March 2016 Issue 345 www.electronicpaymentsinternational.com

E-COMMERCE CONNECTING THE GLOBE

•FEATURE: European real time clearing •ANALYSIS: US faster payments system •COMMENT: Mobey Forum •COUNTRY SURVEYS: The UK and Finland

EPI 345.indd 1 22/02/2016 10:40:26 Multichannel digital solutions for fi nancial services providers

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

CONTENTS Payment innovators NEWS throw a curveball 3: DIGEST

FEATURES ecent noise around digital trans - myriad loyalty programmes, it could be formation has culminated in some very handy, it being accepted everywhere. 6: FAST PAYMENTS landmark changes not only in pay- However, what’s more interesting is the Anna Milne speaks to the CEO of ments but across media sectors. nod towards the cards sector and wheth - and the president of TCH on the emergence R er there is enough industry momentum to We’ve had the Independent, one of Brit- of faster payments across the globe ain’s leading broadsheets announce termina- get behind a truly consolidated app/card 7: CROSS-BORDER PAYMENTS tion of its print editions at the end of March solution before everyone throws their Alexander Atkins talks to SWIFT on 2016- the first UK newspaper to do so; weight behind mobile and digital-only. I corporations taking notice of same-day there’s been BBC 3 going online, terminating wonder whether PayPal might soon con- cross-border payments and what they can do TV transmission. Then Monopoly chimed sider issuing a card of its own. for their companies in with an upcoming re-launch of a cash- Finally, and most significantly, anoth- 8: LATAM E-COMMERCE less version of the game, thereby eliminating er solution that bridges the gap between Cross-border e-commerce (CBEC) is getting the role of Banker and equipping each team future and present, outlining how the even more successful. Alexander Atkins member with a for transacting payment systems can be opened up to reports on this valuable innovation electronically. Not sure if the world is ready non-bank PSPs in the short-term, amid

10: EUROPEAN REAL-TIME CLEARING for cashless Monopoly, I’m not sure even the ongoing lobbying to grant direct While the outlook for real-time clearing millennials are ready for cashless monopoly. via their own settlement account in the US remains uncertain, in Europe it Cue a launch that bridges innovation in the longer term. And it is so simple. is clearly a key topic. Jip de Lange, senior with the status quo, a product that recog - Rich Wagner, in role as chairman of the consultant at First Annapolis, writes nises real change can take decades. It is a Emerging Payments Association, penned solution that sees the likes of a report suggesting regulators, in what COUNTRY SURVEY and ‘raises’ it, not by further engineering would be an easy-to-implement change of it for a future audience, but by reining policy within the year, assign liability to 12: THE UK it firmly back into the present. And let’s the PSP making the payment, instead of 14: FINLAND face it: mobile payments may one day be to the bank they plug into for settlement, ubiquitous but right now, are far from it. as is the current way. COMMENTS Enter . True, Coin has done a This interim arrangement would afford similar thing in the US. And there are PSPs a little more control, remove the 2: ALEX MIFSUD, CHRIS DAVIES other similar apps that consolidate cards burden of risk for the settlement banks, 16: MOBEY FORUM and loyalty programmes into one card. and create commercial opportunities for And it must be said that Curve, unlike smaller banks in providing settlement. Coin, does not yet accommodate debit For the big banks, while their share of cards, which surely is crucial to UK con- total payments would be hit, many more sumer uptake. It also costs £35 ($50) payments could be drawn into the whole upfront, and at the point of sale, should ecosystem through new PSPs, softening you wish to change your default card, you the blow. In addition, the running costs will need your mobile to do so, meaning of the system would be shared between you need both phone and card- hardly more players. What’s not to love? Ring simplification. the changes. < Yet for Amex customers and those with ANNA MILNE, [email protected]

