at its to social media and their and even offensive to members brand image. “They want studied the issue and found Amazon Go location. The social activism, will easily of Gen-Z, who are distinctly clothes that look like what that it’s actually because Seattle experiment has just attract their attention and, different from Millennials. real teens are wearing, and they’ve developed highly completed several months of as a result, capitalize on their Gen-Z’ers are aware of images in advertising that evolved “filters” that give tests for cashier-less shopping – market value.  the negative stereotypes look just like them.” them the ability to quickly something nearly 40% of tossed around about their sort through limitless sources Gen-Z’ers say they would like.8 predecessors, and they’re Rather than expensive of information.6 Having grown working hard to blaze a designer brands, Linksters up in a completely connected Both Walmart®7 and Sam’s different path. Retailers who are more likely to buy environment, their brains Club8 have also introduced treat them the same are bound Target’s Art Class line, which discard useless data quickly, “Scan & Go” smartphone for failure.3 is designed for and marketed and “trending” topics become apps that allow customers to Linksters. “The kids in the more important, especially to scan each item in their In This Article: photos are wearing practical when trusted sources point cart and pay through their clothes – leggings and printed the way. digital wallet, avoiding #Realism hoodies that are colorful checkout lines. #AlwaysOn and fun,” Johnson says. As a result, they have no time #GeoTargeting “And, the kids in the ads or appetite for browsing. They So, yes, Linksters, like all of #SocialActivism look like kids. They don’t prefer to go directly to store us, want to save time. But to #GenerationGap look like 20-year-olds websites to confirm what they truly understand the Gen-Z #GenZ modeling clothes for teens.”4 want is available, and then mindset, retailers must

52 First Data | Connected | Volume 3 FirstData.com/Connected 53 Lifestyle

8 Mobility Hits Its Groove 1 Now available in your car. Google Assistant. Accessed Mar 2018. https:// 40 Tackling the Pay Gap 1 Year of the Woman? Female Candidates Could Win Big in 2018, But We’re Still Financial Literacy in the assistant.google.com/platforms/cars/ | 2 Amazon agrees to buy Ring, maker of video doorbells. USA Today. Far From Parity. Newsweek. Feb 2018. http://www.newsweek.com/women-now-hold-historic-number-state- Feb 2018. https://www.usatoday.com/story/tech/2018/02/27/amazon-agrees-buy-ring-maker-video- legislature-seats-were-still-more-100-803742 | 2 The Women, People of Color, and LGBTQ Candidates Who Made Residents of the doorbells/378610002/ | 3 Why Amazon is spending a fortune to put cameras in your homes. PaymentsSource. Mar History in the 2017 Election. Vox. Nov 2017. https://www.vox.com/policy-and-politics/2017/11/8/16622884/ 2018. https://www.paymentssource.com/news/why-amazon-is-spending-a-fortune-to-put-cameras-in-your- women-minorities-lgbtq-candidates-made-history | 3 Women and Leadership. Pew Research. Jan 2015. http:// gigosphere face homes | 4 Facing the Future: Face recognition technology in Japanese daily life. NEC. Sep 2017. https://wisdom.nec. www.pewsocialtrends.org/2015/01/14/women-and-leadership/ | 4 American Community Survey. U.S. Census com/en/technology/2017092802/index.html Bureau. Accessed Mar 2018. https://factfinder.census.gov/faces/tableservices/jsf/pages/productview. financial challenges xhtml?src=bkmk 10 Outsmarting Fraudsters 1 First Data Security & Fraud Solutions Internal Data | 2 Trustwave 2017 much different Global Security Report | 3 https://www.idtheftcenter.org/Identity-Theft/how-much-is-your-identity-worth- 