May 2016 Issue 347 www.electronicpaymentsinternational.com

Money 2020 Europe, (wonderful, wonderful) Copenhagen

•Analysis: Mobile wallets, US •Comment: PSD2 •Profile: Klarna •Country surveys: Denmark, Hong Kong, Saudi Arabia

EPI 347.indd 1 29/04/2016 14:46:18 Multichannel digital solutions for fi nancial services providers

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IE RBI final design.indd 1 17/09/2015 11:21:32 EDITORS LETTER NEWS

CONTENTS Top takeaways from Money 20/20 Europe, Copenhagen NEWS Money 20/20’s inaugural European event was a in the lobbying process 3: NEWS DIGEST runaway success and a total blast, with stories, for direct to pay- themes and arguments exploding, flying and ment systems, says he was FEATURE bouncing around the place more than flying ants “amazed by the engagement of the FCA” and on flying ant day. only two tech providers have been certified out 5: MOBILE WALLETS Top highlights included ’s of ten to accommodate the change in access. US have been slow to introduce own- announced expansion into Europe- it was “They didn’t expect the speed of response from brand mobile wallets for proximity payments. However, Chase Pay may prove to be the only a matter of time. The Chinese payment the regulators and haven’t got up to speed in firestarter, setting an industry benchmark giant is officially extending its offering into time themselves.” that other banks may need to match or risk Europe to serve the ever-increasing numbers Partner, partner, partner... Was there even a losing customers to JPMorgan Chase. Robin Arnfield reports of Chinese travellers to the region. And what session in which speakers were not wholeheart- could and should Europe learn from China edly behind this plan of attack for advancing 8: MONEY 20/20 EUROPE in all things payments and banking? The innovation? BBVA’s Carlos Torres Vila perhaps We hear a great deal talked about a cashless answer is a lot: DBS Bank CIO Neal Cross the strongest advocate of all for this, given society but when someone delivers a shared fascinating insights with EPI on the BBVA’s aggressive acquisition strategy, most manifesto to put it on Europe’s political future of fintech and the threat to banks not notably of Holvi and Atom Banks. agenda, it becomes a bit more compelling. Dave Birch, global ambassador, Consult of fintech start-ups, but of Google. Torres Vila bucked the trend for lambasting Hyperion at Money 20/20 Europe did just Blockchain- is it a goer? It is. And it will be the banks’ legacy systems: “We have a conserva- that. Anna Milne reports platform developing companies rather than the tive approach to change and risk, that’s what 10: MONEY 20/20 EUROPE product-offering ones that will really pave the we do and we do it well; we have a legacy way of way. And as for regulation- yes, regulators glob- doing things which has served us very well and More from the inaugural European conference usually held in Vegas. What ally are behind the development of this and yes, continues to serve us very well- we will make a are the top mistakes and misconceptions it can be regulated. It’s down to building on and multi-billion dollar profit this year as we did last banks and payment start-ups make when plugging in to the open source platform. Monica year and the year before and the year before.” innovating and developing? Anna Milne reports Monaco, founder and MD, Trust EU Affairs: Dave Birch, global ambassador, Consult “Blockchain fulfils 90%of the European Com- Hyperion, showed us how to implement a 11: KLARNA: A STUDY OF SUCCESS mission’s objectives. Regulators are interested.” strategy for change with his manifesto for cash- SURVEY Nancy Hulgrave, anchor CNBC, drew out lessness. Classic ‘who, what, why, when, where’ Blythe Masters’ vast knowledge of blockchain stuff. And with ‘how’ thrown in. This is the stuff 13: DENMARK and distributed ledger technologies to get journalists get out of bed for. straight to the point: is it going to change the High value notes to be removed, retailers to 14: HONG KONG world? Masters: “It already is.” be allowed charge for cash payments and make 15: SAUDI ARABIA Tech trails regulation. In many cases, tech payments free; payment accounts to is actually lagging behind regulation- usually be available free of charge to everybody. COMMENT we’re all harping on about regulation hamper- “Europe needs to put this on its political ing technological advancement but in the UK, agenda,” Birch implored. But don’t take it from 2: PSD2 the ongoing call to widen access to the pay- me, the manifesto highlights are on p8, along- 12: BANK ACCOUNT OWNERSHIP ments systems is enjoying a strong push from side research from First Capital suggesting the 16: QR CODES, SIX PAYMENT SERVICES the Financial Conduct Authority, Payment Sys- cashless cause might face an uphill struggle in tems Regulator and the Bank of England. reality. In the interests of balance, an’ all. < Rich Wagner, on the board of the Emerging Payments Association, and heavily involved A NNA MILNE, [email protected]

Editor: Anna Milne Sub-editors: Nick Midgley, Tom Langfield For more information on Timetric, visit Tel: +44 (0)207 406 6701 our website at www.timetric.com. As a Ray Giddings Email: [email protected] Director of Events: subscriber, you are automatically entitled Tel: +44 (0)203 096 2585 to online access to Electronic Payments Financial News Publishing, 2012 Group Editor: Doulas Blakey Email: [email protected] International. For more information, please Registered in the UK No 6931627 Tel: +44 (0)207 406 6523 telephone +44 (0)203 096 2636 or email ISSN 0956-5558 Email: [email protected] Head of Subscriptions: Sharon Howley [email protected] Unauthorised photocopying is illegal. The Tel: +44 (0)203 096 2636 Reporter: Patrick Brusnahan London Office contents of this publication, either in whole or Email: [email protected] Tel: +44 (0)207 406 6526 71-73 Carter Lane part, may not be reproduced, stored in a data Email: [email protected] London retrieval system or transmitted by any form or Sales Executive: Alexander Koidis Tel: +44 (0)203 096 2586 EC4V 5EQ means, electronic, mechanical, photocopying, Asia Editorial: Xiou Ann Lim Email: [email protected] recording or otherwise, without the prior Tel: +65 6383 4688 Asia Office 1 Finlayson Green, #09-01 permission of the publishers Email: [email protected] Customer Services: Singapore 049246 Group Publisher: Ameet Phadnis Tel: +44 (0)203 096 2636 Tel: +65 6383 4688 Tel: +44 (0)207 406 6561 or +44 (0)203 096 2622 Fax: +65 6383 5433 Email: [email protected] Email: [email protected] Email: [email protected]

www.electronicpaymentsinternational.com May 2016 y 1

EPI 347.indd 1 29/04/2016 14:46:20 Electronic Payments International COMMENT PSD2

Has PSD2 the power to change the game in payments? Lars Tebruegge, an independent payment consultant based in Frankfurt, examines some of the key points of PSD2

he Payment Service Directive (PSD) As their name suggests, these TPPs will be secure communication under the revised Pay- of 2007 is being updated by PSD2 able to initiate payments on behalf of the con- ment Service Directive currently being devel- after much debate between European sumer. As the banks generally do not charge oped from the European Banking Authority institutions and stakeholders. This their customers for a credit transfer, this method (EBA) based in London. T may then be utilised by TPPs. This could cut Amongst other issues, the RTS will define for legislation comes along with a number of other initiatives from the European Com- out several layers of intermediaries or middle- which transactions strong customer authen- mission, for example, the men so that, potentially, costs for the merchants tication (SCA) will be required and how this Regulation, the update of the rules on Anti- are reduced. Of course, the TPPs will bear the can be achieved. Currently many aspects are Money Laundering and a Directive on the burden of regulation and compliance, but they still unclear and handled differently within the Transparency and Comparability of Pay- have an excellent starting position – relying on EU member states. If the interpretation of SCA ment Account Fees. an infrastructure already in place. turns out to be very stringent, it will make all The objectives of PSD2 are manifold and A challenge in building up these payment transactions for which SCA is required cumber- should be studied in detail by companies initiation services is reaching a critical mass on some and will add yet more obstacles to business active in the payment business. One of the both the consumer and merchant side. Consid- already under pressure. key new principles is that Third Party Pro- ering the ease of reaching all consumers with a Consequently, many eyes turn towards the viders (TPP) may access the bank payment bank account on the one side and offering the EBA, which has received 120 consultation account of a customer, if the customer has merchants a very reasonable proposition on the replies to a discussion paper. First statements given a respective mandate to the TPP. Up till other, it seems quite certain, that the European from EBA highlight the necessity to find a fine now, most European banks deny this access to payments market is set for change. balance between usability and security. The anyone other than their own customers. With There are other factors which have a signifi- draft RTS are expected for the summer 2016, PSD2 the banks will need to open up access cant impact on just how much the market will followed by another consultation period. We to accounts. One of the TPP groups defined change. Possibly, the most prominent factor will then have a better understanding as to in PSD2 is the so called ‘Payment Initiation will be the Regulatory Technical Standards whether the RTS and the PSD2 have the power Services’. (RTS) on strong customer authentication and to truly change the game in payments.< Q&A with Rich Wagner, CEO of Advanced Payments Solutions

