Global Trends in Cards and Payments Industry 2020 External Document © 2020 Infosys Limited Contents

Foreword...... 4 New payments ecosystem on real-time payment rails...... 5 Embedded, ubiquitous and standardized payments...... 10 AI- and Ml-led digital transformation...... 15 Technology innovation to scale up payments offerings...... 20 Embracing innovative fintech business models...... 24 Product innovation-led differentiation in payments offerings...... 29 References...... 34 Infosys contributors...... 37

New technology and competition startups have used distributed from fintechs have rapidly ledger technology to reduce costs disrupted the financial services and increase reward program industry, especially cards interoperability across merchant and payments. Payments chains. Such initiatives increase are increasingly ubiquitous, consumer adoption of loyalty embedded, standardized, programs and brand stickiness. and secure, reducing friction Rajneesh Malviya The rapid adoption of real- in processing and ultimately Senior Vice President, time payments has fueled that Financial Services, Infosys transforming the customer transformation worldwide, experience. including across borders. With Global Trends in the Cards more than 50 real-time payment and Payments Industry 2020 schemes now live globally, analyzes this new ecosystem of companies are focused on real-time payments, including building overlay and value-added ways to scale solutions, simplify services for all segments. Firms payments, and monetize data. are also investigating innovative The report also provides insights business models that tap into on how industry players are unmet consumer demand and transforming their businesses allow incumbents to fend off by utilizing technologies such as disruption by fintech companies. distributed ledger, cloud, artificial For instance, traditional banks Ashok Hegde intelligence, machine learning, have explored peer-to-peer Vice President, big data, digital, conversational lending, noncard lending at the Financial Services, Infosys commerce (e.g., smart speakers), point of sale, and escrow services wearables and analytics. for consumer digital commerce. These trends and technologies The 2020 edition of this report have profoundly changed the covers these industry trends, and cards and payments industry. more, which we believe will play With resiliency powered by out in the next few quarters. We cloud computing, transaction offer this analysis to you to help processing platforms can now guide you through cards and handle spikes in traffic and payments decisions. ensure banks stay open 24/7. The rapid growth of cross-border e-commerce and expansion of global operations makes the Vijay Anand concept of peak and lean hours Head, Cards and Payments, in bank IT platforms less relevant. Financial Services, Infosys Industry leaders and fintech

The adoption of domestic and cross-border real-time payments has risen rapidly across the globe. There are 54 real-time payment schemes that are live globally, with many planned in the near future (see Figure 1). Industry estimates project the real-time payment market to grow at a compound annual rate of between 50% and 80% from 2018 to 2023.

Trend 1: Rapid rise of real-time payments

With technological and business • Use additional optional services • Design layered architectures advancements, real-time (AOS) to cater to country or with core settlement layer, payment schemes are also region-specific needs overlay services and AOS evolving. The focus of institutions • Use extended remittance • Industry participation in governing real-time payment information to promote use defining the payment message scheme rules are focused on key cases in business-to-business guidelines and overlay services tenets, such as: (B2B) payments • Sandbox environment for • Move from net or deferred fintech startups to connect • Support digital payments settlement mechanisms to real- and test real-time payment and new modes of payment time settlements platforms using APIs initiation – e-channels, wallets, • Enable the use of aliases and third-party providers, etc. addressing services • Adopt ISO 20022 message formats for end-to-end payment flows

Sweden – BIR 2012 Denmark – Straksclearingen Poland – Express ELIXIR 2014 2012 Czech Republic – RTPE Iceland – Greidsluveitan 2018 2001 Norway – Straksbetalinger 2019 South Korea – HOFINET P272 2011

SEPA EU1 – SCT Inst Canada UK – FPS 2008 Switzerland – SIC Hungary 1987 Romania – PlatiInstant US – RTP 2018 2017 Turkey – RPS China – IBPS 2012 2010 Japan – Zengin 1973 Bahrain – Fawri+ Taiwan – CIFS 2016 Saudi Arabia 1995 Mexico – SPEI 2019 Hong Kong – FPS 2004 ARPS India - IMPS 2018 (covering 22 2010 Thailand – Prompt Pay Vietnam Arab countries) 2017 Cambodia - FAST Philippines – InstaPay Colombia Sri Lanka - CEFTS 2014 2018 Ghana – GIP Malaysia - RPP ASEAN’s RTP 2016 Kenya – PesaLink 2018 (covering 10 countries) 2017 Peru Brazil – SITRAF Singapore – FAST 2002 Nigeria – NIP 2011 2014

Indonesia - TBD

Australia – NPP Chile – TEF 2018 2008 South Africa – RTC 2006

1 SEPA EU Countries (22) live with SEPA SCT Inst- Austria, Belgium, Bulgaria, Croatia, Cyprus, Estonia, New Zealand Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Monaco, the Netherlands, Portugal, Slovakia, Slovenia, Spain 1P27 (4) Sweden, Norway, Denmark and Finland

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SWIFT gpi has significantly payments and have been a huge Open banking APIs will help improved cross-border payments success with retail and corporate unlock the value of processing across the existing payments (see Figure 2). real-time payments. correspondent banking network. The immediacy factor in real-time SWIFT has done successful trials Recommendations for real- payments and the large volumes with gpi and domestic real-time of data generated require payment schemes for real-time time payments adoption scalable IT systems for processing cross-border payments. Apart Real-time payments provide a and storage. This need will be from the industry initiatives, platform for institutions to make amplified by open banking and traditional players and fintech the user payment experience indirect participation models. startups also offer real-time more valuable, and ensures Cloud-based offerings can be payment services. Blockchain- 24/7 availability and real-time considered for varying volumes, based technology companies settlement. For institutions, lower costs, greater availability like Ripple are offering instant the real value lies in leveraging and compliance requirements. cross-border payment services. opportunities to monetize real- The company leverages its time payment rails by developing The ability to receive or transfer advanced blockchain technology overlay services. These include money on a real-time basis RippleNet to reach trusted P2P payments, request to pay, requires the existing payment institutions across the globe. payment aliases, Confirmation infrastructure to be significantly Fintech startups like Zelle, Interac, of Payee, liquidity management upgraded. Financial institutions Transfast and Earthport offer real- solutions and cross-border P2P. without a significant market share time domestic and cross-border

6 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited in payments offerings are most and handle large volumes of support end-to-end payments likely to use a targeted approach the payments data that will processing including connectivity that will help them meet customer be generated. to scheme processing systems. expectations and regulatory Fintech startups offer P2P, demands without completely Solutions for real-time contactless payments and overhauling their technology. merchant payment solutions by Many of these banks will pursue a payments connecting multiple networks and solution that will not only coexist The ubiquitous impact and services, or offer their platforms as with their existing payments potential of real-time payments a service to enable domestic and infrastructures and comply with have encouraged most cross-border real-time payments. the new real-time payments players in the industry to offer Some of the solutions support scheme, but also be cost effective. services including platform, specific functions within the Partnerships are key for channels, payment solutions, whole value chain, such as the institutions to develop use cases, routing, connectivity channels, liquidity and cash innovative use cases and to and integration. management, personal finance have a technology platform that Real-time payment solutions management, sanctions, API enables the adoption of real- powered by the big tech connectivity, integration to social time payments. With a Payments companies are used by financial media or e-commerce sites, and as a service model, technology institutions either as a service or point-of-sale (POS) capabilities. companies will own a majority deployed within a cloud-based Big tech companies leverage of the payments processing environment. These solutions their leadership position in the

Figure 2. Fintech startups lead in offering real-time payment services

Big tech Fintech startups Tech giants Messaging Card networks companies networks • ACI worldwide • BELLIN • Ji y • Rapyd • Amazon • SWIFT gpi • American • Finastra • Bambora • Klarna • Rapid Financial • Facebook Express Serve • FIS • BillingTree • Ledge solutions • WeChat • Visa • Fiserv • boon • Montran • Real Time Debit • Baidu • Mastercard • ProPay • Briisk • Moneris • Remitly • Google • Temenos • bpc • Nets • Ripple • Alipay • Volante • Buckzy • NYCE • REPAY • bunq • Nubank • SatoshiPay • Chillr • Obopay • Square Cash • Checkbook • Ozow • Stripe • Curve • Payment data • TransferMate • DiPocket systems Global Payments • Direct Site • PayFi • Venmo • Earthport • Payoneer • Verse • Enservio • PayPal • Worldline • Inpay • PayPie • Weezzo • Guru • Payscout • Wyndy • IntegraPay • Pelican • Yapstone • Interac • Pungle • ZOOZ • Justpay • Quickpay • Zelle

Source: Infosys

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 7 social media and internet space to time payments; for example, the to fill the gaps left by other promote real-time P2P payments Visa acquisition of Rambus and players, offering services that integrated with their chat facilities Mastercard acquiring the real- enhance the customer experience or as a separate payments time payments unit from the Nets and leveraging opportunities app. Credit card networks are Group. The real-time payments for monetization. acquiring specialized players, and market is crowded with multiple expanding their horizon in real- technology providers trying

Trend 2: Real-time cross-border payments Global trade and e-commerce are operate globally. Firms like Recommendations for driving the demand for quick or Amazon, Uber and Airbnb real-time settlement of payments, enable international B2B and leveraging real-time rails within and across borders, which C2B payments by giving retail for cross-border payments is at an all-time high. With over customers and businesses the Similar to the Nordic banks 30 countries having their own opportunity to spend and shop that have stepped in to create domestic real-time settlement across borders. P27, a first-of-its-kind, real-time mechanisms (TCH in the US, NPP However, cross-border real- cross-border payment network, in Australia, NAPAS in Vietnam, time payments face hurdles to there is an opportunity for etc.), there is a need to interlink meet fraud risk and regulatory global banks to explore options these domestic clearings and mandates. Cross-border payments to build similar networks or develop a seamless near-real-time involve currency conversion connect to upcoming networks. cross-border payment experience. and managing exchange rates, Ongoing projects by regional SWIFT’s gpi platform is moving in which add to its complexity. and economic cooperative this direction. Corporate firms and consumers organizations include the Arab The movement of people demand greater visibility and Regional Payment System (ARPS) across borders is increasing transparency while making by the Arab Monetary Fund and the transfer of remittances international payments. To reduce the BRICS (Brazil, Russia, India, across countries. A 2018 World reconciliation errors, businesses China, South Africa) payment Bank report highlights that are favorably considering a real- system. Interoperability and remittance transfers worth time tracking system. Higher risk assessment are constraints US$689 billion were made and infrastructure costs, difficulty when it comes to settling these are expected to grow in achieving cross-border payments across international larger. In India, for instance, interoperability and the risk of borders. The adoption of ISO remittances account for 2.9% customer acceptance are some 20022 by banks globally makes of gross domestic product. The of the factors restricting banks it imperative to send and receive huge volume of cross-border from developing cross-border standardized payment messages remittances is another factor that real-time payments offerings. worldwide. It provides banks with drives the demand for real-time However, a majority of the banks interoperability and the ability cross-border payment transfers are yet to collaborate with fintech to carry richer data and achieve and settlements. E-commerce is innovators to make strides in straight-through processing. another area where cross-border cross-border payments and The availability of richer data will payments are required. Nearly leverage alternative payment be key to alleviating challenges 15% to 20% of e-commerce methods offered. faced in fraud management and transactions are international, compliance regulations related as e-commerce marketplaces to cross-border payments.