44 Fintech & Bank Fusion 1 About Us. Quicken. Accessed Apr 2018. https://www.quicken.com/about-us on-the-black-market.html | 4 https://www.bba.org.uk/wp-content/uploads/2015/02red24+Cybercrime+Top+10+ | 2 Connection Types in Quicken. Quicken. Accessed Apr 2018. https://www.quicken.com/support/how-quicken- from 9-to-5’ers. countries+where+attacks+originate+-++2015.pdf | 5 Brad Rhoads, “A Light in the Shadows,” Connected connects-your-bank | 3 Microsoft Announces Money 97, Making Managing Personal Finances Even Easier. Microsoft. magazine, Volume 2, 2017 | 6 First Data Network & Security Solutions Internal Data Sep 1996. | https://news.microsoft.com/1996/09/30/microsoft-announces-money-97-making-managing- GIG ECONOMY personal-finances-even-easier/ | 4 Send Money and Make Purchases. Venmo. Mar 2018. https://venmo.com/ 12 Rewards Revolution 1 The Coming Branded-Currency Revolution. Harvard Business Review. Jul 2013. | 5 A Finance Company That Can Help You Get Ahead. SoFi. Mar 2018. http://www.sofi.com/ | 6 The Power to Close One sunny Saturday afternoon Some speculate that since working to reverse this trend, Financial apps like First Data’s https://hbr.org/2013/07/the-coming-branded-currency-re | 2 The Evolution of Branded Currency: 2017 Prepaid More Deals. GreenSky. Mar 2018. https://www.greensky.com/ | 7 Over 600,000 People Have Experienced the 8 last fall, an authoritative rap Millennials crave new but they face strong headwinds Money Network® are taking Consumer Insights Study (Rep.). (2017, August). Retrieved February 26, 2018, from First Data Corporation website Convenience of Personal Loans Through Avant. Avant. Mar 2018. https://www.avant.com/ | Money Network. Money https://www.firstdata.com/en_us/all-features/consumer-insights-2017.html| 3 The Evolution of Branded Network. Mar 2018. https://www.firstdata.com/moneynetwork/index.html | 9 PSD2: How Can Banks Seize the 8 echoed from my front door. It experiences, they’re naturally from gig employers. some of the guesswork out of Currency: 2017 Prepaid Consumer Insights Study (Rep.). (2017, August). Retrieved February 26, 2018, from First Data Opportunities? Accenture. Accessed Apr 2018. https://www.accenture.com/us-en/insight-psd2-opportunities- 10 was the two-knuckled knock of prone to hop from one job to the process. It offers a Piggy Corporation website https://www.firstdata.com/en_us/all-features/consumer-insights-2017.html banks | Setting the Standards That Put Customers in Control of Their Money. UK Open Banking. Mar 2018. https:// www.openbanking.org.uk/ | 11 Open APIs in Banking Services. Accenture. Jan 2017. https://www.accenture.com/ a 30-something who’s done this the next. That idea lost traction Several proposals are pending Bank feature to help people 14 The Innovators 1 What is Google Express? Everything you need to know. Digital Trends. Feb 2018. gb-en/blogs/blogs-open-apis-reimagining-retail-banking | 12 Capgemini’s World FinTech Report 2018 Highlights 2 hundreds of times before. As after a Pew Research Center to help independent workers. set aside a portion of their https://www.digitaltrends.com/home/what-is-google-express/ | Walmart Expands Online Grocery Delivery Symbiotic Collaboration as Key to Future Financial Services Success. Capgemini. Feb 2018. | https://www. to 100 Cities. The New York Times. Mar 2018. https://nyti.ms/2Drqsu2 | 3 Your Delivery Has Arrived…With All capgemini.com/news/capgeminis-world-fintech-report-2018-highlights-symbiotic-collaboration-as-key-to- the door swung open, a scruffy- study showed job-hopping is One idea is to tax all gig earnings every day to cover Your Walmart Goodies. Walmart. Aug 2017. https://blog.walmart.com/innovation/20170821/your-delivery- future-financial-services-success/ | 13 Top 10 Fintech Incubators and Accelerators in Europe 2018 Update. 