1. Are banks ready or are they in denial 2. Will this be bad news for the cards working to 'level the playing field'. This is re the work involved in aligning their sector? Should card companies look where change in access to the payments sys- organisations with the upcoming change? to expand their offering to non-card tem will originate. How should they adjust/make the best of payments or partner with FinTech PISP? it? Cards will be around for a long time. Cer- 4. Any other comments for/against/about There are a number of banks actively tainly, there will be innovations within the PSD2? looking at what they need to consider cards market, but I wouldn’t be concerned Whilst I’m not overly bullish for PSD2, I do to comply with the change in regulation. for the big card issuers. These new forms of truly support the concept to drive innova- Banks are not avoiding their responsi- payment will take time to evolve and more tion. I am concered when it comes to the bility in being slow to adjust, they are importantly, to be adopted. So let's first detail of the implementation of the regula- simply trying to ensure compliance and hope that we can eliminate cash - people tions. If we allow PSPs to be given access understand their obligations. In theory, have been discussing the 'death of cash' for to customer data, the number of regulated giving PSPs access to bank data and cus- decades, but it still represents nearly 50% of entities are going to grow substantially. My tomer information is a sensible approach all transations. Cards are still to eliminate concern is whether the regulators are ready to ensure customers are provided with a cash, so I’m in no doubt we won’t see PISP to adequately oversee these emerging com- better and more diverse payment/bank- eliminating cards anytime soon. panies, for which they may not have the ing experience, through value-adds and resources to do so, nor the money to build improved digital solutions. 3. Will PSD2 help to increase innovation out teams that can. But we must remember, PSD2 is and challenger PSPs hence putting extra I've always been a believer that regula- demanding banks (in a secure way) pro- momentum behind the drive to make the tors, especially like the FCA in the UK, vide very sensitive data to PSPs on behalf UK payments system more accessible to have the best interests of the customer at of their customers. Customer data - per- smaller players? the forefront of their activity, but even the sonal finance information of our life's Yes, new innovations will be created. More regulators know the risks of taking their history of making and receiving payments ways to pay and to be paid will emerge, but 'eye off the ball'– this is how the banking and accessing finance - demands careful the more challenging question is whether or crisis resulted. So although I'm bullish when consideration of the security protocols not they will be adopted by the mainstream. it comes to innovation within the space, I involved, when it is shared in the digital In my opinion, these two activities are simply do not want a payment crisis to world. My question is not whether banks mutually exclusive. Innovation will be cre- happen due to the mismanagement of a are ready, but are customers ready to ated by PSPs, through their increased access few PSPs who may get away with activity allow intermediaries access to their data? to banks’ customer data, and their ability due to the lack of supervision from the local I'm not so sure. to leverage it in better ways. The PSR is regulator.<

2 y May 2016 www.electronicpaymentsinternational.com

EPI 347.indd 2 29/04/2016 14:46:20 Electronic Payments International DIGEST NEWS

REGULATION Transferwise expands operations to Canada

UK-based TransferWise has launched its peer ferWise.com, and will be available on the In the UK, TransferWise got the backing to peer (P2P) international money transfer TransferWise iOS and Android apps in the of MPs such as Chi Onwurah and Tessa platform in Canada. coming months, the company added. Jowell for its campaign to Stop Hidden This service will allow users to send Cana- Founded in 2011, the firm uses the real Fees. The online petition attracted 15,000 dian dollars to any of the 60 nations and 35 exchange rate: the mid-market rate - with- signatures within 24 hours of its launch currencies with TransferWise. out the hidden mark-up fees - to send money and the matter was debated in parliament. The company claims that the new service abroad. More than £500m is transferred Since then, HSBC said it will refund some is up to five times cheaper than using a bank. across the globe every month using the customers of their "excessive foreign cur- Currently, transfers are available on Trans- TransferWise platform, the company added. rency fees".<

INNOVATION Mobile cheque deposit services have a certain cachet

Allied Solutions, a provider of insurance, cial institution clients. Allied Solution vice president of partner lending and marketing products to financial Cachet Financial said that its new payment development Brian Timson said: "To help institutions, has expanded strategic collabo- solution will provide Allied's customers with our customers remain competitive, we need ration with Cachet Financial Solutions to access to a self-service chan- to lead the way in delivering innovative solu- offer emerging mobile payments technology nel that will help in driving efficiencies, while tions and fueling new initiatives that will for cheque deposits minimizing the risk of overhead and delin- help our clients thrive in this digital-driven As per agreement, Allied Solutions will quencies. marketplace. offer Cachet's mobile cheque payments solu- Smartphone users can make electronic "Working with Cachet to offer NowPay tion, Select Mobile NowPay, to its financial cheque payments by snapping a photo of will enable our customers to have access to institution clients. their signed cheque and submitting it for a solution that capitalizes on the emerging Allied first collaborated with the technol- payment of auto, healthcare, housing or digital payment channel, which in turn will ogy vendor in 2011 to offer mobile deposit other type of recurring bill, Cachet Financial allow them to attract consumers and uncover solution, Select Mobile Deposit, to its finan- added. new revenue opportunities."<

DISTRIBUTION DISTRIBUTION ATM compromises in US rose 546% in 2015 Paypal credit now over 2014: FICO available across UK

The number of ATMs in the US PayPal Credit, a service that allows users to add compromised by criminals surged a to their , has been six-fold (546%) in 2015 from 2014 rolled out in the UK with interest-free plans. to 2015, according to a report by To promote the offering, the company analytic software firm FICO. will offer 0% interest on purchases over FICO, which monitors American £150 for the first four months. ATMs through its Card Alert service, In addition, PayPal has collaborated with said such breaches were highest at online stores such as Blacks, Dyson, Mil- non-bank ATMs including those in lets, Samsung and Ultimate Outdoors to use convenience stores, where 10 times PayPal Credit. They will offer incentives to as many machines were compro - pay for other items in instalments over even mised as in 2014. longer periods. However, the average duration of PayPal UK managing director Cameron an ATM compromise dropped to 14 McLean said: "For consumers, it's about days in 2015 from 36 days in the giving them more and convenience prior year. when shopping online. For businesses, we In addition, the average number of are enabling them to grow and offer their cards compromised was cut in half. quick-hit approach to ATM theft and card customers greater payment flexibility. The study further unveiled that in 2015, fraud. They are moving faster to make it "It's a sign of things to come. As a newly- criminal activities at ATMs were spread out harder for banks to react and shut down the independent company, we will continue to across the country, contrary to 2014 when compromises. They are targeting non-bank partner with retailers to find new, improved they were concentrated in large cities on the ATMs, which are more vulnerable -- in 2015, ways for people to pay." East Coast and West Coast. non-bank ATMs accounted for 60 percent The company said that PayPal Credit is FICO vice president of fraud solutions of all compromises, up from 39 percent in available to its all existing and new account TJ Horan said: "Criminals are taking a 2014."< holders.<

www.electronicpaymentsinternational.com May 2016 y 3

EPI 347.indd 3 29/04/2016 14:46:22 Electronic Payments International NEWS DIGEST

DISTRIBUTION Bank of America merchant services expands to Europe Banc of America Merchant Services has platform and team to help simplify their offers services to assist large enterprises with expanded its operation to Europe by launch- experience." their complex cash flows. ing a new London-headquartered unit, BofA The new office will be managed by execu- BofAML Merchant Services aims to reduce Merrill Lynch Merchant Services (Europe) tive vice president and segment manager receivables, improve liquidity and streamline (BofAML Merchant Services). Michael Reed, who will be based in London. payments between countries and regions. The new office will facilitate e-commerce, Reed has over two decades of experience Bank of America Merrill Lynch co-head card-present and card-not-present transac- in the payments industry. Prior to this role, of Product Management for Global Transac- tions for customers looking for global payment he served as Bank of America Merchant Ser- tion Services (GTS) EMEA Matthew Davies services. It will also offer existing services via vices' CEO and general manager, responsible said: "The launch of BofAML Merchant BofAML's transaction banking platform. for the organization's large client sales group. Services in Europe provides a great opportu- Bank of America Merchant Services CEO Currently, the new unit supports online nity to further support our global client base, Tim Tynan said: "Bank of America Merchant transactions, which covers 130- curren- by offering enhanced expertise in electronic Services' largest clients have complex global cies and leveraging security features, which payments in addition to our existing range of payments needs, and our presence in Europe includes address verification and 3D Secure transaction banking services offered through will enable them to work with a consistent to minimize fraud for businesses. It also our GTS platform."<

COMPETITION TECHNOLOGY Visa finishes first in the Facebook top 100 again FCA and Barclays

According to sister title Retail Banker Inter- was the Middle East and Africa, with six of get behind national (RBI), Visa is the most 'Liked' finan- the ten most improved banks in this realm Blockchain P2P social cial institution on Facebook for the third year from this region. running. The bank with the highest rating was payments app RBI's research shows that the financial HDFC in fourth place, closely followed by sector is still focusing heavily on the social Banco Bradesco and ICICI, with 6.8 million Blockchain-based P2P app Circle is set to media site to engage and interact with its fans, 41% more fans than the previous year. launch in the UK, backed by Barclays, the customers. With an average rise in 'Likes' of The highest placed UK-based bank was first major British bank to get behind such 66%, it has been a strong showing for the Barclays in tenth, the same position as last a service. financial sector. year. The lender saw a 21% rise in fans to The Financial Conduct Authority (FCA) Visa finished top of the table yet again with hit 4.3 million. issued an e-money licence to the digital cur- a total of 19.8 million fans, a rise of 19% Samantha Gray, head of social media at rency company, the first of its kind for cross compared to last year. MasterCard finished Barclays, speaking to RBI, says: "Facebook border payments using blockchain technol- second with 13.4 million fans, a rise of over plays an integral part of our customer ser- ogy. 25% year-on-year. vice and communications functions. We are Speaking at Money 20/20 Europe in While these two remained triumphant able to reach potential and existing custom- Copenhagen on 5 April, Karina McTeague, again, some institutions saw remarkable ers, with relevant messages specifically cre- director of retail banking supervision at the rises in the amount of 'Likes' they received ated for them; whether this is around educa- FCA, said of the institution: "We are not with both State Bank of India and Intesa tion on a new product, a digital initiative or conservative or risk averse." Sanpaolo increasing their total fans by over something our customers need to be aware Users can send and receive transfers in 1000%. The region with the biggest risers of quickly."< US dollars and pound sterling instantly and for free using Circle. The transaction is con- MOBILE verted into Bitcoin on the blockchain ledger and converted into the reciprocal currency. Gemalto, Worldline join forces on mobile Where the currency is not yet available, the wallet onboarding amount is stored as Bitcoin. Circle launched in the US in Q4 2015 and Worldline, a provider of payments and trans- Also, Worldline will provide additional was founded by Jeremy Allaire of Macro- actional services, has partnered with Dutch identity verification and other issuing- media and Brightcove, and Sean Neville, of digital security firm Gemalto to work togeth- related services. Adobe. er to make mobile payment deployment fast Wolf Kunisch, head of the global business Allaire and Neville are committed to an and easy for bank and card issuers. financial processing & software licens- 'open global network'. The deal will enable the two companies ing and managing director of Germany & They said: "We have billions of smart - to provide banks an end-to-end ready-to- CEE at Worldline said: "Our agreement with phones as a distribution channel." use and customizable service. Gemalto will allow banks to get fast access, Circle raised $50m funding in 2015 and Under the deal, Worldline will provide through existing connections, to many third is undergoing development to support euro tokenization, while Gemalto will ensure the party wallet platforms, thanks to our joint and other currencies. highly secured credential delivery services to expertise's and Allynis Trusted Services Hub, Transaction and withdrawal limits are embed these tokens into smartphone mobile while keeping control and flexibility on the due to be withdrawn in due course. It is wallets using its Allynis Trusted Services Hub. use of the payment data."< available on iOS and Android.<