8 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited These challenges are expected cards. With cross-currency real- Platform (NPP) for domestic to increase as cross-border time payments, travelers can do clearing in 18 seconds and a trial payments are made in real time. away with maintaining multiple using Singapore’s FAST system Banks should leverage AI and currency wallets or accounts. wherein a cross-border payment ML for sanctions screening and was settled in 13 seconds are fraud screening mechanisms Solutions for real-time examples of cross-border real- to enable reliable, smarter and time payments using SWIFT gpi. quicker processing of cross- cross-border payments Visa and Mastercard leverage their border payments. This would lead With the increased focus on card networks for processing push to increased straight-through alternatives to the legacy payments into card accounts. payments, resulting in less correspondent banking system Visa Direct and Mastercard manual intervention, and help in and demand for real-time MoneySend offerings have been bringing down the effective cost payments across borders, many available in the marketplace of payments. Banks can leverage fintech companies have come for quite some time and are SWIFT gpi to send funds overseas up with their own solutions. targeted toward the domestic and benefit from end-to-end Ripple provides a cross-border as well as cross-border payment tracking, improved service levels real-time payment network needs of consumers and small and credit confirmation. With the based on distributed ledger and midsized businesses. New involvement of fintech startups technology across more than 40 partnerships are evolving with like Ripple in the cross-border countries for banks to transfer remittance companies teaming space, there is an opportunity for funds across borders. Ripple up with the card networks. banks to collaborate with fintech recently crossed the 300 clientele Remitly has collaborated with companies and leverage their mark, which includes banks, Visa Direct to allow its US clients platforms and service offerings financial institutions and payment to do real-time cross-border to meet client cross-border providers. Other industry players fund transfers to Visa debit cards payment needs. have come up with blockchain- using a credit push mechanism. Real-time cross-border payments based cross-border payments Bank of Montreal has teamed can be leveraged to support offerings. Visa B2B connect (based up with Mastercard to provide several use cases in retail and on distributed ledger technology) faster global payment services to corporate payments. Real- and IBM Blockchain World Wire its clients based on Mastercard’s time payments would provide (based on blockchain technology MoneySend service. corporations with the ability to and the Stellar protocol) are request on-the-go payments examples of such initiatives. across borders. This will help SWIFT has come up with its own reduce credit risk and payment solution to connect SWIFT gpi fraud. Global businesses can offer with domestic real-time payment their suppliers and customers clearing systems with the help better invoicing terms, reducing of domestic banks. With this working capital needs. This integration, SWIFT aims to increases transparency, as all leverage SWIFT gpi, its existing business stakeholders can track cross-border network, and the status of payments in near domestic real-time payment real time. Cross-border real-time systems to enable banks to payments can become a game- send and receive cross-border changer in the travel and tourism payments in near real time. The industry, which is currently delivery of funds between China dependent on travel and prepaid and Australia using New Payments

Splitting or decoupling of payment instruments (cards) and accounts (sources of fund) has been gaining ground. Digital wallets have accelerated this split. This will increase the dematerialization of cards as card numbers get to kenized and stored in wearables. Digital payments are expected to reach US$15 trillion globally by 2022. With digital payments being embraced across the globe, fintech startups and traditional firms are looking for innovative products to reduce friction in consumer payments and improve customer experience.

Trend 3: Digital payments Sound-wave-based digital number and transaction amount. capabilities. Smart speakers can payments This is a contactless payment receive voice instructions from Ultrasound is sound waves with method and can be done using consumers and execute mundane frequencies higher than the upper a mobile phone. It does not tasks. Going one step further, audible limit of human hearing. require an internet connection Amazon has facilitated payment It has been used for various or bluetooth hardware. Software transactions using Echo (Amazon’s needs such as detecting objects, needs to be installed on a mobile smart speaker) and Alexa measuring distance, medical device that communicates (Amazon’s digital assistant); Alexa imaging and nondestructive (using sound waves) with similar can execute the payments using testing. Ultrasound waves can software or a tag at a merchant’s the Amazon Pay wallet tied to be used to process payments at outlet. The rest of the payment the device. An illustration of how retail outlets or physical points of processing is similar to existing a payment is made using Alexa: sale. Mobile devices can use their industry standards. the user gives a voice instruction built-in speaker to transmit sound to the device asking for a bill to Voice (smart speaker)-based waves to a receiver, which uses a be paid. The device verifies the digital payments standard microphone to receive Amazon Pay wallet balance and the waves. These sound waves Tech giants like Google, Amazon asks for the authorization PIN carry transaction details such as and Apple have launched smart (each Amazon Echo speaker has merchant name, payment account speakers with digital assistant a PIN for user authentication).

10 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited The user provides the eliminate the need for consumers as innovation of form factors or credentials via voice instruction. to remember passwords. Apple innovation in ways in which a On successful validation of the Pay popularized the usage of transaction is initiated. Consumer credentials, payment processing fingerprint authentication for mindshare is increasingly is completed like a normal online payments. Other biometric captured by digital front ends, and transaction. Currently, only low- methods of authentication such the payments service providers value transactions are allowed as facial, voice and vein pattern may eventually get eclipsed with this method. recognition are gaining ground. by these digital front ends. The emergence of QR code-based Wearable payments Cryptocurrency wallets payments in China is a case As merchant terminals with Digital wallets that enable in an example. contactless payments capabilities storing and transacting using Alipay and TenPay are QR code- have become commonplace, cryptocurrencies like bitcoin based payment providers that consumers are embracing are becoming quite popular. dominant digital payments wearables to fulfill their In the cryptocurrency wallet, in China. They both leverage payment needs. Wearable-based digital currency is stored in the consumers’ mobile phones to payments are gaining ground blockchain. The wallet interacts enable a frictionless payment in Europe and China. Wearable with the blockchain and assists experience. There is no fund payment technology works on in transacting using the digital stored in the digital wallet and similar lines to that of near-field currency. The public and private the transaction amount is fetched communication (NFC) mobile keys are held by the user. The from the bank account during payments. Instead of a mobile public address is known to the transaction processing. Alipay and device, a customer can use a user community and wallet TenPay have expanded their share smartwatch, bracelet, fitness provider. The wallet holder is of consumers’ wallets by offering band, ring or any jewelry to identified by a public address. consumer loans, investment pay. The wearable devices have When other users transfer digital advisory services, money market payment credentials embedded in currency to a public address, instruments, etc. Due to their them. They communicate with the the private key on the wallet is dominant market share, they have merchant POS terminal or other used. The wallet authenticates demoted Chinese banks to only compatible devices and complete using the public and private keys. provide value storage rather than the transaction processing in less On successful authentication, financial services. Banks continue than a second. Wearables provide the transaction is processed. to bear the cost of compliance, enhanced convenience and ease Cryptocurrency is stored not in running bank branches and other of usage, without compromising a wallet but on the currency’s operational costs, while digital the security associated with blockchain. The wallet acts as an players have started to eclipse contactless payments. interface between the user and them to the extent that banks the corresponding blockchain. may end up being “dumb pipes” in Biometrics-enabled digital the digital economy. payments Recommendations for NFC mobile payments wherein UPI-based payments have grown a mobile phone is used to digital payments at a rapid pace in India, thanks authenticate a user’s fingerprint, Millennials’ and Gen Z’s propensity to mobile app offerings from have made biometrics technology for mobile has led to fast adoption fintech players such as Google commonplace in retail payments. of mobile payments across the Pay, PhonePe and Paytm. The Biometrics such as a fingerprint, globe. Evolving trends in digital UPI design connects mobile iris or face scan make payments payments such as voice-based apps from any service provider safe, secure and fast, and also payments or wearables appear (fintech startup or bank) to any

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 11 bank account. Though banks had couple of years, voice-based ToneTag offers sound-wave-based launched their own mobile apps payments are expected to gain payment technology to retail for UPI, consumer adoption of market share for low-value merchants. It can work without apps launched by fintech startups payments. Offerings such as the internet and payments can was far higher. This underscores P2P money transfer using voice be made using only a feature the need for banks to stay commands will heat the market phone. In India, retailers like focused on digital offerings to for players such as MoneyGram, Shoppers Stop and digital wallets stay relevant in the minds of PayPal and Venmo. such as MobiKwik leverage millennials and Gen Z. ToneTag’s offering. Globally, about Atomic wallet, Bread wallet, 400,000 merchants are using this Banks can tap into their Mycelium and Exodus are few technology, with higher traction knowledge of customers’ digital cryptocurrency wallet offerings seen in the Middle East and Asia. preferences (for example, the available on mobile, desktop As no internet or NFC or bluetooth use of smart speakers) and and cloud-based formats. In hardware is required, it is suitable technology like biometrics to Europe and the US, there is no for usage in geographical areas reduce friction in payments regulatory bar on dealing with where internet penetration is processing, improve customer cryptocurrencies. However, low and customers cannot afford experience, enhance engagement in some Asian countries, smartphones. and ensure stickiness. With the cryptocurrency trading is not amount of data available to banks, approved, and the evolution Apple Pay transformed the NFC they have a bigger opportunity of the cryptocurrency wallet mobile payments market and built to understand consumers’ is limited in such markets. itself a unique value proposition preferences and financial needs. Regulatory frameworks will in terms of consumer convenience Insights gained from digital continue to a key factor in and payments security. The Apple interactions will enable banks determining the success of smartwatch enables wearable to customize their products and cryptocurrency wallets. payments and supports the Apple launch new offerings to meet the Pay digital wallet. To enable wider In China, fast-food chain KFC has emerging needs of millennials adoption of wearables, players introduced a facial recognition- and Gen Z. such as Xiaomi, Fitbit and HTC based payment system called offer payments capability at a “Smile to Pay.” It links users’ faces reasonable cost for their devices. Solutions for digital to their Alipay accounts. Alipay This has boosted wearable is one of the most widely used payments payment usage in markets digital wallets in China. Users can like China. Amazon’s Echo-powered Alexa execute a payment by interacting voice command payments are with a self-service kiosk for well integrated into Amazon’s payment processing. Mastercard retail ecosystem. The Google has launched a “selfie-based Home speaker, powered by the payment” pilot in Europe that digital Google Assistant, offers authenticates payment by clicking voice-based payment features. a selfie instead of entering Google has teamed up with a password. Walmart to bring thousands of Walmart products into the voice shopping mode. Over the next