Editor: Anna Milne Sub-editors: Nick Midgley, Tom Langfield For more information on Timetric, visit Tel: +44 (0)20 7406 6701 our website at www.timetric.com. As a Ray Giddings Email: [email protected] Director of Events: subscriber, you are automatically entitled Tel: +44 (0)20 3096 2585 to online access to Electronic Payments Financial News Publishing, 2012 Group Editor: Douglas Blakey Email: [email protected] International. For more information, please Registered in the UK No 6931627 Tel: +44 (0)20 7406 6523 telephone +44 (0)20 3096 2636 or email ISSN 0956-5558 Email: [email protected] Head of Subscriptions: Sharon Howley [email protected] Unauthorised photocopying is illegal. The Tel: +44 (0)20 3096 2636 London Office Reporter: Patrick Brusnahan contents of this publication, either in whole or Email: [email protected] 5th Floor, Tel: +44 (0)20 7406 6526 part, may not be reproduced, stored in a data Farringdon Place, Email: [email protected] retrieval system or transmitted by any form or Sales Executive: Alexander Koidis 20 Farringdon Road, Tel: +44 (0)20 3096 2586 London, EC1M 3AP means, electronic, mechanical, photocopying, Asia Editorial: Xiou Ann Lim Email: [email protected] recording or otherwise, without the prior Tel: +65 6383 4688 Asia Office permission of the publishers Email: [email protected] 1 Finlayson Green, #09-01 Customer Services: Singapore 049246 Group Publisher: Ameet Phadnis Tel: +44 (0)20 3096 2636 Tel: +65 6383 4688 Tel: +44 (0)20 7406 6561 or +44 (0)20 3096 2622 Fax: +65 6383 5433 Email: [email protected] Email: [email protected] Email: [email protected]

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EPI 345.indd 1 22/02/2016 10:40:27 Electronic Payments International COMMENT PAYMENTS TRENDS

Throughout 2016, payments will thrive The payments industry is currently going through a period of rapid transition, driven by the pace of innovation, new forms of competition and weightier regulation. Alex Mifsud, CEO of Ixaris, shares his five key payment predictions for 2016

1.Interchange fees will shake up the currency players are all battling it out for 4. Convergence of cards and bank payments European card market supremacy. Traditionally, most non-cash retail payments One of the most immediate changes is the EU However, this competition is not equal or happen on cards, but bank-based models are regulation on interchange fees. Interchange efficient. Banks still retain, and want to pro- emerging. Regulators are now mandating is paid by merchants to card issuers for the tect the broad distribution networks, regu- that banks accept these developments, which acceptance of card-based transactions, this lated payment service providers are looking will cannibalise card-based payments. fee will now drop from nearly 2% to 0.3% for scale while staying on the right side of Bank-based payments have the potential for credit and 0.2% for debit cards. compliance, and the cryptocurrency players to save costs for retailers by avoiding the Most notably for card issuers, the reduc- are seeking legitimacy. interchange fees. However, the reduction tion will directly impact their bottom line. Better outcomes can be achieved through in interchange fees means this cost saving is With less money to be made, issuers will regulators encouraging more collaboration. becoming less of a driver. begin to cut card offerings and benefits for This ‘open’ approach to payments would be Despite this, the arrival of Apple Pay and consumers, and instead, look at new ways to more effective in addressing the residual inef- a general acceptance amongst consumers of generate revenue. ficiencies in payments, and lead to an explo- mobile payments is likely to maintain the One route will be to look outside of the sion in more creative payments solutions that pressure and build momentum for bank- transaction, to generate more revenue. Card are better suited to everyone’s needs. based payments. issuers may try to form direct relationships with merchants, and through intelligent use 3. Real-time payments will go global 5. Banks and fintech companies will finally of data, for example transaction history, The success of the UK’s Faster Payments start collaborating deliver highly targeted promotions to rel- solution will be replicated and in some cases Banks no longer dictate the terms of the evant customers. However, the card schemes, exported to other countries – for example industry. 2016 will see banks realise they which have access to richer data, may just FedPayments and Ripple in the US, and the need to collaborate to survive. Banks and get there first. blockchain-based e-Peso in the Philippines. fintech companies will have to work together Also, the UK’s Faster Payments is being and start to forge tangible and meaningful 2. Regulators will get serious about ‘open’ exported to Thailand. partnerships. payments The benefits of faster payment systems will Importantly, banks will realise that they New players have been encouraged into the force many more countries to make plans for can play a profitable role in deciding, and payments ecosystem, and this has been the adoption, and will initially lead to faster pay- funding, the winners in fintech. Partner- catalyst for a ground-shifting change. As it ments being the global norm and eventually ships, rather than acquisitions, will become stands the banks, more nimble regulated to faster cross-border payments becoming the norm, with banks establishing funds and non-banks and the unregulated crypto - practical. accelerators to support innovation.<