4 y May 2016 www.electronicpaymentsinternational.com

EPI 347.indd 4 29/04/2016 14:46:23 Electronic Payments International MOBILE WALLETS FEATURE

Chase Pay to galvanise US bank mobile wallet market

Unlike their Canadian counterparts, US banks have held back from launching own-brand mobile wallets for proximity payments. But the mid-2016 launch of Chase Pay may well force them to offer mobile wallets or risk losing customers to JPMorgan Chase. Robin Arnfield reports

anadian banks have a lot of momen- has won 12 million monthly users based Desjardins, Canadian retailer Loblaw’s tum in payment-enabling their apps globally since its October 2014 launch, and banking subsidiary President’s Choice Finan- for proximity payments using NFC,” Android Pay has won five million monthly cial, and Scotiabank, along with the Ugo and “CDerek Colfer, Visa Canada’s Head users since its September 2015 launch. Suretap mobile wallets. of Technology and Digital Innovation, says. Samsung says 5 million registered users Ugo, which is provided by UGO Mobile “CIBC was the first Canadian bank to launch processed over $500m using Solution, stores consumers’ TD and Presi- a mobile wallet in 2012, followed by RBC, in the first six months since its August 2015 dent’s Choice Financial credit cards, gift Scotiabank, TD and Desjardins Group.” South Korean and September 2015 US cards and loyalty cards on NFC-enabled By contrast, US banks were held back by launches. Android smartphones connected to the Rog- Softcard (originally Isis), a mobile payment JV However, transaction volumes are low for ers, Bell, Telus, Koodo Mobile or Virgin between US telcos AT&T, T-Mobile and Veri- Apple Pay and Android Pay because, unlike Mobile networks. zon. “US banks were slow to get off the ground Starbucks’ mobile wallet which combines Suretap is owned by a partnership – also in developing their own wallets, as originally payments and loyalty, they don’t give con- called Suretap – between Rogers, Bell and the only way they could do so was through sumers a compelling reason to change their Telus, each of which offers the mobile wal- Softcard, whose owners controlled access to payments behaviour. “Once Apple Pay and let. As of March 2016, Suretap had been their customers’ handsets,” says Colfer. “Prior similar schemes offer the ability to redeem downloaded almost one million times. Over to Google buying Softcard in February 2015, rewards and loyalty points at the point 20 popular loyalty programmes, including US banks couldn’t get their proprietary pay- of sale, they will see significant growth,” seven of the top 10 Canadian programmes, ments apps onto customers’ smartphones.” Conroy says. can be stored on Suretap, along with CIBC “In the US, a significant challenge is the and Rogers Bank credit cards. “Still to come HCE relatively low distribution of NFC-enabled are debit cards, coupons and other offers,” Despite the advent of Google’s HCE (Host terminals for accepting Apple Pay, Android Suretap says. Card Emulation) software, US banks have Pay and Samsung Pay,” says Thad Peterson, partnered with Apple Pay, Android Pay and a Senior Analyst at Aite Group. “NFC ter- Mobile Payments Reference Model Samsung Pay instead of launching their own minal distribution is increasing, however, In 2012, under the auspices of the Canadian mobile wallets. Meanwhile, the Canadian and, as NFC achieves critical mass, we will Bankers Association, the Canadian bank- banks have yet to make any announcements see a more rapid uptake in usage of these ing industry published the Canadian NFC about support for Apple Pay, Android Pay schemes.” Mobile Payments Reference Model, a set of and Samsung Pay. Samsung Pay offers merchants who voluntary, open guidelines for the develop- HCE stores mobile wallet credentials in haven’t upgraded their magnetic-stripe-only ment of secure proximity mobile payments. the cloud for Android devices instead of on a POS terminals to NFC/EMV the ability to BMO Bank of Montreal, CIBC, National smartphone’s secure element, meaning banks accept mobile payments using Magnetic Bank of Canada, RBC, Scotiabank and TD don’t need agreements with telcos to put Secure Transmission technology. This sends published the Payments Security White Paper their credentials onto customers’ handsets. magnetic signals from the customer’s device in July 2015, which outlines the principles “RBC was the first bank in North America to the terminal’s card reader. “Samsung Pay for securing mobile payments in Canada, to launch its own native mobile wallet using is doing very well in the US because of its use including open mobile wallets containing HCE,” says Julie Conroy, research director of mag-stripe acceptance technology,” says cards from multiple issuers. at US-based consultancy Aite Group. “So Crone. “Its usage reviews are pretty good, “Canadian banks are focused on protect- far, in the US only Chase and Capital One and consumers use it at a lot of places.” ing consumers in the payments ecosystem,” have opted for native mobile wallets. There says Hisham Salama, TD’s associate vice are US banks that want the consumer to stay Canada president of emerging payments. “You have in their own banking app and not to open One difference between Canada and the US to look at the safety and soundness of any up another bank’s mobile payments app. But is the Canadian FIs’ and telcos’ collaborative products offered to consumers, starting with we haven’t seen much traction with Apple approach to developing an open mobile pay- identity and verification for customers trying Pay and Android Pay yet, so a lot of banks ments environment. to digitise plastic cards.” will sit on the side-lines to see what happens Canada’s three largest mobile carriers, Bell with Chase Pay after its launch in mid-2016.” Mobility, Rogers Wireless and Telus Mobil- RBC ity, operate the EnStream mobile credentials RBC is leading the way in offering wallets pro- The “Pays” management partnership. Canadian issuers viding added-value compared to plastic cards. Richard Crone, CEO of US m-payments con- using EnStream to load customers’ creden- “We constantly look for ways to improve sultancy Crone Consulting, estimates that tials onto their handsets include Montreal- our mobile payments platform so it pro -

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EPI 347.indd 5 29/04/2016 14:46:23 Electronic Payments International FEATURE MOBILE WALLETS

n CANADIAN MOBILE PAYMENTS PRINCIPLES n MOST FIs BELIEVE THEY SHOULD OFFER DIGITAL PAYMENTS UNDER THEIR OWN BRANDS

Security – maintain the level of security consumers and retailers have come to expect from payment service providers in Canada, equivalent to that FI’s should continue to provide branded payment instruments in the digital world 18% 53% 26% 3% provided by EMV chip-and-PIN. Identify and protect (e.g. own digital wallet). consumers and retailers against technological and operational risks; FI’s should acknowledge that third parties Strongly agree (e.g. handset manufacturers, merchants, Openness – create and support an open mobile social media sites, etc) are better placed to provide Agree payments environment that allows consumers to digital experiences for customers and should 5% 43% 24%622% % Neither agree nor disagree focus on ensuring that their payment Disagree pay for goods and services using any mobile wallet credentials are available for customers to use Strongly disagree on any mobile device, leveraging the contactless wherever they want them. payment terminals that many retailers already have; To make sure they are not disintermediated in payments, FI’s should seek to curate digital Innovation – support innovation in mobile experiences for their customers, e.g. provide 5% 24% 24%245% % payments by creating an environment that storefronts/marketplaces to sell third party products and services (non-financial). promotes consumer choice and is conducive to the

development, evaluation and introduction of new 0% 20% 40% 60% 80% 100% products and services.