12 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited Trend 4: ISO 20022 adoption in payments From low-value retail payments to Recommendations for Coexistence approach – a large global business transactions, financial messaging is the heart of accelerating ISO 20022 first step toward ISO 20022 all payment operations. ISO 20022 adoption adoption is a global standard for financial As various central banks and A structured migration approach payment messaging that provides payment authorities are coming that allows a legacy format to a standardized approach and up with regulations on ISO 20022 be in use while ISO 20022 is methodology to be used across all adoption, banks and financial leveraged for specific schemes is payment messages and networks institutions are working to recommended. The coexistence of It provides for richer metadata embrace ISO 20022. SWIFT has message formats enables multiple on payment transaction details projected this transition to occur message formats to be used for than do traditional messages used over a four-year period. This various payment schemes. The for payment transfer. The XML- provides financial institutions with simplest way to achieve this is by based framework of ISO 20022 sufficient time to prepare and mapping the existing proprietary allows more information to be plan for the implementation of messaging formats to their sent through payment messages, ISO 20022. Critical success factors equivalent SWIFT MX messages. which improves the operational that will help banks adopt this The mapping can be built using efficiency. standard seamlessly include: the business logic of the messages The payments industry currently • Create an impact assessment at the interface layer. For example, uses various legacy proprietary with a long-term view in mind the ISO equivalent of MT101 is messaging formats that limit Pain.001, while that of MT900 • Plan the adoption sequence for innovation and collaboration is CAMT.054. An alternative various payment schemes among financial institutions. This approach is adoption based on • Ensure that any new payment also leads to higher infrastructure message type, and this approach scheme to be introduced in the and operational costs ISO gives flexibility to financial market is ISO 20022-based to 20022 adoption provides banks institutions to initially adopt ISO avoid duplication of efforts and financial institutions with 20022 based on the message type flexibility and accuracy through a • Plan for implementing the or its attribute. syntax-independent and flexible required technology and framework. It promotes users interface changes creating payment message • Educate technical and models that break cross-border operations resources on the barriers and support global new messaging format business operations.

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 13 Participants may choose to global usage guidelines for ISO A report on ISO 20022 migration migrate to ISO 20022 messages 20022 adoption. The adoption by SWIFT highlights that most of only for some specific business will gain further momentum the domestic systems, including processes in payment processing due to key initiatives such as real-time payment systems while retaining their existing the European Payment Council’s and high-value real-time gross legacy message formats for Single Euro Payments Area (SEPA) settlement schemes, have other message types or business offerings, the UK’s New Payment announced plans for migration processes. For example, migrating System Operator’s introduction of to ISO 20022. SWIFT expects only outward payments for the New Payments Architecture 80% of high-value payments settlement to ISO 20022 while and the US Federal Reserve and its to be migrated to ISO 20022 by continuing to receive payment clearinghouse’s focus on real-time 2023. For cross-border systems, messages from clearing in payment initiatives. most banks plan to complete proprietary standards. This gives MX message adoption by 2023. ISO 20022 being a standard XML financial institutions the flexibility The study points out that only and global messaging format to divide the payment traffic 25% of the 148 high-value will help banks generate richer based on message attributes such payment systems across the structured data. Over time, all as account type and payment globe have already adopted ISO segments of financial settlements, type. Banks need to build a set of 20022. However, a widely used set from payments to securities, will API libraries for business processes of high-value payment systems use ISO 20022 standards, which where complex orchestration is are expected to adopt MX-based will improve the efficiency of present. The API layer can handle ISO 20022-compliant payment message communication and the required message translation. messages by 2023. These payment optimize the operational and Banks with low payment volumes systems cumulatively handle 87% infrastructural costs. The Trace and those that use a limited set of of high-value payments globally Transformer by Trace Financial payment schemes can consider in terms of payments value. Most and the Swift Funds Migration transforming their functional flow European and Asian countries Accelerator by Volante are for ISO 20022 adoption. have adopted the MX-based examples of service offerings from global standard for high-value payment messaging solution payments, and the rest of the Status of payment scheme providers that enable banks regions are gearing up as well. adoption of ISO 20022 to accelerate their ISO 20022 adoption. Payment gateway Regulatory boards and SWIFT providers to various central banks, have started various initiatives to such as CMA, ProgressSoft and encourage banks and financial Flywire, have launched offerings institutions to migrate to ISO for ISO 20022 transformation for 20022. SWIFT has come up with their clients. the Cross-Border Payments and Reporting initiative to develop

Banks are using AI and ML to redefine the customer experience and gain insights from payments data. Natural language processing leverages AI capabilities to convert speech to text and to generate text. Chatbots are increasingly used in cardholder servicing because they can automate the handling of routine customer queries, and allow the customer service representatives to focus on complex servicing requests.

Trend 5: Artificial intelligence and machine learning in cards

Cognitive robotics process used in areas such as account “Self-driving” banking focuses on automation (RPA) is AI-related opening, collections, dispute automated banking processes technology that enables the management and cardholder that enables bank accounts to banking industry to automate servicing. Complex ML algorithms “drive themselves.” Self-driving banking processes that are used for fraud management banking is expected to evolve to a involve manual intervention and anomaly detection in card stage where it can make decisions by back-office personnel to transaction processing. on behalf of customers based on pull information from multiple customer consent and data. Computer vision leverages applications or data sources. RPA AI for automatic extraction, can be applied to a wide range analysis and understanding of use cases in banking including of useful information from retail branch banking, commercial images. This helps to review lending, consumer lending, loan documents related to legal and processing, underwriting, anti- regulatory compliance. money laundering (AML), etc. In the cards industry, RPA has been

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 15 Recommendations for needed to solve complex business complex with the widespread problems. More importantly, adoption of digital technologies leveraging AI and ML insights gained through AI and and the increase in technology for cards ML initiatives should be made complexity. While fraudsters will available in near real time to front- continue to mount cyberattacks, Rapid improvements in end staff for their decisioning. ensuring platform security is computing power, decline in the This ensures these gains are critical given the laws governing cost of computing and storage, amplified across functional areas, customer data privacy and availability of abundant data various operational silos and the financial value of insights and advances in algorithms have geographical teams. generated by AI and ML initiatives enabled increased adoption of . AI and ML. These technologies Focus on processes and Regulatory compliance should be viewed as technology methodologies enablers, whose benefits can be Leveraging AI-powered RegTech fully accrued only if the required A clear definition of an solutions enable banks to methodologies, processes and enterprisewide data strategy overcome regulatory compliance governance mechanisms are put will provide a set of directions to challenges. AI and ML enables in place. various teams working on AI and cost reduction and improves ML initiatives. Data governance proof of compliance. These Align technology strategy with processes are standard to meet initiatives themselves could business goals regulatory compliance related come under regulatory scrutiny Banks need to align their AI to customer data privacy. Using given the regulations in the and ML technology strategy the data lake approach to have customer data privacy domain. with an enterprise-level road a single, consolidated data Data insights gained through data map of business use cases. repository will enable banks collected or stored in a manner A clear definition of use cases to have a 360-degree view not compliant with regulations and use case prioritization of customers, business and and actions arising from those based on expected benefits are processes. Having a common insights would attract regulatory prerequisites for any initiative in set of tools for data extraction, scrutiny. Therefore, a robust data AI and ML. It is also imperative analysis, insight generation and governance model is imperative. that the technology strategy be data visualization will avoid aligned with a bank’s game plan duplication of efforts across Employee displacement for pursuing differentiation or multiple teams, business units Nearly half of all banking jobs will excellence in various domains. and geographically spread teams. be technically and economically Well-defined key performance doable by AI and automation Foster a culture of learning and indicators will ensure the over the next couple of years. collaboration objectives of the AI and ML Self-learning algorithms’ without Banks can leverage digital initiatives and expectations of any supervision will ensure learning platforms to enable a benefits are clearly articulated to technology can do most things culture of continuous learning in the wider teams involved. that humans can do. With the AI and ML for their business and possibility of humans becoming technology teams. A collaborative Critical success factors in redundant and the workforce team of technology experts and AI and ML initiatives displaced, a comprehensive business knowledge is essential approach to tackling the for successful AI and ML initiatives. Cybersecurity outcomes is necessitated. Business system analysts can Retraining employees ensures that act as the bridge between the Technology platforms form the the impact of job displacement technology and the business core of the banking and payments due to AI and ML is reduced to the team. Cross-functional teams processing industry. Managing minimum. working collaboratively are cybersecurity has become