4 bearded dad lowered a bike just as pervasive among all earnings a small amount, big-ticket items. First Data’s has-arrivedwith-all-your-walmart-goodies | Amazon Leads Online Grocery Sales at 18% of Market, Yet Four Fintech News. Feb 2018. http://fintechnews.ch/fintech/top-10-fintech-incubators-accelerators-europe/15564/ Competitors are Finding Success by Not Attempting to “Out-Amazon Amazon”. Cision PR Newswire. Nov 2017. | 14 Cybersecurity Dominates EU Fintech Action Plan. Finextra. Feb 2018. https://www.finextra.com/ 4 helmet to his side and smiled, generations at a certain age. maybe 5%, with the money Innovation Lab is now in the https://www.prnewswire.com/news-releases/amazon-leads-online-grocery-sales-at-18-of-market-yet- newsarticle/31631/cybersecurity-dominates-eu-fintech-action-plan?utm_medium=newsflash&utm_ 15 “Hey! Jerry from TaskRabbit. going into a general account field, actively collaborating with four-competitors-are-finding-success-by-not-attempting-to-out-amazon-amazon-300551867.html | source=2018-2-6&member=96635 | Mind the Gap: Addressing Challenges to Fintech Adoption. Accenture/ 5 Groceries Delivered in 1 Hour! Whole Foods. Accessed Mar 2018. https://www.wholefoodsmarket.com/service/ FinTech Innovation Lab. Feb 2018.http://24708-presscdn.pagely.netdna-cdn.com/wp-content/uploads/2018/02/ You got some furniture that The actual reasons are much that would be portable from job independent contractors to order-groceries-delivery | 6 Amazon starts free, 2-hour Whole Foods deliveries in fresh test of grocery model. USA FINTECH-REPORT_MIND-THE-GAP.pdf | 16 PSD2 Workshop for First Data. Accenture. Dec 2016. Page 31. needs assembling?” more complex. And, span to job. But gig companies fear create additional new products Today. Feb 2018. https://www.usatoday.com/story/tech/news/2018/02/07/amazon-launches-whole-foods- deliveries-four-cities/318337002/ | 7 What We Know about the Amazon and Whole Foods Shopper. Fortune. Jun 44 The Power of Partnerships 1 Redrawing the lines: FinTech’s growing influence on Financial Services. everything from the difficult the “portable earnings” plan and services that can better 2017. http://fortune.com/2017/06/28/whole-foods-amazon-shopper-data/ | 8 Amazon’s Meal Kit Move Will PwC. Mar 2017. https://www.pwc.com/jg/en/publications/pwc-global-fintech-report-17.3.17-final.pdf | 2 Banks Jerry is part of a growing job market Millennials would open them up to more meet their unique needs. Be More Than a Blue Apron Competitor. Fortune. Jul 2017. http://fortune.com/2017/07/17/amazon-meal-kit- and fintech startups are working together to accelerate financial inclusion. Medium. Jul 2017. https://medium.com/ blue-apron/ | 9 Domino’s Becomes A Tech Company That Happens to Make Pizza. NPR. Nov 2014. | https://www. accion/banks-and-fintech-startups-are-working-together-to-accelerate-financial-inclusion-33ddf35a7b7 | 3 Why throng of workers with side encountered when they claims from workers wanting npr.org/sections/alltechconsidered/2014/11/04/359829824/dominos-becomes-a-tech-company-that- Did the iPod Win, and TiVo lose? Fortune. Apr 2011. http://fortune.com/2011/04/27/why-did-the-ipod-win-and- 10 4 hustles in the Gig Economy. entered the workforce, which full benefits.9 One thing is certain. If Jerry, my happens-to-make-pizza | Is Domino’s a pizza company or a tech company? Techly. Apr 2017. https://www. tivo-lose/ | DIRECTV, Inc. Encyclopedia.com. Apr 2006. https://www.encyclopedia.com/social-sciences-and-law/ techly.com.au/2017/04/24/dominos-pizza-technology-company/ | 11 Domino’s now lets you order pizza just economics-business-and-labor/businesses-and- occupations/directv-inc | 5 Thomson