Source: “Payments Security White Paper,” Canadian Bankers Association) Source: Celent Digital Research Panel, November 2015

vides choice, convenience and flexibility,” etrics technologies such as wearables. In service, which makes it easier for people to says Linda Mantia, RBC’s executive vice November 2015, it participated in a pilot use mobile payments. Also, while the pay- president of digital, payments and cards. “In involving the Nymi Band, a wearable authen- ment app is part of our banking app, you Autumn 2015, we rolled out beta mobile gift tication device that uses the uniqueness of the can make quick payments using an Android card capabilities in RBC’s mobile solutions. wearer’s heart to authenticate transactions. widget without firing up the whole app. This means clients can load, purchase, gift “We’re investigating these technologies to another individual and redeem gift cards with our clients’ needs in mind, while ensur- Canadian credit unions using the RBC Mobile app. We’ll be adding ing the safety and security of their personal From Spring 2016, Canadian credit unions digital receipts to the RBC Mobile app soon, information,” says Mantia. “The pilot will be rolling out mobile Flash pay- allowing clients to have all their receipts at showed that early payment technology adop- ments using Canadian debit scheme Interac’s their fingertips so they can track their pur- ters valued the concept of wearable payment Token Service Provider platform. chases to reconcile their receipts with bank- devices. It aligned with our mobile strategy of The first four credit unions to launch the ing statements.” providing choice, convenience and flexibility mobile payment service are Affinity Credit Mantia says contactless cards are an efficient, to our clients while moving all the security Union and Conexus Credit Union in Sas - secure and simple way to pay at the point-of- into the background. Wearable, biometric katchewan, First West Credit Union in Brit- sale. “So, for mobile payments to take off, they payment technologies have the potential for ish Columbia, and Meridian in Ontario should offer clients more than what they’re seamless secure payment authentication, as already carrying in their wallet,” she says. they can assure issuers that both the payment The US In March 2016, RBC updated the RBC information and client are present during the “In the US, mobile payments are being led by Wallet for Android as a stand-alone app giv- transaction.” retailers, not banks,” says Crone. “Retail- ing clients access to the wallet without hav- ers such as Starbucks, Dunkin’ Donuts and ing to use RBC’s mobile banking app. Cus- Scotiabank Subway have been very successful with tomers can also use an Android widget to Since October 2015, Scotiabank’s My Mobile mobile payments. Starbucks says 21% of select their card and pay with one tap from Wallet has supported credit and debit card pur- its sales come via its Starbucks mobile pay- the home screen without having to sign in. chases on both Android and BlackBerry devices. ment app.” RBC’s mobile payments are powered by RBC Scotiabank customers with eligible One way banks can play in mobile pay - Secure Cloud, which keeps sensitive customer Android smartphones from Rogers, Bell, ments is to embed their payments creden - data secure in RBC’s HCE-based cloud, not Virgin Mobile, Telus and Koodo can tap tials inside a retailer’s own app. “But issu- on the customer’s smartphone secure element. their phone to pay for purchases up to ers need to ensure their branding isn’t sub- “Secure Cloud is based on (proprietary) tokeni- the contactless limit of C$100 ($76.53) at sumed inside the retailer’s app,” Crone says. sation technology, where the secure token is a Interac Flash (Canadian contactless debit “There need to be embedded links between representation of a card and is used at the point- cards) or Visa PayWave-enabled terminals. the bank’s mobile banking and payment of-sale to facilitate a payment, but the secure Customers can store their Scotiabank apps and retailer apps. A bank’s mobile token itself doesn’t contain sensitive client data,” SCENE loyalty card in their mobile wallet to banking app can use presence detection to says Mantia. “That data resides with RBC’s earn and redeem SCENE points at participat- detect when a cardholder is in a Walmart Secure Cloud instead of on the mobile device ing merchants. store, for example, and offer a link to the and isn’t shared. This technology is more secure Walmart loyalty app for shopping, while than existing credit and debit cards.” TD providing the bank’s payment app for the Secure Cloud works with multiple mobile In March 2016, TD became the first Canadian actual purchase.” devices and platforms, as well as existing bank to use the HCE-based Visa Tokenization Research by Celent shows that most US contactless-enabled POS terminals. “We’re Service in its new Android mobile payments app. banks are more likely to engage with third- also well positioned for how payments will “The app has been very well received by party wallets than explore their own HCE be transformed with the Internet of Things,” customers,” says Salama. “This is a testimo- wallets. In November 2015, Celent sur - Mantia says. ny to the seamless experience we designed veyed 42 US banks and credit unions for its RBC has been experimenting with biom- using Visa’s network-based tokenisation “US Financial Institutions and Digital Pay-

6 y May 2016 www.electronicpaymentsinternational.com

EPI 347.indd 6 29/04/2016 14:46:24 Electronic Payments International MOBILE WALLETS FEATURE

ments: Digital Research Panel Series Part 3” Over half US millennials will move their pri- port NFC for through report. mary banking relationship to get a mobile our recent partnership with MasterCard Celent Senior Analyst Zilvinas Bareisis payment capability from a bank.” through integration with the MasterPass says 61% of respondents already support Chase plans to prepopulate all its 94 mil- digital wallet,” the CU Wallet spokesper- Apple Pay and the majority of the others are lion credit, debit and GPR prepaid cards son says. “We have also partnered with two planning to join the scheme. in Chase Pay. “Chase Pay will be accepted national merchant networks, Empyr and “When we asked the FIs about HCE, just by the 49 major retailers such as Krog - Relevant Solutions, with a third that will be 5% said they offer HCE wallets, 17% plan ers, Walmart and Wendy’s which belong announced in the coming weeks, to provide to do their own HCE wallets and 32% are to MCX and account for over $1 trillion consumer value through national and local considering them,” Bareisis says. “But 46% in annual spend. It will offer on-us trans - discounts and card-linked offers.” said they have no plans for HCE. The para- actions which are cleared through Chase’s dox is that when we asked what they were own processing network and have fixed- MCX worried about in digital payments, they all fee pricing with volume-based discounts Walmart, Best Buy and Target launched talked about the need to be top of wallet plus zero merchant fraud liability and zero MCX in 2012 in order to develop a retailer- and not lose control, and all agreed that network fees. This means merchants are centred mobile payment system focused on banks should provide their own branded motivated to accept Chase Pay’s lower-cost loyalty and rewards that would cut the cost wallets.” transactions.” of card acceptance in its members’ stores. “Chase did a deal with Visa according to MCX subsequently launched the Cur- Chase Pay which it carved out a portion of VisaNet rentC mobile app which, as of March 2016, The rollout of Chase Pay by Chase, the larg- called ChaseNet so Chase can process trans- is in pilot mode in Columbus, Ohio with est US card issuer, will awaken the bank- actions in an Amex style closed-loop envi- retailers such as Kmart, Sam’s Club, Sears, branded mobile wallet market, says Crone. ronment,” says Bareisis. “Because Chase Walmart, CVS/pharmacy, Target and Wen- “Chase Pay will spur every bank that wants Pay encompasses both issuance and accept- dy’s. MCX’s members collectively operate to keep their customers to offer a bank- ance through Chase’s merchant services over 110,000 locations. branded wallet,” he says. “Banks need to business, it’s a unique proposition that not “CurrentC provides consumers with have a plan for mobile payments. Signing many banks can replicate.” multiple ways to pay, including chequeing up for Apple Pay or Android Pay isn’t a Chase Pay’s benefit to consumers will be accounts, Chase Pay, gift cards, and retail- mobile payment strategy, but will actually the ability to activate offers and redeem ers’ private-label credit and debit cards,” an erode the bank’s franchise and brand value rewards from within the wallet. “Chase MCX spokesperson says. “CurrentC com- over time. Most importantly, banks offer- will be the only wallet provider able to offer bines these payment accounts and consum- ing a mobile payments capability will have a seamless rewards and offers integration,” ers’ loyalty cards, automatically applying platform for providing personalised services Crone says. “I estimate that Chase will see coupons, promotions and loyalty rewards such as customised credit offers when the revenues of $300 per active Chase Pay user at checkout in a single transaction.” customer is in the store making a purchase.” per year from merchants whose offers are MCX’s prospects are uncertain due to the Chase’s QR-code based mobile wallet will activated.” fact that many of its original members no be accepted at US merchants belonging to Although its default option is QR code longer have exclusive agreements to accept the MCX (Merchant Customer Exchange) payments, Chase Pay will support NFC pay- CurrentC, which means they can accept mobile payments alliance as part of MCX’s ments for Android devices as well as Blue- other m-payment methods such as Apple CurrentC wallet. tooth Low Energy beacons which detect a Pay and Android Pay. Another potential mobile wallet user’s presence. “BLE can drawback of CurrentC is the fact that only be used for applications such as paying for Chase-issued cards linked to Chase Pay can take-out food at drive-ups,” says Crone. be stored in it.

CU Wallet Walmart Pay US credit union service provider CU Wal - In December 2015, Walmart launched its let has developed the white-label CU Wal- QR code-based Walmart Pay mobile wallet Chase is partnering with 17 technology let app which credit unions can issue using which it plans to roll out to its 4,600 US vendors so merchants who aren’t Chase their own brand. CU Wallet has 120 credit stores during the first half of 2016. Walmart Commerce Solutions merchant acquiring union participants, which together repre- Pay works on iOS and Android devices clients can participate in Chase Pay. From sent over 10 million members. which have downloaded the Walmart Autumn 2016, Chase Pay will also be “The CU Wallet application is already mobile app, and accepts any major credit, accepted at the 7,500 company-operated live,” a CU Wallet spokesperson says. “Two debit and prepaid cards as well as Walmart Starbucks locations in the US. early adopter credit unions have launched gift cards, Walmart says. “Market research surveys show that con- the app and are testing with friends, fam - Walmart has a head start for Walmart Pay sumers prefer to get a mobile payment ily and employees in preparation for a full as it already has 22 million Walmart mobile capability from their primary FI, and Chase release to membership. A third credit union app users. The app lets Walmart customers is playing into that,” Crone says. “Chase is on the cusp of doing the same, and a look at and activate in-store offers and store knows that the number one reason for dozen or so others have signed contracts a shopping list. switching banks, after fees, is mobile capa- and are in our deployment pipeline.” “What Walmart is doing is cross-popu - bility. Five years ago, Chase was one of the Currently, CU Wallet supports QR code lating the payment credentials customers first banks to launch mobile RDC, and transactions using technology supplied by use in Walmart.com and allowing them to every time its RDC ad played on national PayPal subsidiary which also pro- make purchases in physical stores with the TV, it opened up 10,000 new accounts. vides MCX’s platform. “We will soon sup- Walmart app,” Crone says.<

www.electronicpaymentsinternational.com May 2016 y 7

EPI 347.indd 7 29/04/2016 14:46:25 Electronic Payments International FEATURE MONEY 20/20 EUROPE