16 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited Explainability of AI models demographic profile, transaction by more than 500,000 new users data, earlier reward redemptions per month. Erica supports 400,000 With various decisioning related and other financial parameters to ways in which clients can ask to application processing or identify the most suitable reward financial questions. It also notifies loan sanctioning, credit limits offers for the customer. users about infrequent, abnormal and collections being done charges and about any increase in by algorithms, explaining the American Express offers a a recurring charge. rationale behind such decisions personalized travel solution to its becomes important. An inability customers through Mezi (acquired State Bank of India (SBI) Cards to explain why a loan or a by Amex in 2018), an AI-powered has leveraged RPA to automate transaction was declined will personal travel assistance app. the follow-up process under lead to customer dissatisfaction. Customers can send a text with chargebacks for disputed Self-learning algorithms run the their request for reservations for transactions. The RPA bot risk of being labeled as biased flights, hotels, restaurants, etc., automates customer follow-ups based on gender, age or race if and Mezi provides personalized to collect evidence and inputs for the decisions made cannot be recommendations and makes the proper classification of disputes. logically explained to customers. necessary travel arrangements. SBI Cards has benefited from the reduction of 700 man-hours With the growing advent of Bank of America’s chatbot, Erica, of effort per day due to the self-learning algorithms, the is available to mobile banking RPA initiative. risk of being unable to explain customers and has over 27 the algorithm model increases, million active users. Customers thereby making banks vulnerable can interact with Erica in three to public scrutiny. different modes – voice, tap and text. Erica can assist with money Solutions that leverage transfers, transaction searches, AI and ML for card account balance inquiries and financial management. Financial payments management capabilities include HSBC leverages customer and Spend Path, a FICO score tracker, transaction data to customize a subscription monitor and bill product offerings, improve reminders. Erica studies people’s risk profiling and automate situations and behaviors and compliance initiatives. The bank offers proactive guidance and also uses AI to deliver relevant insights to help customers stay rewards and loyalty offers to connected with their cash flow, customers and has seen higher to avoid surprises and identify rewards redemption rates savings opportunities. It has based on the AI-generated completed over 50 million client recommendations. The AI requests and has been engaged model analyzes a customer’s

Payment System Directive 2 analytics can be used for real-time to build innovative products and (PSD2) regulation and open decisioning in cross-sell or upsell services. The data strategy, in banking initiatives across the initiatives, reward offers, customer addition to the data privacy and globe are opening access retention, etc. compliance regulations, should be to payments data for third- the guiding force to handle data Monetizing data will require party providers. ownership disputes. organizations to be cognizant Growth in data monetization of data privacy and compliance adoption is driven by the regulations when harvesting Solutions that monetize continuous increase in enterprise- data, storing data, manipulating payments data level data; the rise is leveraging data for commercial usage, big data technologies and etc. Organizations that plan to Banks and payments industry awareness of potential benefits monetize payments data should players can leverage data analytics in adopting data monetization have a well-defined data strategy firms whose service offerings solutions. But data privacy and in place. Data can be categorized come with built-in capabilities security regulations are significant as raw (containing personally for compliance with data privacy constraints for market adoption of identifiable information, PII), regulations and best practices in data monetization solutions. anonymous (PII is removed) or data security. This enables banks synthetic (cannot be tracked to to pursue data monetization Challenging regulatory original data set). Organizations initiatives by leveraging large requirements and competition must evaluate the risk and volume of in-house data from fintech startups have led compliance issues inherent in along with data sourced from to increased competition in certain data types. They can then external sources. payments businesses. Banks choose to either: commoditize have started to look beyond the Arm INSIGHT offers products to the anonymous or synthetic traditional payments service synthesize data (ARM Mimic) data, build new products for offerings and embrace data and ingest external data (ARM their customers using raw or monetization to grow their Refinery) – these offerings can anonymous data or innovate to revenue. Banks are using data-led be used to gain insights and create new revenue streams from insights to improve their existing capture business value from data the anonymous or synthetic data. business models and create new troves. ARM Mimic allows banks to Organizations can opt to use revenue streams by launching synthesize data while maintaining internal data or combine existing innovative products and services. the statistical relevance required customer data with data sourced to gain necessary insights from from external vendors to gain the data. It synthesizes data within Recommendations for new insights that help create new data privacy constraints and monetizing payments data products or revenue streams. enables innovative and creative data monetization programs. The Banks are better positioned to Payment providers with a ARM Refinery data engine allows monetize payments data to presence in both the card-issuing financial institutions to ingest data generate new revenue streams and merchant-acquiring spaces from different sources, aggregate as they have a comprehensive have access to both consumer and transform the data to get view of the customer’s profile. and merchant data. Payment actionable insights, and upload to Differentiation lies in creating providers with a presence in any database or cloud platform. valuable products and services one business can develop from payments data available partnerships with players in the in-house combined with data other leg of the business. They sourced from multiple external can further combine externally parties. Insights gained from sourced data with internal data

18 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited Data Republic offers the Senate Ingenico offers a business The platform provides a suite Data Exchange Platform which intelligence tool named Elevate of capabilities for banks to helps organizations share data that enables firms to assess simplify campaign management. without risking nonadherence key performance metrics and It also provides an “always on” to customer privacy regulations help them benchmark their customer intelligence capability or data security guidelines. The performance against their peers. that enables the generation of Senate Data Exchange Platform Elevate is targeted at companies relevant and highly personalized streamlines data collaboration who handle international recommendations to enhance the across internal teams and also e-commerce transactions and customer experience across all with external parties to avoid process payments and customer touchpoints. unauthorized data sharing. It disputes arising out of those provides an end-to-end view e-commerce transactions. It of the customer by securely facilitates the conversion of raw combining data sets across payments data into easy-to-use the organization and a data dashboards. The dashboards allow enrichment facility to unlock organizations to identify payment customer insights. It facilitates a problems and opportunities and product innovation sandbox that proactively act on them. allows organizations to rapidly NGDATA offers the Intelligent test and evaluate new technology Engagement Platform, a customer against internal data. It also allows experience management solution banks to explore the potential of that captures channel data new data partnerships in a secure, to provide real-time insights auditable environment. to engage with customers.

Millennials are not inclined toward loyalty programs that require them to carry physical loyalty membership cards. US consumers hold 3.3 billion memberships, with an average consumer participating in at least seven programs. Points earned but never redeemed are 30% of total points awarded. A high percentage indicates that consumers are not connected with their loyalty programs.

Trend 7: Distributed ledger technology for loyalty programs

Customer trust and loyalty are they do have an affinity for digital loyalty program in such a way critical to the success of any reward programs. A retailer or that merchants cannot view each organization. With a customer- merchant may find it cumbersome other’s transactions. Benefits of centric approach, loyalty and to run a loyalty program due to leveraging blockchain for loyalty rewards have become focus areas the IT platform cost involved, programs include interoperability, and unique selling propositions customers disinterested in the reduced third-party costs, for financial organizations across onboarding process, abandoned increased adoption due to the globe. Conventional loyalty points or competition from loyalty frictionless systems, near-real- programs suffer from challenges program offerings in the market. time processes, and a secure and such as low redemption rates, permissioned platform. For a merchant or retailer to reward points lock-in with specific launch a cobranded loyalty merchants, high operational program with a card issuer Recommendations for costs, low customer incentives or another ecosystem player and a lack of uniform customer leveraging distributed involves high overhead due experience. In many loyalty to the complexity involved in ledger technology for programs, rewards are primarily loyalty points accounting and the loyalty programs driven by the total amount spent. reporting process with cobrand There is potential to achieve Rewards and benefits offered partners. Blockchain-powered multiple benefits from a well- can act as a differentiating factor. loyalty programs enable users to defined loyalty program to target With the benefits that blockchain- receive and redeem loyalty tokens a brand, product or customer based loyalty solutions offer, in an interoperable manner across profile. Millennials are not inclined and the problems inherent in loyalty programs. Every merchant toward loyalty programs that traditional reward platforms, has permissioned access to a require them to carry physical banks and industry players need distributed ledger that hosts the membership cards; however, to quickly adopt blockchain

20 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited technology. This will help be made available to consumers. a blockchain-based crypto- create unique customer value This makes it simple for the card currency offered as rewards propositions through a unified issuer and ecosystem players to points. LoyalCoin earned by platform for all participating articulate the benefits accrued to transacting at merchant outlets partner merchants, thus enabling the consumer. can be redeemed at any merchant a frictionless system. participating in the program including McDonald’s in the For blockchain-based loyalty Solutions that leverage Philippines. Consumers can programs to be successful, distributed ledger convert their LoyalCoin into other merchants may offer reward cryptocurrencies such as bitcoin points using varying loyalty technology or Ethereum. scheme definitions. Reward Singapore Airlines has launched points calculation, conversion and a blockchain-based digital wallet Trippki enables hotels to reward redemption must be transparent based on KrisFlyer, its air miles their guests with TRIP tokens that and easy for consumers to program. The wallet enables flyers are cryptocurrency issued on comprehend. This would to convert their unused airline the Trippki platform, built using otherwise lead to disinterest miles (KrisFlyer miles) into reward Ethereum DApp technology. from consumers and result in points (KrisPay miles). If the TRIP tokens can be redeemed low adoption. unused air miles are not sufficient against hotel room bookings for redemption at the airline, they on the Trippki platform. Trippki It is imperative to provide a can be tokenized as reward points. also keeps track of blockchain seamless onboarding program Consumers can redeem them at events across the globe, enables for partner merchants and other merchant outlets including fuel, crypto enthusiasts to book hotel stakeholders into the blockchain- retail, food and beverage, that are rooms and gather their reward based loyalty programs. These not directly participating in the air points as TRIP tokens. Hotels can programs also need to comply miles program. launch bespoke reward programs with regulatory mandates on using the Trippki platform to transaction data and customer American Express has launched meet the varied needs of the data privacy rules that vary a distributed ledger that allows traveler community rather than from region to region. In case merchants to offer Amex reward provide standard reward offerings tokens are used, token life cycle points to their consumers on that are widely available in the management becomes crucial, their respective mobile apps or market. Guests staying in hotels and the approach needs websites and not depend on a booked through Trippki can get to be in consensus with all credit card as a channel to offer rewarded with TRIP tokens for the stakeholders. reward points. The distributed writing reviews. ledger provides Amex with Card issuers would need to insights on products and services qiibee enables merchants to issue integrate their core processing that consumers purchase; these reward points as cryptotokens on accounts receivable platform insights are not available to the qiibee platform, which runs with blockchain-based loyalty Amex with credit card purchase on Ethereum blockchain and uses platforms. This ensures the details transactions, which carry the qiibee protocol. These reward of registered merchants and merchant name but not details of points are backed by QBX, which customers and loyalty program the items purchased. is the qiibee platform’s own token. terms and conditions are seamless across channels and all player- Appsolutely is a Philippines-based touchpoints. A consolidated omnichannel loyalty solution reward points statement must company. It offers LoyalCoin,