to stop making TiVo boxes. Estimates show a third of forced them to become more “bokhylla-assembler” was any by launching an app – no clicking required. TechCrunch. Apr 2016. | https://techcrunch.com/2016/04/06/ The Register. Nov 2002. | https://www.theregister.co.uk/2002/11/22/thomson_to_stop_making_tivo/ | 6 Toyota to 12 the U.S. workforce,1 and 162 comfortable with part-time Meanwhile, financial firms are example of the side hustlers’ dominos-now-lets-you-order-pizza-just-by-launching-an-app-no-clicking-required/ | Good news, stop buying car navigation systems from Denso. Nikkei Asian Review. Aug 2015. https://asia.nikkei.com/Business/ pizza-loving parents: Domino’s now has a baby registry. Fast Company. Dec 2017. https://www.fastcompany. Companies/Toyota-to-stop-buying-car-navigation-systems-from-Denso | 7 Apple CarPlay vs Android Auto. Tech million people in the U.S. and work, to the explosion of the working to educate contractors hustle, it’s hard to believe the com/40502867/good-news-pizza-loving-parents-dominos-now-has-a-baby-registry | 13 Domino’s Wedding Radar. Jan 2018. https://www.techradar.com/news/apple-carplay-vs-android-auto | 8 The Coca-Cola Company 14 Europe combined2 perform online platforms that make on financial literacy. A recent Gig Economy is really dying a Registry. Domino’s. Access Mar 2018. https://www.dominosweddingregistry.com/ | IKEA has bought Completes Refranchising of Company-Owned Bottling Operations in the United States. Coca-Cola. Oct 2017. http:// TaskRabbit. TechCrunch. Sep 2018. https://techcrunch.com/2017/09/28/ikea-buys-taskrabbit/ | 15 Amazon www.coca-colacompany.com/press-center/press-releases/tccc-completes-refranchising-of-company-owned- independent work, including these opportunities possible, study shows that more than slow death. And, yes, he even Home Services Gets Its Official Launch. TechCrunch. Mar 2015.https://techcrunch.com/2015/03/30/amazon- bottling-operations-in-us 16 part-time “contractor” jobs to the desire of Gen Y’ers to half of side hustlers use the got that extra ten bucks for home-services-gets-its-official-launch/ | The Lowes-Porch Partnership. Lowes. Accessed Mar 2018. https:// www.lowes.com/l/lowes-and-porch.html | 17 Lowe’s Next-Generation VR Experience, Holoroom How To, Provides 48 Payments Everywhere 1 Making Seamless E-Payments a Reality. Strategy + Business. Jul 2017. for platform-businesses like blaze their own path out of money they earn to pay for walking my dog. After all, he On-Demand DIY Clinics for Home Improvement Learning. Lowes. Mar 2017. https://newsroom.lowes.com/ https://www.strategy-business.com/article/Making-Seamless-E-Payments-a-Reality?gko=227b8 18 TaskRabbit, Uber, Lyft, and the mainstream.5 basic expenses, like food was already there.  news-releases/holoroom-how-to/ | Amazon’s iOS and Android apps now feature augmented reality shopping. TechRadar. Feb 2018. https://www.techradar.com/news/amazons-ios-app-now-features-augmented- 50 Gen-Z Rising 1 The Next Generation Gap. Delta Sky Magazine. April 2017. http://deltaskymag.com/ 3 Upwork. On this gig, Jerry will or housing. That makes reality-shopping | 19 Lowe’s Gives Visualization A Makeover with Two New Augmented Reality Apps. Lowes. Sep Sky-Extras/Favorites/The-Next-Generation-Gap.aspx | 2 Generation Z. Savvy, Connected, Changing the World. J. 20 3 make $30 putting together a Whatever the reason, either by fluctuations in earnings even 2017. https://newsroom.lowes.com/news-releases/new-augmented-reality-apps/ | Store gift cards in one Walter Thompson Intelligence. May 2015. https://www.jwtintelligence.com/trend-reports/generation-z/ | What location. Walmart. Accessed Mar 2018. https://www.walmart.com/cp/walmart-pay/3205993 | 21 You can now Is Generation Z, And