Top 4 ways to eliminate cash and why - Money 20/20 Europe The best-yet argument for a cashless society was delivered by Dave Birch, Consult Hyperion at Money 20/20 Europe, in which he outlined clearly the reasons to fight for a cashless society. A who, what, why, when, where and how argument that leaves little room for naysayers. Anna Milne reports

A manifesto for cashlessness- as Birch said it The ECB published detailed analy - for transactional purposes. BoE figures sis of the cost of retail payments. In are similar. Dr Renaldi's research stat - The question is why do central banks Eurozone area, the cost of provision of ed that the European economy could keep producing cash? retail payments are substantial- about grow another nine basis points just The Bundesbank says that only 1% European GDP is burnt up in pro- by removing some of the underground 10-15% of cash in Germany is used to viding euro. Cross-subsiding cash is not economy. support the needs of commerce and this a welfare-maximising strategy. tallies with BoE estimates, at most 25% Effectively, the people who don't 3. Regulate for on-demand electronic cash in the UK is used for transactional use the cash are cross-subsidising the payment accounts capable of holding purposes. people who do: gangsters. This doesn't a maximum of €1,000 with no further So in two of world's largest econo - seem to be a reasonable way to run an KYC. mies, at most the cash is used as a economy. In the UK, families who use cash are medium of exchange. And this fraction £100 worse off than those who don't is steadily falling as cash is replaced at “In NL every family pays due to the cost of cash acquisition, the point of sale. €300 a year just to use cash” inability to pay utilities through debit In Europe, the use of cash for legiti - systems, exclusion from online offers, mate purposes is going down, yet the Belgian and Dutch (high card usage etc. Payment accounts should be free. overall amount of cash in circulation is countries) central banks say the total NB This does not mean bank accounts. going up. Why support this? costs of cash are 0.75% and 0.65% We should aim to make the cost of GDP respectively. In both countries, 4. Make it illegal for payment cards cash higher, therefore raising the cost cash account for three quarters of the to display the cardholder name of criminal activity. social costs: in NL every family pays physically or electronically. In Europe we should aim to be effec - €300 a year just to use cash. Most of the concerns that reason - tively cashless within a decade. It won't Quoting Dr Laura Rinaldi from the able people have about moving away disappear altogether but it won't mat - Centre for Economic Studies at Leu - from cash are to do with privacy and ter. ven University, [Birch argued] if the security and since we'll have to have cost-based pricing was replaced, usage security in order to have privacy, we 1. Allow retailers to surcharge for would shift from cash to debit which should set our goals around privacy as all types of payment- including cash- would add 19 basis points to the Euro - the central narrative to address these except card present and cardholder pean economy. concerns because in order to deliver present debit. privacy goals we will have to have Manifesto commitment #1- ask poli - 2. Remove high value notes as they no security goals made as well. ticians to halve the total social cost of longer support trade. Therefore we need privacy enhancing payment systems in the next decade, In 2011 the ECB survey found that infrastructure for transactions, and for starting by allowing retailers to charge only one third of €500 bank notes the sharing of transaction data begin - for cash. issued were in circulation and used ning with a law such as this. <

8 y May 2016 www.electronicpaymentsinternational.com

EPI 347.indd 8 29/04/2016 14:46:28 Electronic Payments International MONEY 20/20 EUROPE FEATURE

Is the younger generation preventing a digital payment revolution?

Contrary to popular belief, could it actually be the millenial contingent pushing back the shift towards electronic payments, preferring to use cash? And if so, why? And what should be done? First Capital Cashflow conducted a survey which suggests this might well be the case and comments on the findings

ore than two-thirds of 18 to routinely use cheques. people who need the most convinc - 34-year-olds still prefer to pay While this may highlight the growing ing to give up on antiquated forms of for goods with cash, according prominence of card payments, the fact payment, but this isn’t necessarily the to new research by First Capital that one in three people still swear by case,” she commented. M coins and notes shows that we’re still Cashflow. “While our survey showed that those a long way from becoming a “cashless aged 55+ are still most likely to use • New data shows that younger gen - society”. cheques, the results also found that 18 erations still rely heavily on cash It is the demographical differences to 24-year-olds are four times as likely • 18 to 24-year-olds slow to adopt that caught the eye in particular, with to use cheques as those aged between ‘Online Wallet’ payment solutions some of the results showing that we 45 and 54. like Apple Pay shouldn’t be too quick to make assump - “It’s a little surprising to see such • FCC says that people of all ages tions as to which age groups are failing little uptake of modern technolo - need to be made aware of the ben - to move with the times. gy PayPal and Apple Pay among the efits of advanced payment technol - Other key findings included: youngest age group, but I’m sure that ogy as more variations of this technology • 18 to 24-year-olds are among the come to market, uptake will inevitably least likely to use Online Wallets increase.” New research undertaken by direct to pay for goods, with a paltry 6% debit facilities management specialists, choosing this kind of technology as Education First Capital Cashflow, has cast doubt their preferred payment method. Buckingham added that as we become a real- over suggestions that it is older mem - • The over-45s are the most likely to time society, it’s vital that people of all ages bers of society who are most reluctant use credit cards - accounting for an are made aware of the benefits of using more to embrace a digital payment revolu - overwhelming 77% of those who advanced forms of payment. tion. chose this as their favoured pay - “It can take the best part of a week The survey found that 18 to 34-year- ment method. for a cheque to clear, and this is caus - olds are actually the most likely to pay • Men (34%) are more likely to pay ing problems for businesses and con - for goods or services with cash (67% for goods with cash than women sumers alike. We live in an instant of those polled), whereas older genera - (22%). world and people’s expectations have tions appear to be more comfortable changed when it comes to finances. using plastic- especially credit cards. Louisa Buckingham of First Capital “We want to have access to funds Overall, debit cards were found to be Cashflow said the findings show that, straight away, and the only way to the UK’s preferred method of payment, contrary to popular belief, it isn’t the achieve this is to speed up the ongo - attracting 39% of the vote, followed older generations who need to be con- ing migration away from outdated pay - by cash (32%). 15% opted for credit vinced to use digital payment methods ment methods towards more conveni - cards, 10% favoured ‘Online Wallet’ instead of cash. ent direct debit and paperless payment solutions like Apple Pay, and 3% still “We’re quick to assume that it’s older options,” she concluded.<

www.electronicpaymentsinternational.com May 2016 y 9

EPI 347.indd 9 29/04/2016 14:46:30 Electronic Payments International FEATURE MONEY 2020 EUROPE

The top five misconceptions in payments What are the key mistakes and misapprehensions that payment start-ups and banks alike make, the world over? Does technology drive consumer behaviour, should the proposition always target the consumer? Anna Milne highlights a few, as cited by thought leaders and entrepreneurs at Money 20/20 Europe

here was no shortage of opin - evidence that regulators are perhaps not as smart, so dedicated, and so hard-working, ions and insights at Money 20/20 stuck in the past as we might assume and that there’s just nothing [for Klarna] to do in Europe. Some of the speakers put that we better stop using that as an excuse China. Investor Michael Moritz says: T to bed some misconceptions about for change ourselves. “The Chinese government are interested in the way to go about innovation. having American companies, despite what 2)Technology does not drive consumer the Western press says. They’re interested 1)Regulation doesn’t always trail behaviour in having American companies succeed in technology The art is in using technology as a facilitator. China, it’s good for the Chinese economy, In many cases the regulators are up to speed Too many start-ups and banks get over-excit- for Chinese consumers. People in the west and ahead of the tech providers, certainly of ed about new technological developments just aren’t self-critical enough about the way the banks and set about creating a product which in which the western companies go to China Take for example the UK’s Payment Sys- doesn’t actually serve any viable purpose or and the reason that most western companies tems Regulator (PSR), which has got full- solve any problem. fail in China is down to their own doing, steam-ahead behind the cause to open up DBS’ Chief Innovation Officer (CIO), Neal nothing to do with the Chinese government access to payment systems in the UK, much Cross is a keen adversary of this mindset. or regulation- it’s a whole series of western to the surprise, frankly, of much of the imperial arrogance that brings industry. Rich Wagner said himself at “Western imperial arrogance brings them down” them down. That’s a minority Money 2020 Europe in Copenhagen, viewpoint.” he has been “amazed by the engagement of Take blockchain: as Michael Moritz, Neal Cross, CIO, DBS Bank, is of a similar the Bank of England”, saying the bank is Sequoia Capital, says, on the subject of opinion: “What the Chinese are doing is just finally understanding the financial risk (to blockchain: “It may work perfectly in theory streets ahead in every way- the banks, the the Bank) is far less than imagined. but it doesn’t solve a problem for the con- payments companies- they know their cus- Wagner explained the situation is now sumer.” tomer and learn exactly how to serve them.” such that the technology providers who That’s not to say it isn’t potent technology would be tasked with the logistics of opening that could revolutionise the entire financial the systems, are lagging behind in prepara- system- but the message is not to get carried 4)Going directly after the individual tions to be able to provide the service. The away and to play the long game to develop consumer is a “suicide mission” only two out of ten providers who are ready something that actually solves a problem. Any organisation, be it bank or start-up, who and certified are FIS and . Simon Taylor, VP blockchain R&D, targets the customer directly is embarking on The regulator is way ahead of the . Barclays says the same, it will be the platform a suicide mission, says Sequoia venture capi- The end goal is for small Payment Service devloping propositions that survive, not the tal’s Michael Moritz. Providers to gain direct access to the UK’s product-focused ones. “Start from what the “In payments, unless you’re a very large payments systems, such as Faster Payments, requirements are and work from there.” company- very large, it’s very difficult to go by having a settlement account with the Bank Matthew Hampson, CTO, Nomura, says: with a new product and try to persuade a of England. Currently, these small providers “I encourage all companies to have a go with consumer to trust your service’s payment rent access to the systems from the bigger blockchain technology using real business mechanism if they don’t know anything banks who collectively own the systems. projects and problems, not in some lab out about it. It is far more prudent to go and con- The recent UK launch of bitcoin P2P ser- back.” vince the merchants who already have lots vice Circle provides further evidence that the Vitalik Buterin, the talented developer and of consumers that you can do a fantastic job FCA is not so risk-averse and conservative as creator of Ethereum, bemoaned the rush of for the merchant- like Klarna- and help them some expect. Karina McTeague, speaking at bitcoin products that launched, a lot of them make their business better,” he said. Money 2020 on a panel about the future of citing as their business case the rising price banking said as much: “We are not conserva- of bitcoin. “That is not a business model,” tive or risk averse.” he said. 5)Do not underestimate consumer faith in Monica Monaco, who consults on EU banks to deliver the best services regulation, said that while regulators may BBVA, ING and CGI, among others champi- be wary of blockchain technology, they are 3)Do not underestimate or dismiss China oned the powerful position banks still have, absolutely taking action to educate them- As Klarna’s Sebastian Siemiatkowski said, “I despite some rhetoric to the contrary. While selves on it. If we take the EU as the slowest, would never go to China because Alipay is it’s true banks need to innovate, move for- most slow-moving bureaucratic institution, one of the most impressive companies I’ve ward and not be complacent, their customers then as a benchmark alone this serves as ever met, they’re amazing, so impressive, so believe they will deliver. <