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 21 Trend 8: Cloud for platform scalability and resilience Adopting emerging technology to focus on business goals and Recommendations for has been a challenge for lets the technology operations traditional financial services team handle the organization’s leveraging cloud firms, especially the midsized computing demands. Cloud Infrastructure as a service and small players. Changing computing helps increase agility, (IaaS), platform as a service technology trends, paucity scale higher, optimize utilization (PaaS) and software as a service of skilled resources in niche of IT resources and saves cost (SaaS) are the three main technologies, and the cost and through the use of pooled assets. approaches for embracing risk involved have inhibited these Traditional players are held back cloud services. Corporations firms from adopting emerging by legacy systems that increase subscribing to SaaS services technologies. On the other hand, costs and slow down the time can use applications without traditional players face increasing to market for new products. the need to internally manage competition from fintech startups Cloud helps them modernize infrastructure components or that have built their platforms their back-end platforms to align application development. Based based on a digital-first approach with the latest technology trends. on computing needs and an and do not face the burden of Cloud-based platforms allow assessment of service providers’ integrating their digital with their them to offer Platform as a Service capabilities, a decision must be legacy back ends. The bank of the (PaaS) and explore additional made to choose the cloud model future is expected to look very revenue streams. and the service provider. different from today. Midsized and Banks can “lift and shift” their small traditional players in the Organizations can launch existing landscape into a cloud financial services industry need “software as a service in the cloud” setup; however, this approach to equip themselves to face the as an offering to provide platform may not allow banks to enjoy onslaught of competition from capabilities using the multitenant the complete set of features nontraditional players, changing architecture. Resiliency of IT and benefits offered by cloud consumer expectations, emerging platforms and the ability to infrastructure. As part of their technologies and alternative quickly recover from failures platform modernization journey, business models. Cloud is a are critical. Industry players banks can rebuild core processing solution that can help financial consider cloud a go-to approach platforms as digital-first platforms organizations be future ready. to enable enterprise platform transformation. According to an that embrace API-based and Cloud enables institutions to Infosys Knowledge Institute study, microservices-led architecture cope with changing business 50% of financial services and principles. Such redesigned demands, pursue new business insurance respondents had shifted applications will enable banks to opportunities that demand all or some critical enterprise fully benefit from the scalability, platform capabilities, and be applications to the cloud. The reliability and resilience that agile in scaling resources with market for cloud offerings is cloud infrastructure offers. increasing speed and elasticity. expected to grow by 8% annually It enables an organization’s until 2024. technology leadership team

22 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited Irrespective of the cloud industry players to reduce time with money management tools model, institutions need to to market and evolve platform and a Mastercard debit card. It focus on security measures functionality in a collaborative enables small-business owners and controls at all layers of way with other ecosystem to manage their finances on a the cloud infrastructure. Any players. Industry players are platform runs on AWS. Starling breach in regulation in a cloud increasing their focus on reduced Bank and Monzo are digital-only setup would be detrimental to a cycle times for new product banks in the UK that leverage bank’s reputation and consumer launches, introducing minimum AWS for their core platforms. confidence in the bank’s brand. viable products, building Starling Bank and Monzo run their platform capability sets in an analytics platforms on BigQuery, Bank platforms tend to have iterative manner, and designing deployed on GCP. multicurrency, multicountry platforms with scalability and features given the multicountry In January 2019, Cantilan Bank Inc. resilience as core principles. In operations of banking players. became the first Philippines bank such a transformative approach, As part of their cloud journey, to fully leverage a cloud-based the cloud journey can be institutions can consider instilling SaaS system for its core banking accelerated and amplified by multitenancy features into their system needs. Singapore’s DBS is players embracing DevOps core processing platforms. This one of the early adopters of cloud and agile approaches to enables to monetize platforms in the Asian banking industry. platform development. and extend capabilities to smaller Indonesia-based bank BRI runs traditional players and emerging Solutions that its platform on Google Cloud fintech players. This approach Platform (GCP). can go hand in hand with a leverage cloud bank’s strategy of competing and Banking players in the US, Europe collaborating with fintech players. and Asia are leading cloud adoption. US-based card issuer Embracing DevOps, Continuous Capital One leverages Amazon Development, Continuous Web Services (AWS) for its cloud Integration and process needs. Spain’s Bankinter and the automation has become UK’s OakNorth are using AWS important in an API-led platform to host their banking platforms. development where development Holvi, a digital bank for freelancers communities are spread across and small-business owners runs locations. DevOps and agile current business account services approaches enable banks and

POS financing provides consumers with instant loan processing to enable them to complete purchases. The loan size could range from hundreds to thousands of US dollars. Consumers can pay the loans in installments. POS financing provides unsecured loans within minutes at low interest rates without a preapproval, and with a simple and seamless loan setup. This form of financing is emerging across retail websites and in stores as an alternative to credit cards.

Trend 9: POS financing and noncard lending

Installment purchase has become one in 10 millennials says they the annual percentage rate works, popular since the 2008 recession: have carried credit card debt for which they address by offering 41% of US consumers have used five years. Millennials and Gen Z transparent and fixed credit terms. an installment loan and 28% of are drawn to POS financing due Fintech startups leverage mobile shoppers now prefer a retailer to their aversion to high interest apps for loan processing to that offers the option. TransUnion rates levied on credit cards and ensure a paperless and digital- has reported that unsecured the open-ended nature of credit first approach to consumer personal loans were the fastest- card outstanding. In contrast, onboarding. They have built growing debt type in the US in POS financing loans have fixed platform capabilities to leverage 2018, growing 19% year over year, tenure for repayment with interest nontraditional data sets for credit indicating an uptick in alternative rates that are lower than those on scoring apart from the usage of financing solutions. credit cards. Few fintech startups traditional credit bureau data. provide budgeting tools to help 52% of Gen Z and 60% of Their digital-first approach consumers track their monthly millennials say they are interested ensures a frictionless purchase budgets along with loan tracking. in payment methods other than experience for the consumer and POS financing fintech companies traditional credit cards to finance influences the user experience have gained traction by removing large e-commerce purchases. at the point of sale. Traditional consumers’ pain points such as Only one in three millennials banks such as Citizens Bank have lack of understanding as to how carries a credit card and about also built product offerings in this

24 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited space. Citizens Bank offers POS fresh credit application process. app to shop, engaging customers financing at Apple Stores and its This gives existing players an through features like price-drop merchant-financing loan portfolio advantage by making the process notifications and a wish list. The has grown to over US$1 billion. frictionless for merchants and Klarna solution is integrated into customers. retail stores like Zara, Ikea and Asos. It has launched Mindful Recommendations Consumers expect an Money, a digital content hub omnichannel experience for for POS financing and for money management and POS loans. The user experience responsible lending, tailored noncard lending across physical stores, the web for millennials. In 2018, Klarna’s To mitigate the threat posed by and mobile apps needs to be annual loan volume growth grew POS financing upstarts, traditional consistent and should be built 36% to US$29 billion. The firm players must take certain steps around ease of experience, instant monetizes purchase transactions to compete effectively. Most card decisioning and loan processing. through merchant fees rather issuers allow transactions above Loan program features need to be than charging interest. a certain value to be converted aligned with consumer needs in into installment loans payable terms of ticket size, upfront fees or Affirm is a US-based POS over three to 36 months. Banks monthly fees, loan duration, etc. financing provider focused on must offer this facility through serving consumers without Banks and card issuers must digital platforms for a hassle- credit histories, savings accounts build strong relationships with free consumer experience. Text or access to small loans. It has ecosystem partners — large retail messages to cardholders with a over 2,000 merchant partners, chains, small retailers, fintech list of eligible transactions that including retailers like Warby firms and card networks. This can be converted into installment Parker, Room and Board, and will ensure that banks and card loans can be helpful. Card issuers David Yurman. Affirm has built issuers stay invested in consumer and acquiring banks can launch its own algorithms for predicting mindshare and do not fall behind APIs that enable consumers to the loan repayment eligibility fintech firms. make purchases at merchant of consumers. Its algorithm outlets and online stores with considers factors like the price a financing facility. Card issuers’ Solutions for POS financing of an item being purchased to insights into consumer credit and noncard lending understand a customer’s risk histories and credit behaviors profile. Affirm monetizes purchase Several traditional and fintech would enable them to price the transactions through interest firms have successfully loans instantaneously. Offering levied on consumers but doesn’t distinguished their POS financing APIs to enable loans at the point charge fees or a prepayment solutions across countries of sale would lead to increased penalty. The Affirm InStore service through their scale, marketing sales for merchants, who would be enables consumers to apply for initiatives or targeting of specific willing to route such transactions Affirm loans at the physical point audiences. Klarna is a Sweden- on a card payment rail, that would of sale through a virtual card. The based POS financing provider have otherwise been processed firm has partnered with Walmart with 130,000 merchant partners as consumer loans outside to enable POS financing at over that supports 60 million shoppers card networks. 4,000 store locations and on across the US and 14 markets Walmart.com. Lending to existing customers in Europe, including the UK and makes it possible for card issuers Germany. Klarna’s customer to process significant parts of acquisition strategy has been consumer loan requests without largely millennial focused. the consumer going through a It offers a direct-to-consumer

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 25 Australia-based Afterpay focuses repayment durations of their at any merchant that accepts on the fashion and beauty choice. Amazon store cards are PayPal. Ally Financial has decided industry and enables buyers to offered by Synchrony Bank and to reduce its focus on credit card pay in four equal installments. can be used by consumers for business and increase its focus on Globally, Afterpay has over 4.3 loans with predefined tenures. the POS loan model. Ally recently million customers and more than Amex “Pay It Plan It” offerings acquired Health Credit Services, 30,000 merchants. Its merchant enable cardholders to select up which offers unsecured loans to network comprises more than to 10 purchase transactions and finance medical procedures. Ally 10% of the US fashion and convert them into installment plans to increase its focus on POS beauty industry. Afterpay enables loans lasting up to 24 months. lending business across categories 25% of all online fashion and in the retail sector. The “My Chase Mastercard recently acquired beauty transactions in Australia. Plan” offerings from JPMorgan Vyze, a fintech firm that connects The company holds biannual Chase enable Chase credit card merchants to multiple POS promotional events to coincide holders to convert past purchases financing lenders. Vyze offers with the back-to-school shopping into installments that attract an API that allows merchants to period, with discounts at retailers monthly fees. offer credit options in store and like Steve Madden and NARS. online. PayPal Credit is an online Consumers can use Square financing product and virtual Installments offerings through line of credit offered by PayPal. mobile apps to avail themselves Buyers can split payments of of POS financing loans with US$99 or more over six months