What Does It Want? Fast Company. May 2015. https://www.fastcompany.com/3045317/ Swedish-inspired bookshelf, as I choice or necessity, residents of more frightening, as workers buy Nike gear on Amazon and Instagram. Circa. Jun 2017. https://www.circa.com/story/2017/06/30/business/ what-is-generation-z-and-what-does-it-want | 4 Target’s New Fashion Line Allows Kids to Get Creative with Their 22 5 hurry off to catch a flight. “Need the gig-o-sphere face financial worry there won’t nike-confirms-it-will-start-selling-its-products-directly-on-amazon-and-instagram | Nike Makes It Style. Target. Jan 2017. https://corporate.target.com/article/2017/01/art-class | Attention Span Statistics. Official: It Will Sell on Amazon and Instagram. Fortune. Jun 2017. http://fortune.com/2017/06/30/nike-amazon- Statistical Brain. July 2016. https://www.statisticbrain.com/attention-span-statistics/ | 6 What Is Generation Z, me to walk your dog, too?” he challenges that are much be enough to make instagram/ | 23 Industry sees Coca-Cola and Nike as leading exponents of social. IAB Research. Dec 2015. https:// And What Does It Want? Fast Company. May 2015. https://www.fastcompany.com/3045317/what-is-generation- 24 7 asks. “Just ten bucks since I’m different from 9-to-5’ers. They ends meet. www.iabuk.com/press-release/industry-sees-coca-cola-and-nike-leading-exponents-social | Nike will z-and-what-does-it-want | Infographic: How Gen-Z Wants to Shop and Pay. NASDAQ. Nov 2017. https://www. also sell sneakers on Instagram. Engadget. Jul 2017. https://www.engadget.com/2017/07/05/nike-sell-on- nasdaq.com/article/infographic-how-gen-z-wants-to-shop-and-pay-cm883047 | 8 Infographic: How Gen-Z already here.” have no access to company instagram/ | 25 Gatorade GX Platform. Co.Design. Accessed Mar 2018. https://www.fastcodesign.com/product/ Wants to Shop and Pay. NASDAQ. Nov 2017. https://www.nasdaq.com/article/infographic-how-gen-z-wants-to- 26 9 benefits like 401(k) plans or gatorade | Lancôme Le Teint Particulier Custom-Made Foundation. Nordstrom.com. Accessed Mar 2018. https:// shop-and-pay-cm883047 | Getting Gen-Z Primed to Save the World. The Atlantic. Accessed Mar 2018. http:// shop.nordstrom.com/c/lancome-le-teint-particulier www.theatlantic.com/sponsored/allstate/getting-gen-z-primed-to-save-the-world/747/ | 10 The March for Our 6 Researchers studying the subsidized health insurance Lives, explained. Vox. Mar 2018. https://www.vox.com/2018/3/19/17139654/march-for-our-lives-dc-march-24- 1 11 growth of the side hustle offer and their income can fluctuate 35 The New Big Data Big Data in Healthcare: Paris Hospitals Predict Admission Rates Using Machine protest | Elusive Gen-Z: How to Market to the Unmarketable. Forbes. Dec 2017. https://www.forbes.com/sites/ Learning. Forbes. Dec 2016. https://www.forbes.com/sites/bernardmarr/2016/12/13/big-data-in-healthcare- forbesagencycouncil/2017/12/21/elusive-gen-z-how-to-market-to-the-unmarketable/#29cb3bd2ca21 theories on why so many wildly as gigs pour in and then paris-hospitals-predict-admission-rates-using-machine-learning/#16bef3ec79a2 | 2 Cancer Moonshot Blue 1 younger people, particularly dry up just as suddenly. In Ribbon Panel. National Cancer Institute. Sep 2016. https://www.cancer.gov/research/key-initiatives/moonshot- 54 Financial Literacy in the Gig Economy Intuit: Gig Economy Is 34% of U.S. Workforce. CNN. May cancer-initiative/blue-ribbon-panel | 3 Cancer Cures Could Already Exist in Big Data. Fast Company. Sep 2016. 