10 y May 2016 www.electronicpaymentsinternational.com

EPI 347.indd 10 29/04/2016 14:46:30 Electronic Payments International Electronic Payments International KLARNA FEATURE

Klarna’s Karma- a story of positive disruption Since its establishment in 2005, Klarna has had a meteoric rise. Constantly expanding its market presence across the globe, it now has 45 million customers and works with 65,000 merchants in 18 markets in Europe and the US. Patrick Brusnahan takes a closer look at the third-party payment service provider

larna is a Swedish third-party and confirm by tapping Buy Now. This payment service provider which option can also be used without having to Key Financial Data primarily operates in Europe and, log in. more recently, in the US. The firm Users can select Immediate Checkout or NET REVENUES: $332M (2015) K Pay After Delivery. Immediate Checkout is offers credit for e-commerce purchases, NET INCOME: $11M (2014) which can be redeemed through invoices, what is says on the tin; an immediate pay- TOTAL TRANSACTION VALUE: payment cards and bank transfers within ment is made from any Visa, MasterCard, 14 days. Its clients include Spotify, Sam - or Discover payment card. $9BN (2014) sung, Disney, Asos, Fitnessguru, Adlibris Pay After Delivery gives users 14 days from and Wish. receipt of the order. A key acquisition for the company was the Klarna offered a fixed Geographical Presence purchase of Analyzd in May 2011. A risk deposit account for medium- and long-term • As of April 2016, Klarna is used by 45 management and fraud prevention company investments. Customer can deposit anything million customers and 65,000 merchants operating in Israel, the US and the EU, the between €10,000 ($11,265) and €500,000. in 18 countries. deal allowed Klarna to improve its protec- Amounts up to €100,000 are backed by • It is headquartered in Stockholm, Sweden. tion against attacks and fraud. the Federal Deposit Insurance Corporation • Klarna was used for nearly 39.5% of all online purchases in Sweden in 2015. In December 2013, Klarna purchased the (FDIC) and the account management fee is • Klarna covers more than 50% of online German payment service provider Sofort. waived. merchants in Germany. Sofort is an e-commerce PSP that operates The interest rates can go up to 1.4% per • In 2015, Klarna accounted for 10% of total in Germany and Austria. The deal was com- annum and customers can open accounts for e-commerce payments in Northern Europe (Denmark, Finland, Germany, Norway, pleted in March 2014 and, while Sofort kept different periods, including 12,24,36, and 48 Sweden, and the UK). its branding, Klarna gained access to nearly months. < 50% of online merchants in Germany. This transformed the company into one of the n LATEST SIGNIFICANT EVENTS largest payment service providers for Euro- Year Events Comment pean e-commerce. September 2015 Partnership Klarna expanded to the US through a partnership with Its main sources of revenue are transaction Overstock.com. fees and interest on credit. However, other sources of revenue include setup fees, month- September 2015 Partnership American Express users in Sweden, Germany, Finland and the US can use Klarna Checkout. ly fixed costs, and penalties for late payments. Klarna actually generated 30% of its February 2015 Partnership Klarna launched its service on Tradera, an eBay subsidiary transaction volume from Germany, its larg- in Sweden. est market after Sweden. June 2014 Expansion Klarna launched its full range of products and services in There are several products and services the UK. contained within Klarna. Its first is an April 2014 Product Launch Klarna Checkout was launched in Germany and the UK, invoice-based payment. When a purchase enabling merchants to separate order confirmations from is confirmed, the merchant sends the actual payments. merchandise with an invoice. The buyer repays the amount within 14 days of deliv- n COMPARISON WITH PAYPAL ery. Payments can also be made through Klarna PayPal monthly instalments on request by email. Instalment plans can incur interest and Annual Transactions $9bn (2014) $282bn (2015) administrative fees. There is no revolving Active Users 45 million (April 2016) 179 million (2015) credit option and payments are due within Scope E-commerce E-commerce, P2P a defined period. Payment Instruments Credit line, credit transfer Cards, e-money, credit transfers In addition, there is Klarna Checkout, a simple app for payment. Customer login Payment Method API API, beacons, QR codes, facial recognition, app details are saved for specific IP addresses. Key Markets Sweden, Germany, UK, 14 2013 countries including the US, the UK, Germany, Australia Klarna requires three simple steps for login other European countries and New Zealand and the US and payment; Enter your email address and postcode, accept or edit the billing address Source: Timetric

www.electronicpaymentsinternational.com May 2016 y 11

EPI 347.indd 11 29/04/2016 14:46:31 Electronic Payments International COMMENT EXPERIAN- JONATHAN WILLIAMS

The onus of ownership- three reasons to check details Jonathan Williams, director of payment strategy, Experian, explains why it is imperative to double check account details before entering onto a system, for both the organisation and the consumer

rganisations across all industries will realise something is wrong. Each failed Customer judgment may feel that taking account direct debit is estimated to cost around £50 Payments that fail cause problems not information over the phone - not just from banking charges but also the only for your company but also for your O through a call centre or increas - resources used to contact customers to cor- customers. Customers may not receive the ingly as information entered by the cus - rect the mistake. goods or services they ordered, receive late tomer into an online form is enough. payment notifications or even worse fall But, alas it is not the case. Another avenue for fraudsters victim to fraud as money they are owed is Here are three key reasons why it’s Fraudsters will try and take advantage wher- paid into a fraudster’s account. Even if the in the interest of both the organisation ever they can. Direct debit fraud, for example, error is spotted before these things hap - and its customers to check bank account where someone sets up a direct debit from pen you will still have to re-contact your data before it is entered into the system, another person’s account without their per- customer to get the correct information let alone used to make, or receive pay - mission. Or account takeover, where a fraud- from them - trouble for you and for them. ments. ster takes over a genuine customer’s account Checking bank account data in real-time at The recent announcement from Pay - and supplies their own bank account details. point of entry will prevent such incidents ments UK recognises a key issue in the occurring. industry and urges the banking sector to This is particularly important when paying It’s simple, all organisations should, find a solution. money into a customer’s bank account in regardless of sector, incorporate bank instances such as; insurance claims, pension account data checking into processes. Some The added cost of human error payments, benefits, grants or account refunds. payment service providers, businesses, gov- Information taken by telephone or through Both can be prevented by confirming that the ernment and third sectors have already been an online form can very easily be misheard bank account details provided belong to the doing it as standard for the last several years, or mistyped. If it goes unchecked, it’s only person that should be making or receiving we’re pleased to see greater focus on this when payment fails that the organisation the payments. area.<

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DigitalEPI 347.indd touch briefings 12 ad copy - CI 18042016.indd 1 18/04/201629/04/2016 11:17:37 14:46:34 p12.indd 1 29/04/2016 15:07 Electronic Payments International SURVEY COUNTRY SURVEY: DENMARK COUNTY