Online purchases are considered cases where the buyer and seller E-commerce sellers want to riskier than ones made in brick- cannot come to an agreement. serve customers worldwide and-mortar stores as there is an Once a buyer initiates the dispute and supporting cross-border element of risk involved that the resolution process, PayPal holds transactions is necessary. Escrow product to be delivered may not the transaction amount until service providers must support be the same as the one promised the dispute is resolved. If the global currencies and markets on the website or that the online buyer and seller cannot reach an to serve buyers globally. They retailer will not deliver the agreement, the dispute becomes must provide various payment product. According to Experian, a claim. Claims give PayPal the methods such as debit and credit e-commerce fraud increased 30% authority to investigate the case cards, bank payments, wire in 2017 year-over-year in the US. and determine an outcome. transfers, e-wallets and PayPal. It is In the UK, fraud increased 27% necessary to verify all the parties To provide escrow services for in 2018. The two most common involved in a transaction as the e-commerce marketplaces that frauds are shipping fraud and onus is on the escrow service do not have the size or capability billing fraud. Shipping fraud, provider. Yet, the verification must to offer such services, new-age where fraudsters use their own be fast and secure. They should solution providers such as escrow. address to receive delivery of also have platform capabilities com, MANGOPAY, Shieldpay, stolen goods purchased online, to perform Know Your Customer Stripe Connect and Braintree have grew by 37% in 2017. In billing (KYC) verification instantaneously. sprung up globally. fraud, the victim’s address is Escrow solutions must be simple used for payment for the stolen and easy to integrate into goods purchased. Billing fraud Recommendations e-commerce marketplaces. The increased by 34% in 2017. Escrow for escrow services in third-party providers can provide services helps solve the issues of consumer payments APIs and premade user interface trust, fraud and security between components to integrate into the the online buyer and seller. With The escrow services providers marketplaces to reduce time to escrow services, a third-party have transaction fees that are market and simplify operations. service provider collects and holds higher than PayPal’s, as they This will allow e-commerce on to the money on behalf of the provide better arbitration services websites to customize the seller and pays the seller if the and have built-in checks at every onboarding process while being buyer is happy after the product stage to prevent fraud. Yet, these able to set payout timing, process has been received. higher fees may be a deterrent complex money movements and for smaller e-commerce websites. PayPal has been delivering integrate financial reporting. The The pricing structure must be similar services since 1999. It is escrow solution providers also designed in a way that aids both relatively easy for buyers and need to focus on creating a safe small- and big-ticket sales and sellers to use PayPal for payment experience for online platforms caters to the volumes of small processing. It is also convenient with their prevention tools and and large retailers. For example, for cross-border transactions in in-house fraud engines that notify Escrow.com’s solution is suitable which the buyer and seller may buyers and let them take action for transactions in excess of not have a common payment against suspicious behavior US$500 due to the way the site instrument. PayPal also provides in transactions. has designed its pricing structure. a dispute resolution process for

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 27 Solutions for escrow The Shieldpay escrow solution Currently, very few commercial allows verification of the vehicles are sold online. The new services for digital identity of all parties involved, e-commerce escrow solutions commerce collection of funds, parking of will pave a way forward for funds and the release of funds even higher-value commercial Well-established marketplaces when both parties are satisfied. vehicles to be bought and sold on and e-commerce retailers such Shieldpay is integrated into Visa’s marketplaces. TruckTractorTrailer. as Amazon, eBay, Etsy, Alibaba CyberSource platform that allows com recently partnered with and Walmart have been using secure P2P payments, which escrow solution provider Accruit escrow services to the advantage has been difficult in the past. to enter this untapped market. of both buyers and sellers. Alipay This, in turn, has allowed Visa to offers buyer and seller protection Payoneer has started offering accept payments in lesser-known with escrow services. When B2B escrow services for online marketplaces and ad sites. a buyer purchases a product, transactions. According to a Alipay collects the money from Escrow services are now being Payoneer survey, nearly 75% of the buyer and holds it an escrow adopted for P2P high-value respondents declined to conduct account until the buyer receives transactions such as preowned transactions due to the high risk the product and confirms the car sales on marketplaces like perceived. Using escrow in B2B same. This provides a system of Craigslist, eBay and Hemmings. transactions opens up cross- guarantee. In case of a dissatisfied Escrow solutions such as PaySafe border commerce. consumer due to any problem allow transactions for preowned As escrow becomes more with the product, Alipay refuses to cars to be reviewed at every stage integrated into online sales, high- pay the seller, thereby protecting – such as ownership title, history value items including preowned the interest of the buyer. There is report and inspection, before the cars, commercial vehicles, also a provision of chargeback like funds can be released to the seller. construction equipment and the one provided by credit card This is a new business marketplace luxury items like art could soon be companies. In case of a dispute, where transactions in the range purchased with the same online the arbitration cell intervenes and of US$5,000 to US$30,000 can be ease as less-expensive goods. is another service offered as part done without any friction. This is of the escrow solution. This has in contrast to the earlier fortified helped Alipay attract many loyal preowned brick-and-mortar car customers and have a market dealership model. share equivalent to Amazon and eBay combined.

Industry players are launching innovative payments offerings to differentiate themselves in a crowded marketplace. Bitcoin-backed debit cards issued with Visa and Mastercard logos enable acceptance with merchants across the globe. The cryptocurrencies are integrated with fiat currencies and transferred to the bitcoin-linked debit card using a cryptocurrency wallet. The bitcoin-linked debit cards can be used for making transactions similar to normal debit cards, with no change in the merchant’s infrastructure for bitcoin card acceptance. Bitcoins get converted to fiat currency at the card issuer’s end during transaction processing.

Trend 11: Cryptocurrency in cards

The global cryptocurrency how they use debit cards linked and Amex are focusing on market is expected to grow at to bank accounts. Bitcoin can digitizing cross-border corporate 6.2% annually until 2024 to reach be turned into fiat currency in payments using blockchain and US$1.4 billion. From the increased a quick and easy way by using distributed ledger technologies. launch of product offerings, it is these debit cards. With the These card network majors are evident that cryptocurrencies are traditional payment systems still investing in and collaborating increasingly being considered dominating the finance market, with fintech companies that are as a feasible option for payment the crypto debit cards are paving working to reduce friction in the across multiple regions. Bitcoin- the way for expansion of digital consumer-to-consumer and B2B backed debit cards allow users to currencies in the payments payments domains. use their cryptocurrency widely. domain. Increased adoption of Cardholders can make purchases bitcoin-backed debit cards is and payments and withdraw fiat coming at a time when major card currency from an ATM, similar to networks such as Visa, Mastercard

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 29 Recommendations for norms for both card issuers Mastercard logo and provides and cardholders. Cardholders’ access to five cryptocurrencies leveraging cryptocurrency identity details that are AML and 150 fiat currencies. MCO Visa in card products KYC compliant, can be stored prepaid cards provided by crypto. in a centralized repository to com let holders buy, sell and track To increase the uptake of crypto- which multiple industry players digital coins by linking the cards based card product offerings, have permissioned and need- to mobile wallets. the shortcomings of the current based access. market offerings must be Coinbase allows its customers removed. Currently, issuers of Banks can leverage big data, to make contactless, chip bitcoin-backed debit cards charge AI and ML to improve their or PIN-based transactions a fee to facilitate the service. The product offerings that involve anywhere in Europe where Visa fees levied on bitcoin-backed cryptocurrency. AI and ML can be payments are accepted and debit cards vary across issuers. leveraged in areas such as bad charges a liquidation fee for However, consumers do not pay actor detection or fraud detection each transaction, as spending any fees if they pay directly at related to cryptocurrencies, cryptocurrencies causes retailers through a cryptocurrency wallet behavior analysis (for liquidation of the same. Bitcoins exchange-supported transfer behavioral pattern analysis of can be loaded on Xapo debit mechanism. Bitcoin-backed debit individual investors), on-chain cards using real-time conversion. cards increase the probability power factors for identification Users can pay fees to Xapo using of cyber theft, since users must of unique factors influencing the bitcoins. Coinbank issues physical transfer their virtual currency to a behavior of the crypto asset, and cards and virtual cards that can be mobile wallet to use them. fund-flow analysis (for analysis of loaded with litecoin and bitcoin. fund transfers between exchanges Uquid allows crypto payments As an alternative, a crypto asset or other entities). Big data can in bitcoin and over 80 additional held with a crypto exchange can also be used in analyzing the altcoins with a Uquid wallet or be treated as collateral against spending pattern of cards linked debit card supporting three fiat which a loan can be provided to cryptocurrency wallets, thereby currencies. Uquid Android and iOS to the user in fiat currency. In providing personalized reward apps are also offered. cases where the cardholder offers to promote such spends. fails to pay the outstanding Facebook plans to launch balance, the crypto asset can virtual currency Libra. Virtual be liquidated by the card issuer. Solutions that leverage currency will be issued using The card issuer can store the cryptocurrency in card a permissioned blockchain. spend details in a decentralized Bitnovo offers prepaid debit network using distributed products cards that can be reloaded ledger technology. Credit cards BitPay offers Visa prepaid cards instantly using bitcoins and in backed by cryptocurrency as that are linked to cryptocurrency Spain additionally provides the security collateral can be made wallets and instantly convert the option of buying bitcoins through more effective and trustworthy bitcoin core to bitcoin cash and its app, website and vouchers. by leveraging smart contracts then to fiat currency for online Bitwala, a Europe-based crypto and blockchain technology in payments. Wirex supports a crypto exchange, collaborates with a maintaining the digital agreement reward program for converting German fintech startup allowing between the parties in the ledger. the spends using Visa debit cards consumers to perform different This would increase transparency into crypto rewards, which can be forms of funds transfer including and governance and reduce the either spent or converted to other SEPA. FuzeX is a cryptocurrency scope for disputes. currencies with a different wallet payment card that is NFC enabled and has an EMV chip with a The distributed ledger-based for each cryptocurrency. Revolut, barcode display. approach will ease the burden a UK-based fintech startup, offers of complying with AML KYC the Revolut Metal card with a