2017. http://money.cnn.com/2017/05/24/news/economy/gig-economy-intuit/index.html | 2 Independent Work: Millennials, are working second addition, new U.S. tax laws https://www.fastcompany.com/3063530/cancer-cures-could-already-exist-in-big-data | 4 9 Examples of Big Choice, Necessity, and the Gig Economy. McKinsey & Company. Oct 2016. https://www.mckinsey.com/global- 3 jobs or even have primary are making it harder for this Data Analytics in Healthcare That Can Save People. Datapine. May 2017. https://www.datapine.com/blog/ themes/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy | Connecting Talent big-data-examples-in-healthcare/ | 5 Number of music streaming subscribers worldwide from 2010 to 2020 (in with Opportunity in the Digital Age. McKinsey & Company. Jun 2015. https://www.mckinsey.com/global-themes/ jobs that are free from the group to collectively bargain millions). Statista. Accessed Mar 2018. https://www.statista.com/statistics/669113/number-music-streaming- employment-and-growth/connecting-talent-with-opportunity-in-the-digital-age | 4 Millennials Aren’t Job-hopping 6 constraints of stale offices, bad and be recognized as full-time subscribers/ | Dance Hit Song Prediction. Journal of New Music Research. Sep 2014. http://antor.uantwerpen. Any Faster Than Generation X Did. Pew Research. Apr 2017. http://www.pewresearch.org/fact-tank/2017/04/19/ be/wordpress/wp-content/papercite-data/pdf/herremans2014dance.pdf | 7 About the Music Genome Project©. millennials-arent-job-hopping-any-faster-than-generation-x-did/ | 5 Why the Gig Economy Is the Best and Worst 7 bosses, and set hours. employees. Some states are Pandora. Mar 2018. https://www.pandora.com/about/mgp | 8 Smart Grid. USC. Mar 2018. http://dslab.usc.edu/ Development for Workers Under 30. Forbes. Jan 2018. https://www.forbes.com/sites/larryalton/2018/01/24/ smartgrid.php | 9 Deep Solar: Data Driven Modeling and Analytics for Enhanced System Layer Implementation. USC. why-the-gig-economy-is-the-best-and-worst-development-for-workers-under-30/#76d1335d6d76 | 6 Financial Mar 2018. http://deepsolar.usc.edu/ | 10 What is NASA doing with Big Data today? Open NASA. Oct 2012. https:// Wellness in the Gig Economy. Enrich. Sep 2017. http://www.enrich.org/blog/financial-wellness-in-the-gig-  Brad Rhoads open.nasa.gov/blog/what-is-nasa-doing-with-big-data-today/ | 11 NASA Open Government 2016 Plan. Open NASA. economy | 7 Overlooked Passage in GOP Tax Bill Would Gouge Gig Economy Workers. Salon. Nov 2017. https:// Jul 2016. https://open.nasa.gov/open-gov/ www.salon.com/2017/11/18/overlooked-passage-in-gop-tax-bill-would-gouge-americas-growing-army-of- gig-economy-workers_partner/ | 8 This State Wants to Offer Universal Benefits to Gig Workers. Fortune. Oct 2017. In This Article: 39 Food For Thought 1 https://smallbiztrends.com/2017/03/big-data-insights-for-small-businesses.html http://fortune.com/2017/10/13/gig-economy-workers-benefits/ | 9 Could a Tax Fix the Gig Economy? The Atlantic. Nov 2017. https://www.theatlantic.com/business/archive/2017/11/gig-economy/544895/ | 10 Over 44 Million Americans Have a Side Hustle. Bankrate. Jul 2017.https://www.bankrate.com/pdfs/pr/20170712-Side-Hustles.pdf #SideHustle #RainyDayFund | 11 Is the Gig Economy Working? The New Yorker. May 2017. https://www.newyorker.com/magazine/2017/05/15/ #SafetyNet #FinancialLiteracy is-the-gig-economy-working #FinancialPeace

54 First Data | Connected | Volume 3 FirstData.com/Connected 55 The ultimate turn-key gift card program for rewards and incentives.

Featured in:

Reach. Reward. Recognize. Incentivize.

Whether it’s for employee gratitude, a sales incentive of consumers or corporate gifts, when you’re inspired to reward or are interested in incentivize, use digital gift cards and send within minutes. receiving a gift card The best choice for bulk gift card orders with absolutely as an employee zero fees and hundreds of retailers to choose from, reward or incentive. you’ll love Gyft® Corporate.

To learn more, visit: business.gyft.com