Denmark leading the way towards cashlessness The Danish cards and payments industry is well-developed, and Danish consumers are prolific users of payment cards. This is evident by the fact that, in 2014, the country had the highest frequency of use (transactions per card per year) in the world – 173.6 transactions per card, the highest in the region

enmark is followed by all of its n DENMARK’S CARD TRANSACTION VOLUMES BY n NUMBER OF ATMS AND POS TERMINALS IN Nordic peers in terms of transac - CHANNEL (BN), 2010-2019 DENMARK (THOUSAND), 2010-2019 tions per card– Finland with 170.0, Year ATM POS Year ATM POS Norway with 126.3, and Sweden D 2010 3.0 62.6 2010 2.9 110.4 with 126.2 transactions in 2014. The consumer preference for electronic 2011 2.8 69.1 2011 2.8 125.4 payments and government plans to advance 2012 2.5 68.0 2012 2.7 132.2 as a cashless society supported the growth 2013 2.3 73.2 2013 2.6 145.0 of payment cards. Overall, payment cards 2014 2.2 75.9 2014 2.5 153.4 posted a CAGR, between 2010 and 2014, of 6.70% in terms of transaction volume – a 2015 1.8 66.7 2015 2.5 161.8 trend that is anticipated to continue. 2016 1.8 68.4 2016 2.4 169.7 The government took several initiatives to 2017 1.7 70.5 2017 2.4 177.2 bring the entire population into the banking 2018 1.7 72.8 2018 2.4 184.0 system. According to the World Bank Glob- al Findex survey, the percentage of Danish 2019 1.7 74.8 2019 2.4 189.7 population aged 15 or above with a bank S o u r c e : E u r o p e a n C e n t r a l B a n k a n d T i m e t r i c S o u r c e : E u r o p e a n C e n t r a l B a n k a n d T i m e t r i c account reached 100% in 2014. This result- ed in a high penetration of bank accounts n DENMARK’S PAYMENT CARDS BY TYPE n DENMARK’S CARD TRANSACTION VALUES BY and banking products. (MILLION), 2010-2019 CHANNEL ($BN), 2010-2019 Year Debit Cards Credit Cards Year ATM POS Denmark is moving towards cashlessness 2010 6.0 2.0 2010 17.8 1,047.6 Cash payments are declining in Denmark. In terms of transaction volume, cash trans- 2014 6.9 1.7 2011 17.3 1,145.6 actions accounted for 37.4% in 2010 and 2015 7.0 1.7 2012 16.5 1,250.9 decreased to 16.1% in 2014. In comparison, 2019 7.5 1.8 2013 15.4 1,364.2 in other developed European markets such Source: European Central Bank & Timetric 2014 14.9 1,480.5 as the UK, cash accounted for an industry share of 46.2% in 2014. transaction value in 2014. 2015 14.4 1,597.5 Don’t have online account details? To encourage cashless payments, the Dan- According to the New Payment Solu - 2016 14.1 1,717.8 ish government proposed a plan in May 2015 tions report published by the Danish Pay- 2017 13.8 1,839.9 to allow certain categories of retailers – res- ment Council in March 2014, Dankort was You and your associates may be entitled to online 2018 13.6 1,960.7 taurants, apparel stores and gas stations – to the most popular method of payment for login credentials. The benefits of full online refuse payments in cash. The proposed plan purchases made at retail outlets. The use 2019 13.4 2,075.7 access are as follows: is anticipated to be implemented by 2016. of Dankort debit cards is widespread for S o u r c e : E u r o p e a n C e n t r a l B a n k a n d T i m e t r i c In October 2014, the central bank a range of purchases, and 60% of online • Timely daily news updates announced that it would stop the internal payments are made using Dankort and nals in the country, representing 40.1% of production of printing of banknotes and VisaDankort cards. all POS terminals. • Access the latest analysis minting of coins by the end of 2016 and To capitalise on the growing popular - • Monthly editions sent directly to your inbox outsource the process to external suppliers. High uptake of contactless technology ity of contactless technology, Danske Bank The government claims that the initiative will The Danish payment cards market has and Jyske Bank began offering contactless • News alerts direct to your inbox save up to $17.2m (DKK100m) by 2020. seen the uptake of contactless technology. Dankort cards from August 2015. Danske • Comments from key industry influencers and leaders According to Timetric, Denmark had the Bank replaced all old cards with contactless Dankort maintains its dominance highest number of contactless terminals and Dankort cards free of charge until November • Search for specific, relevant content Dankort, introduced in 1983, is the national the second-highest number of contactless 2015. • Access the archive debit and dominated the debit cards in the Nordic region as of November M-payments are also gaining promi - card market with an 83.7% share of the total 2015 – next only to Norway. nence. Verifone signed an agreement with transaction value in 2014. There were 5.3 million contactless cards in the m-payment solution provider Swipp in To create or activate your account please contact: Visa and MasterCard are also strength- the country as of November 2015 – equiva- November 2015, to allow 30,000 partner ening their presence, with respective shares lent to 60.2% of all payments cards. Also, merchants to accept contactless payments [email protected] of 12.4% and 3.8% of the total debit card there were 61,600 contactless POS termi- using the Swipp app. < www. www.privatebankerinternational.com www.electronicpaymentsinternational.com May 2016 y 13

Digital touch briefings ad copy - CI 18042016.indd 1 18/04/2016 11:17:37 EPI 347.indd 13 29/04/2016 14:46:35 Electronic Payments International SURVEY COUNTY COUNTRY SURVEY: HONG KONG

Hong Kong on an electronic payments high A number of factors are driving Hong Kong’s card and electronic payments market: a highly developed public transport ticketing system, an increase in popularity of premium cards and a highly banked population (96.1%). Cross-border trade between Hong Kong and China is also fuelling the market

he growing payment cards market, n n coupled with favorable regulations, HONG KONG’S CARD TRANSACTION VOLUMES NUMBER OF ATMS AND POS TERMINALS IN BY CHANNEL (BILLION), 2010-2019 HONG KONG (THOUSAND), 2010-2019 encourages foreign banks from T mainland China and other markets Year ATM POS Year ATM POS to expand their presence in Hong Kong. 2010 15.1 69.8 2010 3.01 433.91 Foreign banks such as Bank of China, 2011 16.7 79.1 2011 3.02 475.69 Citibank and Standard Chartered Bank 2012 17.6 86.5 2012 3.03 508.77 have a strong presence in the country. Hong Kong’s payments cards market is 2013 19.4 92.0 2013 3.05 535.14 highly developed, with card penetration of 2014 20.4 98.9 2014 3.08 559.28 3.4 cards per individual in 2014. Further- 2015 21.4 105.4 2015 3.11 582.05 more, the average annual spend per card 2016 22.3 111.8 2016 3.15 604.97 stood at $4,052.80 in 2014 – higher than in Malaysia, Indonesia, Taiwan and Singapore. 2017 23.1 117.8 2017 3.19 627.22 Banking penetration is very high in Hong 2018 23.8 123.3 2018 3.24 647.97 Kong, recording 96.1% in 2014 according 2019 24.5 128.3 2019 3.29 667.85 to the World Bank Global Findex survey. To Source: Timetric Source: Timetric increase this further, the HKMA assigned HSBC, Standard Chartered and Bank of China the role of major financial service pro- Pay to introduce a triple currency n HONG KONG’S CARD TRANSACTION VALUES BY viders in November 2015. These banks are in August 2015. The card is available in CHANNEL ($BN), 2010-2019 responsible for the release of financial prod- Platinum, Gold and Classic variants and can Year ATM POS ucts and services to consumers living in rural be used in Hong Kong, Macau and mainland 2010 44.2 469.3 areas, senior citizens and unbanked con - China. Transactions are settled in the respec- 2011 45.1 501.3 sumers. High banking penetration resulted tive local currencies. in an increase in the total number of bank 2012 45.5 543.8 accounts, as well as banking products such Demand for premium cards is on the rise 2013 47.7 576.2 as consumer loans and payment cards. The demand for premium credit cards is high 2014 48.6 600.3 in Hong Kong due to the growing presence 2015 49.6 623.8 Multiple currency cards become prominent of a high-income population. Consumers To capitalise on the increasing cross-border have become more sophisticated, and credit 2016 50.5 646.9 trade between Hong Kong and mainland cards are becoming an essential part of the 2017 51.4 669.5 China, as well as to cater to the fast-growing lifestyle. The demand for high quality ser- 2018 52.2 691.2 Chinese population working and studying in vice and rewards is also increasing among 2019 53.1 711.5 Hong Kong, banks are issuing dual currency consumers. To serve the most profitable con- Source: Timetric payments cards. Expenses in Hong Kong sumer segment, banks are offering exclusive and overseas are settled in the local currency, benefits and rewards. while expenses made in mainland China are For instance, HSBC started offering – around four times the country’s population. settled in the Chinese currency. Banks usually reward programme called – ‘Red Hot Hong Kong’s Mass Transit Railway (MTR) waive the foreign currency transaction fee, Rewards of Your Choice’ to consumers started operating a fully automatic fare col- and cardholders are offered benefits such as from January 2016. This reward programme lection system in 1979. To further enhance cash rebates, medical assistance, travel assis- offers cashback on dining, entertainment and customer convenience, MTR launched the tance and concierge services. lifestyle expenditures. Octopus fare collection system and the Octo- Some examples of dual currency credit pus Card in 1997, which eliminated the need cards are the UnionPay Dual Currency Plati- The Octopus card ‘s dominance for travelers to find the exact change to pay num Credit Card offered by Standard Char- The Octopus card was one of the world’s fares. It is now widely accepted across con- tered, and the CUP Dual Currency Platinum first contactless cards. It is one of the world’s venience stores, restaurants and supermar- Card offered by Bank of China. highest used smart cards, owned by 99% of kets in the country. Over 13 million trans- In addition to dual currency cards, banks Hong Kong residents aged 15–64 in 2015. actions used Octopus cards, valued at over are also offering triple currency cards. Banco As of August 2015, there were 29 million $20.6m (HKD160 Mn), are carried out daily Nacional Ultramarino partnered with Union- Octopus cards in circulation in Hong Kong across 70,000 card readers. <

14 y May 2016 www.electronicpaymentsinternational.com

EPI 347.indd 14 29/04/2016 14:46:35 Electronic Payments International SURVEY COUNTRY SURVEY: SAUDI ARABIA COUNTY