Consumers and corporate acquiring bank. Card issuers levy travel targeted at consumers and employees use credit cards for a foreign currency transaction corporate users. The multicurrency their payment needs when they fee on each transaction done on prepaid travel cards can be loaded travel abroad. Alternatives such the credit card. This burdens the with one or multiple currencies as foreign currency or traveler’s cardholder with too many fees that are supported by the card checks are available, but they and a lack of visibility into the issuer. Each currency is loaded need to be purchased prior to total amount in local currency that in a separate wallet. Some cards travel and fees are incurred when he would incur if he were to do a allow converting the balance unused quantities are returned. transaction abroad. available in one currency wallet to Usage of foreign currency leads another, if required. Prepaid travel Some of the acquiring banks to the accumulation of coins, card issuers bundle value-added provide their merchants with which cannot be converted to services such as travel insurance, dynamic currency conversion domestic currency. mobile apps for online tracking (DCC) services to ease these and monitoring, concierge Using credit cards during problems and to enable services, and emergency services foreign travel does not require merchants to attract foreign with the travel card. However, any specific planning and is travelers to their stores. As part industry players levy fees when very convenient to the users of DCC services, the cardholder loading foreign currency into the due to the wide acceptance will be shown the transaction wallet and when returning the of credit cards internationally. amount in the foreign currency unused balance in local currency. Credit cards typically provide and the amount in the reward points, fee-based fraud cardholder’s local currency for Multicurrency debit cards protection, insurance facility, which authorization will be taken. are linked to a savings or and the option to block the card Any fees levied by the merchant checking account in the user’s and have a replacement card (or DCC service provider) will be local currency. At the time of issued. However, usage of credit included and displayed to the transaction, the transaction cards during foreign travel has its cardholder in their local currency. amount in foreign currency is own set of disadvantages such The transaction gets processed by converted to the local currency as foreign currency transaction the card issuer in the cardholder’s equivalent and the bank account fees, ATM cash withdrawal fees, local currency and hence does is debited. These debit cards exchange rate markups and not involve any foreign currency come with mobile app facility interest levied if the outstanding conversion or related markups for transaction tracking and balance is not paid in full within or foreign transaction fees. DCC monitoring. Unlike credit cards, the stipulated time. provides complete visibility to the foreign currency conversion the cardholder on the transaction rate is attractive and there is no Card issuers use a foreign amount that is being charged in foreign transaction fee. Unlike currency conversion markup of local currency for all transactions. prepaid travel cards, these debit 1% to 3% over the conversion cards do not attract any fees for rate used by card networks such As an alternative to credit loading or refunding since the as Visa or Mastercard. ATM cash cards, many fintech startups bank account balance in local withdrawals attract a fee levied and banks have come up with currency is used. by the card issuer as well as by prepaid or debit card-based the ATM service provider or the product offerings for foreign

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 31 Recommendations for at the card-issuing bank, or the Card issuers with multicountry cardholder could transfer money market operations can leverage multicurrency card in real time from a different bank their relationships with hotels, product features to the card issuer). Features such restaurants and other tourist- as ATM locators, claims expense related establishments for loyalty Card product offerings with management (for corporate cards) offers on multicurrency cards used multicurrency features should be and travel insurance will be of by foreign travelers (cards issued accompanied by robust digital immense help to the cardholder. by banks’ entities operating in the capabilities and a higher level of home countries of the travelers). customer service. Digital front Transparent pricing and lower Such card issuers can leverage the ends for cardholder acquisition, fees would be great incentives cardholder profile and transaction customer servicing and for travelers to use multicurrency data to run market campaigns omnichannel customer service card products. The card issuer can on behalf of merchants related support are a prerequisite as consider partnering with ATM to the tourism industry. Loyalty cardholders may need customer service providers in key foreign offers would tempt cardholders support in a foreign country with markets to enable lower ATM and enable merchants to attract limited access to mobile data and withdrawal fees for cardholders. increased footfalls of higher- no access to physical branches. In the case of prepaid travel spending foreign travelers. Moreover, the card may be the cards, features such as the ability key (or the only) source of funds to convert a balance from one From a corporate card for the cardholder. Hence, digital currency to another, multi- perspective, the incumbent front ends and omnichannel currencies support as part of large banks or travel card customer service will provide the the card wallet and lower fees issuers have the advantage of necessary support to cardholders. for load, reload or refund would an in-depth understanding of persuade the cardholder to corporate needs due to long-term Mobile apps can be leveraged retain the multicurrency card for relationships and their ability for digital KYC and instant subsequent travels. to provide bespoke solutions to onboarding of the cardholder. meet corporate needs. However, Spend controls (merchant With increased offerings from fintech startups are disrupting category, transaction limits, fintech startups and market the market by providing lower transaction types) can be offered adoption of open banking and the fees, transparent pricing, ease as a self-service through mobile second European Union Payment of third-party integration, API- apps. Mobile apps can be used for Services Directive initiatives, card enabled platform access and location tracking or geofencing issuers need to embrace open digital front ends. Incumbent and this could come in handy APIs and third-party integration players must create innovative in scenarios where transactions for a complete and collaborative product features, leverage could arise from locations outside approach with the ecosystem digital front ends and tap into the intended country of travel. players. Card issuers can provide data monetization initiatives for Ease of use and a feature list of APIs to pull data for reporting, loyalty offers to stay relevant mobile apps could be potential regulatory needs, expense and remain competitive in an service differentiators for the tracking, claims management and evolving marketplace. card issuer. Mobile apps can other purposes. They can provide enable real-time loading (the these facilities through their source of funds could be the bank in-house platforms or they can account held by the cardholder integrate with third parties.

32 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited Solutions for up to a predefined monthly Axis Bank offers multicurrency spend. Premium offerings prepaid travel cards for Indian multicurrency cards from Revolut include overseas travelers. The card can be loaded TransferWise offers multicurrency medical insurance, delayed with balances in 16 currencies and accounts for individuals and baggage and delayed flight each currency balance is stored in businesses in the UK, Switzerland, insurance, disposable virtual a separate wallet. The cardholder Australia, New Zealand, cards, and concierge services. can choose currencies based on Singapore, most of the European Visa teamed up with Revolut purchasing needs. In scenarios Economic Area and the US. in October 2019 for the launch where the cardholder does not Users need to open the account of a multicurrency debit card have a wallet in the currency of in the first currency and add a in Singapore. Mastercard and the transaction, balances available balance; they can subsequently Revolut have teamed up for in wallets in other currencies can add more currencies and hold the launch of Revolut in the be used (the order of usage of balances in those currencies. The US market. Revolut plans to wallets is set by the bank). Such TransferWise account and all the leverage Mastercard MoneySend conversions incur foreign currency currencies are connected to the remittance offerings as part of its transaction fees. HDFC Bank offers TransferWise multicurrency debit global expansion plan. multicurrency prepaid travel cards that support 22 currencies (each card. The debit card is issued N26 is a digital bank in Europe currency balance is stored in a with a Mastercard logo and the focused on the banking needs of separate wallet). On an as-needed card supports balances in over international travelers. The N26 basis, the cardholder can convert 40 currencies. Foreign currency debit card allows ATM withdrawals the balance in one currency to conversion markup is low since and purchase transactions in another through an internet the conversion is done using foreign currencies at the current banking login. Ctrip (China’s real midmarket rates. The card midmarket rate with no exchange largest travel company) teamed allows free ATM withdrawals up rate markup. MoneyBeam up with Wirecard in 2019 for the to a predefined limit and has offerings from N26 allow P2P launch of a multicurrency prepaid competitive offerings in terms of transfers using the phone card for Chinese travelers. The transaction fees. numbers or email addresses of card allows balances to be loaded Revolut offers contactless recipients. N26 offers insurance in seven different currencies and is multicurrency debit cards with coverage for medical expenses, issued with the Visa logo. free ATM withdrawals up to a flight and baggage delay predefined limit. The cardholder expenses, and travel cancellations. can spend in over 150 currencies The N26 mobile app offers spend at the interbank exchange rate tracking, alerts and notifications, with no foreign transaction fees and online payments features.

Trend 1: Rapid rise of real-time payments • https://www.pymnts.com/news/faster-payments/2019/real-time-ubiquity-tch-federal-reserve/ • https://www.fisglobal.com/insights/what-we-think/2019/november/what-is-next-for-real-time-payments • https://www.pymnts.com/tracker/faster-payments-november-2019/

Trend 2: Real-time cross-border payments • https://www.pymnts.com/smarter-payments/2019/why-cross-border-payments-need-transparency-overhaul/ • https://ripple.com/use-cases/banks/ • https://www.ibm.com/blockchain/solutions/world-wire • https://www.swift.com/news-events/press-releases/swift-enables-payments-to-be-executed-in-seconds • https://www.paymentsjournal.com/to-pay-or-to-be-paid-that-is-the-answer/ • https://usa.visa.com/run-your-business/visa-direct.html • https://www.mastercard.us/en-us/issuers/products-and-solutions/customer-needs/consumer-solutions/mastercardsend.html

Trend 3: Digital payments • https://en.wikipedia.org/wiki/Ultrasound • https://economictimes.indiatimes.com/small-biz/startups/features/this-amazon-backed-startup-makes-digital-payment-possible-without-internet-tonetag/articleshow/71042246.cms • https://www.finextra.com/blogposting/17881/5-important-mobile-wallet-trends-you-need-to-know • https://www.paymentsjournal.com/5-global-trends-that-will-affect-digital-payments-in-india/ • https://www.paymentscardsandmobile.com/mobile-wallet-trends-annual-report-2019/ • https://www.marketwatch.com/press-release/e-wallet-marketanalysis-by-growth-emerging-trends-and-future-opportunities-till-2023-2019-10-14

Trend 4: ISO 20022 adoption in payments • https://www.swift.com/your-needs/industry-themes/iso-20022 • https://www.iso20022.org/adoption.page • https://www.nacha.org/system/files/resources/ISO-20022-Frequently-Asked-Questions.pdf