Saudi’s card and payments market soars Another market with a government drive to encourage cashless payments, Saudi Arabia has seen POS transactions almost triple in value since 2010. EMV-enabled cards and a rise in e-commerce have also fuelled the payment market’s growth. With an appetite for new technology, it is set to grow further

he government’s initiative to pro - n n mote POS transactions, banks’ SAUDI ARABIA’S CARD TRANSACTION NUMBER OF ATMS AND POS TERMINALS IN VOLUMES BY CHANNEL (BILLION), 2010-2019 SAUDI ARABIA (THOUSAND), 2010-2019 efforts to introduce Sharia-com - T plaint cards, the rising techno - Year ATM POS Year ATM POS logically advanced young population 2010 126.2 22.5 2010 10.9 80.5 and increasing e-commerce market are 2011 155.6 30.8 2011 11.8 88.8 expected to push the growth of the coun- 2012 168.5 38.9 2012 12.7 92.5 try’s cards and payments industry over the next five years. 2013 177.3 45.5 2013 13.9 107.8 2014 194.1 53.5 2014 15.5 132.1 Saudi government’s effort to encourage 2015 210.4 61.6 2015 17.1 156.6 less-cash payments propelled debit cards’ 2016 227.6 70.4 2016 18.8 180.9 growth. The government took a number of initiatives 2017 245.9 79.5 2017 20.5 203.3 to migrate towards a cashless society over 2018 264.5 88.7 2018 22.1 224.1 the last five years. 2019 283.1 97.8 2019 23.8 242.3 One such initiative was the introduction Source: Saudi Arabian Monetary Agency and Timetric Source: Saudi Arabian Monetary Agency and Timetric of the Wage Protection System (WPS) law in June 2013. The law mandates that the salaries of employees are to be paid directly n SAUDI ARABIA’S PAYMENT CARDS BY TYPE n SAUDI ARABIA’S CARD TRANSACTION VALUES into bank accounts. WPS was implemented (MILLION), 2010-2019 BY CHANNEL ($M), 2010-2019 in phases depending upon the number of Year Debit Cards Credit Cards Charge Cards Year ATM POS employees in any given organisation. It 2010 9.7 2.2 0.3 2010 1,081.7 179.1 became mandatory for companies with 100 2014 17.1 3.1 0.3 2011 1,261.8 223.8 or more employees to transfer salaries into bank accounts in November 2015. Such ini- 2015 14.6 2.9 0.3 2012 1,340.6 283.7 tiatives are anticipated to further increase the 2019 30.1 4.4 0.4 2013 1,343.7 353.0 volume of debit cards in circulation. Source: Saudi Arabian Monetary Agency and Timetric 2014 1,505.0 428.0 2015 1,658.8 505.3 Technology encourages card penetration Technology adoption is expected to be the paid cards for remittance and cash transfers 2016 1,820.7 589.1 key driving factor of industry expansion. were found to be of interest across the board, 2017 1,985.7 678.6 EMV chip-enabled cards are already particularly for expatriates. Prepaid cards 2018 2,151.3 770.5 in circulation, and banks started to issue are more popular in Saudi Arabia than other 2019 2,311.3 861.7 contactless cards, causing the cards and pay- Middle Eastern countries. Source: Saudi Arabian Monetary Agency and Timetric ments industry to be on the cusp of transfor- The country has a large influx of tourists mation. The adoption of EMV enabled cards to the Islamic holy cities of Mecca, Jeddah grew substantially over the last five years, ris- and Riyadh. Every year, millions of religious 2014, from $459.9m (SAR1.7bn) in 2010 to ing from 6.3 million in 2010 to 20.5 million tourists visit Saudi Arabia as part of the Hajj $2bn in 2014, and was estimated at $2.6bn in 2014. pilgrimage, with others also taking part in in 2015. In addition, the country is moving towards the Umrah pilgrimage. A substantial num- The growth of the online transaction contactless payments with Riyad Bank ber of tourists withdraw cash and carrying volume was assisted by the notable rise in launching the country’s first contactless it during the pilgrimage which signifies an internet penetration. card in September 2015 and took the ini - opportunity for prepaid card issuers. The government has also been taking steps tiative to transform its entire card portfolio As a result, many banks and card issuers to develop the e-commerce market. to contactless technology. Other banks and offer cards exclusively for individuals trave- The Ministry of Commerce and Industry card issuers are anticipated to follow and ling to Mecca and Madina. introduced the first draft of the eCommerce propel the growth of the industry. Law in February 2015 to increase the com- The prepaid cards market also poses sig- Rising e-commerce drives e-payments petitiveness in the e-commerce market as nificant growth opportunities due to the high The value of e-commerce transaction grew well as to enhance the customers’ trust on unbanked and expatriate populations. Pre- rapidly in Saudi Arabia between 2010 and online purchase. <

www.electronicpaymentsinternational.com May 2016 y 15

EPI 347.indd 15 29/04/2016 14:46:36 Electronic Payments International COMMENT SIX PAYMENT SERVICES

Payments innovation– what’s in-store? Sascha Breite, head of Future Payments at SIX Payment Services, sheds a little light on innovation from a merchant’s perspective. What if the consumer was more involved in the value chain- is there a proposition that benefits consumer and merchant alike? And what about QR codes, is there life in that old dog yet?

he payments ecosystem has been confluence of interest in a purchase and other kinds of payments, such as Near Field revolutionised in recent years. intent to buy will become increasingly impor- Communication (NFC). Innovation in payment methods is tant to retailers and consequently to the pay- We will survey how consumers, who have constant and it’s worth looking at ment industry. become used to peer-to-peer payment sys- T One key is to connect the consumer’s iden- where we may see further change with tems, are now responding to QR code tech- regards to payments across Europe. tity with the company that they want to pay: nology and how far it has the potential to where are they going? Can they be identi - become widely used as a payment option. The service economy fied? If you can bring together these various It is our view that customers hate ‘idle’ Payment simplification is creating different sources of information with communications time, when they’re queuing in shops for expectations among consumers. They expect from mobile devices and from the payment example. The result is that new systems are that their real-time experiences will follow side, you can link the movements of consum- emerging where they can scan goods as they technological advances. ers to sales. walk around the store, meaning by the time Just as they can ‘lease’ music instead of Companies like Starbucks and McDonalds they reach the checkout, they can pay quickly. buying it outright, and access software as a have developed apps which can track their The consumer being more active in the service (SaaS) for a monthly fee, they expect consumers and offer them the chance to pay value chain of a transaction means that mer- this model to spread to other areas of their in advance. Starbucks’ Order & Pay service chants can provide more information (this lives. achieved five million sales in its first month can appear on the consumer’s mobile device, The payment industry needs to support alone. as they tour the retail premises for example); this new business model, enabling payment But what if you’re an SME? This area is it can give details of product availability, or of smaller amounts – since individual service currently underserved. For example, if we the location of certain goods. It also opens up fees such as subscription services may be very know that a card holder is using their card, the possibility of developing greater engage- small – and enabling customers to cancel a we can connect them with goods or services ment, communication and loyalty relation- service at short notice, rather than being tied that merchants are offering, enriched with ships between retailers and consumers. into long contracts. other information to improve loyalty and The way that people communicate today, marketing effectiveness. Enhanced security using social media to make recommenda- Small and medium-sized enterprises will Rising awareness of the dangers of online tions (and alert each other to problems) is be able to access anonymised data on the and cyber fraud means that everyone in the also shaping payment technology. If they are purchasing behaviour of their customers, as payment industry must take steps to improve dissatisfied with something, the payment a way of helping them to understand spend- security. ‘Always on’- consumers don’t want industry must pay attention and respond. ing and payment patterns. to be bothered with paying attention to secu- Many customers avoid loyalty schemes, rity measures, and yet it is essential they feel A mobile world meaning that merchants know relatively secure in what they’re doing. Fraud preven- The amount of time that consumers spend on little about their spending habits. It may be tion measures have become more advanced, their mobile devices is dramatically altering worthwhile bringing together information but there has to be constant improvement the payment landscape. Figures show that from banks and telecom companies to pro- and vigilance to ensure that the industry the average user checks their mobile device vide additional analysis. remains ahead of any threats to its reputa- 120 times per day, looking at mail, informa- This has the potential to be of great help tion and integrity. tion, news and other updates (including their to SMEs – for example, if a merchant recog- The range and speed of changes in the pay- bank details). nises when a customer has spent more than ment industry have never been so dramatic This volume of attention can be targeted €200, they could offer them something as a and revolutionary, with new entrants to the by marketers, with consequent implications reward. It is a way for smaller merchants to industry threatening to disrupt the sector and for the payment industry. It will steer how compete with larger brands. traditional players seeking ways to maintain new payments and purchases are made. their positions. In many cases, payments will take place QR code options The future is clear - It will be those that seamlessly in the background, through a safe, Scanning a product’s QR code into a con - enable the consumers and retailers of tomor- virtual wallet. But it is important to under- sumer’s smartphone is an option that SIX row to reap the maximum benefits of this stand what people are looking for, what is Payment Systems is piloting in Switzerland, innovation who will prevail. This will require attracting them in this new ‘attention econo- along with conducting a survey to discover agility to adapt to market changes and must my’, so that the payment industry can facili- how consumers are reacting to QR code be part of a wider arsenal of attributes which tate it. technology. At least 130,000 consumers will should include a calm approach, budgetary It is also being called ‘contextual com - have access to the option, potentially rising support and the resilience to await results of merce’, where the option to buy a product to 500,000 by the end of the year. new ideas. These coupled with stamina and or service is presented to a consumer while It allows consumers to use their smart - continuing to provide a suite of ‘staple’ solu- they are online, browsing through pictures phones as part of the purchasing process, tions will deliver a payments future that will or news stories for example. Identifying the despite the restrictions imposed by Apple on enrich the entire industry. <

16 y May 2016 www.electronicpaymentsinternational.com

EPI 347.indd 16 29/04/2016 14:46:36 Title Sponsor

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