Trend 5: Artificial intelligence and machine learning in cards • https://newsroom.bankofamerica.com/press-releases/consumer-banking/bank-americas-ericar-completes-more-50-million-client-requests • https://www.finextra.com/pressarticle/78566/bank-of-america-chatbot-logs-50-million-requests-in-first-year • https://www.creditconnecter.com/credit-cards/ • https://becominghuman.ai/how-ai-has-impacted-the-credit-card-industry-be2db758cce9 • https://www.creditcards.com/credit-card-news/artificial-intelligence-credit-cards.php • https://emerj.com/ai-sector-overviews/artificial-intelligence-credit-cards/ • https://www.fintechnews.org/the-crirital-role-of-artificial-inteliigence-in-payments-tech/ • https://www.livemint.com/Home-Page/6PqZ9XLJIljC0VPDpD35KP/How-credit-card-issuers-can-gain-from-machine-learning.html • https://www.mastercard.ca/en-ca/issuers/products-and-solutions/grow-manage-your-business/loyalty-solutions/pay-with-rewards.html • https://mezi.com/ • https://thefinancialbrand.com/84350/bank-of-america-chatbot-erica-retail-banking-virtual-assistant/ • https://www.businesswire.com/news/home/20190528005646/en/Bank-America’s-Erica®-Completes-50-Million-Client/ • https://www.infosys.com/industries/financial-services/documents/robotics-process-automation-cards.pdf • https://www.businesswire.com/news/home/20180925005512/en/NICE-Deploys-Robotic-Process-Automation-SBI-Card • https://www.sbicard.com/sbi-card-en/assets/docs/pdf/who-we-are/news/2019/express-computer-online-rpa.pdf • https://www.bernardmarr.com/default.asp?contentID=1263 • https://www.darkreading.com/application-security/how-ai-and-cybersecurity-will-intersect-in-2020/d/d-id/1336621?image_number=7

34 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited • https://www.forbes.com/sites/quora/2018/10/09/how-artificial-intelligence-job-displacement-will-affect-the-worldwide-economy/#3c20eb7c1f52 • https://www.bbva.com/en/self-driving-banking-using-technology-to-connect-with-customers/ • https://www.cbronline.com/news/hsbc-client-intelligence-utility

Trend 6: Payments data monetization • https://www2.deloitte.com/content/dam/Deloitte/ch/Documents/financial-services/ch-en-fs-disruption-payments.pdf • https://www.alliedmarketresearch.com/data-monetization-market • https://www.arminsight.com/ • https://go.datarepublic.com.au/senate-platform/ • https://www.ngdata.com/ngdata_iep/ • https://www.ingenico.com/epayments/data-analytics

Trend 7: Distributed ledger technology for loyalty programs • https://patents.justia.com/assignee/american-express-travel-related-service-company-inc • https://www2.deloitte.com/us/en/pages/financial-services/articles/making-blockchain-real-customer-loyalty-rewards-programs.html • https://www.bigcommerce.com/blog/customer-loyalty-blockchain/#businesses-adopting-blockchain-loyalty • https:\www.tothenew.com\blog\reinventing-loyalty-programs-with-blockchain-technology\ • https://hackernoon.com/blockchain-can-save-customer-loyalty-programs-from-becoming-unfruitful-3992c6bc6053 • https://dragonchain.com/blog/loyalty-and-rewards-programs-reinvented-with-blockchain/ • https://www.plugandplaytechcenter.com/resources/enhancing-customer-loyalty-programs-blockchain/ • https://www.disruptordaily.com/blockchain-startups-marketing/

Trend 8: Cloud for platform scalability and resilience • https://www.infosys.com/services/cloud/insights/documents/cloud-apps-financial-services-insurance.pdf • https://www.mordorintelligence.com/industry-reports/cloud-enabling-technology-market • https://www.computerworld.com/article/3145622/capital-one-rides-the-cloud-to-tech-company-transformation.html • https://fintechnews.ch/virtual-banking/hottest-digital-first-challenger-banks-by-country-in-europe/32245/ • https://searchcloudcomputing.techtarget.com/definition/Infrastructure-as-a-Service-IaaS • https://searchcloudcomputing.techtarget.com/definition/Platform-as-a-Service-PaaS • https://searchcloudcomputing.techtarget.com/definition/Software-as-a-Service

Trend 9: POS financing and noncard lending • https://www.jifiti.com/glossary/pos-financing/ • https://thefinancialbrand.com/84711/point-of-sale-pos-lending-finance-fintechs-banks/ • https://www.forbes.com/sites/ronshevlin/2019/03/04/jpmorgan-chase-enters-a-hot-fintech-space-point-of-sale-pos-financing/#6ac89b61f158 • https://www.bankingdive.com/news/banks-holiday-retail-point-of-sale-loans-citi-jpmorgan-chase-mastercard-affirm/568293/ • https://www.supermoney.com/point-of-sale-lending/ • https://www.forbes.com/sites/ronshevlin/2019/03/04/jpmorgan-chase-enters-a-hot-fintech-space-point-of-sale-pos-financing/#6323d6e0f158 • https://www.aseantoday.com/2019/03/point-of-sale-finance-the-next-big-thing-in-fintech-development/ • https://www.businesswire.com/news/home/20190416005294/en/ • https://www.bankingdive.com/news/ally-credit-card-point-of-sale-loan/559131/ • https://www.businesswire.com/news/home/20190416005294/en/ • https://www.businessinsider.com/paypal-credit-launches-in-the-uk-2016-4 • https://www.paypal.com/us/webapps/mpp/paypal-credit • https://thefintechtimes.com/paypal-credit/ • https://www.forbes.com/sites/ronshevlin/2019/03/04/jpmorgan-chase-enters-a-hot-fintech-space-point-of-sale-pos-financing/#6ac89b61f158

External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 35 • https://www.bankingdive.com/news/banks-holiday-retail-point-of-sale-loans-citi-jpmorgan-chase-mastercard-affirm/568293/ • https://intelligence.businessinsider.com

Trend 10: Escrow services for consumer payments in digital commerce • https://wpriders.com/business/escrow-payment-solutions-for-your-online-marketplace/ • https://www.pymnts.com/disbursements/2018/digital-escrow-big-ticket-ecommerce-accruit-ingo-money/ • https://www.finextra.com/pressarticle/76755/shieldpay-agrees-partnership-with-visa-to-enable-secure-use-of-payment-cards-on-p2p- marketplaces • https://www.ecommercebytes.com/2017/08/08/ups-offers-b2b-escrow-service-payoneer/ • https://www.b2bpay.co/b2b-electronic-payments • https://ecommerceguide.com/guides/b2b-ecommerce-payment-systems/ • https://dinarys.com/blog/7-b2b-ecommerce-payment-systems • https://marketplace.webkul.com/role-of-escrow-payment-in-e-commerce-marketplace/ • https://www.pymnts.com/news/b2b-payments/2017/payoneer-armor-payments-escrow-b2b-ecommerce-buyer-supplier-transaction-transfer-b2c-b2b-payments-amazon/ • https://www.digitalcommerce360.com/2017/04/18/b2b-e-commerce-marketplace-ec21-launches-payoneers-escrow-solution/ • https://www.finextra.com/blogposting/14077/escrow

Trend 11: Cryptocurrency in cards • https://cointelegraph.com/category/market-analysis • https://www.pymnts.com/tag/libra/ • https://en.wikipedia.org/wiki/Libra_(cryptocurrency) • https://coinfunda.com/bitcoin-debit-card/ • https://coin.dance/stats • https://hackernoon.com/five-real-machine-learning-use-cases-in-cryptocurrencies-y51x33gw • https://hackernoon.com/how-merging-ai-with-blockchain-can-create-a-more-secure-environment-for-data-sharing-a63ac0e2389e • https://cards.crypterium.com/learn/pros-and-cons-crypto-debit-cards • https://www.bitcoinmarketjournal.com/bitcoin-debit-card/ • https://news.bitcoin.com/cut-off-here-are-7-different-bitcoin-debit-card-services-and-fees/ • https://news.bitcoin.com/spend-10-cryptocurrencies-with-these-debit-cards/ • https://medium.com/@slavasolodkiy_67243/crypto-friendly-cards-suck-a-new-analysis-illustrating-their-weaknesses-in-detail- 5619b27c88ed • https://www.barchart.com/crypto/market-capitalizations • https://www.cfo.com/payments/2019/12/the-5-biggest-trends-in-cryptocurrency-for-2020/ • https://www.hexaresearch.com/research-report/cryptocurrency-market • https://cointelegraph.com/news/coinbase-card-adds-xrp-and-launches-in-10-more-european-countries • https://www.investopedia.com/tech/coinbase-what-it-and-how-do-you-use-it/ • https://www.marketsandmarkets.com/Market-Reports/cryptocurrency-market-158061641.html • https://www.accountingtoday.com/list/4-cryptocurrency-trends-for-the-next-5-years

Trend 12: Multicurrency cards for corporate travelers and tourists • https://www.pymnts.com/news/payment-methods/2019/visa-partners-with-revolut-to-introduce-multi-currency-debit-card/ • https://www.revolut.com/ • http://transumo.com/best-travel-card/ • https://transferwise.com/ • https://n26.com/en-eu • https://www.forbes.com/sites/bishopjordan/2017/03/20/n26-review • https://www.axisbank.com/retail/forex/travel-forex-card/multi-currency-forex-card • https://www.hdfcbank.com/personal/pay/cards/forex-cards/multicurrency-platinum-forexplus-chip-card • https://markets.businessinsider.com/news/stocks/wirecard-and-ctrip-china-s-largest-travel-company-launch-multi-currency-visa-travel- cards-1027846195

Rajneesh Malviya Ashok Hegde Vijay Anand Senior Vice President, Financial Services Vice President, Financial Services Head, Cards and Payments, Financial Services

Each contributor below is a consultant in the cards and payments competency area.

Vaibhav Bhokare Jennifer Mariasoosai Warsha Borde Dhiren Mehta Rahul Chidipothu Vaibhav Pathak Neelmani Choudhary Krithika Ragunathan Elbin Elias Manickavasagam S Rashmi Hulsurkar Nakul Seth Pankaj Jayswal Ashutosh Sharma Kaustav Lahiri

Producers Samad Masood Sharan Bathija Infosys Knowledge Institute Infosys Knowledge Institute London Bangalore

The Infosys Knowledge Institute helps industry leaders develop a deeper understanding of business and technology trends through compelling thought leadership. Our researchers and subject matter experts provide a fact base that aids decision making on critical business and technology issues. To view our research, visit Infosys Knowledge Institute at infosys.com/IKI

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