Chris Davies, MD, Global Payments: Cashing in on progress – new ways to pay People and businesses are embracing new ways to pay for goods and services. payments, compared with 20% of 55-75-year-olds . Never before has there been a time when their need for flexibility and speed of With globalisation driving growth in international visitors spending more time service coalesces so neatly with rapid innovation in payments technology. and money in the UK, this opens up enormous opportunities to market products For example, an increase in contactless cards use has also led to additional to a much bigger international customer base. A key development in this area is growth in both credit and debit card volumes. Consequently, average card the technological innovation enabling merchants to accept international cards. transaction values fell by £1.40 ($2) in a year as consumers used cards International visitors can now also pay in their domestic currency. Dynamic more frequently for lower value payments. Contactless spending increased currency conversion allows customers to see on the how much significantly from £287m per month in January 2015 to £567m in June 2015, they will be charged in their home currency – instead of having to think about according to data from The UK Cards Association. Additional growth is expected conversion rates. Tax-free shopping also allows them to identify tax amounts for this year. rebate directly at the terminal. This is likely to benefit retailers in 2016. Card terminals accept contactless payments via NFC technology. The same With advancements in technology, merchants will be able to use terminals technology is used to accept mobile payments, which has become increasingly for more than just the processing of payments. Customers like giving feedback, popular since the introduction of Apple Pay in the middle of last year. As more and are willing to share their views. However, many end up not doing so, as individuals upgrade their iPhones, this method is likely to gain traction. Other traditional methods such as customer surveys, polls or internet reviews are time- smartphone providers, such as Samsung and Sony, are currently developing and consuming or cannot be completed anonymously. launching their own payment apps. The payments industry is experiencing a period of fundamental upheaval The adoption of new payment technology is quickly gaining widespread as factors such as changing customer habits; technological innovation and acceptance as customer and merchant awareness develops further – a trend regulation combine. With a global economic recovery providing further impetus that is likely to accelerate in 2016. This is especially the case for young people, to this, merchants and payments companies positioned to make the most of as more than a third (34%) of those aged 18-34 are interested in using mobile these powerful forces are the ones most likely to prosper in 2016. <

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EPI 345.indd 2 22/02/2016 10:40:27 Electronic Payments International DIGEST NEWS

DISTRIBUTION Visa Checkout debuts in Singapore

Visa has rolled out its online payment ser- The Visa Checkout facility is currently by online shoppers by reducing the number vice, Visa Checkout, in Singapore, following accepted at a variety of online retailers in of steps required for them to complete their its launch in the US, Canada and Australia Singapore including Golden Village, Spizza, online purchases, thus enhancing the entire in July 2014. Cold Storage, Guardian, Giant, Aviva and shopping experience. The service enables shoppers to use any ComGateway. “The solution can be used on any device; or , or other branded Online travel agency Zuji and supermar- this is crucial since abandoned transactions card, to make purchases from a PC, mobile ket chain NTUC FairPrice will also join the online are more likely to be on mobile devic- device or within a mobile app. payment service in the next few months, Visa es (55%).” Visa Checkout stores a customer’s billing revealed. Since its launch, over 10 million users and shipping data, and uses a username and Visa country manager for Singapore and have signed up for Visa Checkout accounts. password rather than a credit card number Brunei Ooi Huey Tyng said: “Visa Check- The service is now available in 16 markets as authentication. out addresses some of the problems faced around the world. <

DIGITAL Bitcoin and Coinify partner to boost adoption in Vietnam Bitcoin exchange Bitcoin Vietnam has by Coinify, that will be automatically con- partnership with Bitcoin Vietnam will add signed a strategic partnership with Den - verted to the Vietnamese dong. yet another payment service provider to the mark-based Coinify ApS to launch the first Bitcoin Vietnam CEO Nguyen Tran Bao list of bitcoin-enabled services in the South- blockchain payment processing platform in Phuong said: “We believe that this is a great, east Asia region. the local market. and necessary, step forward for the devel- “Vietnam itself is a very attractive market The platform, which will be integrated opment of the domestic market to provide and we are thrilled to be able to bring their with the merchant’s website and online- Vietnamese merchants direct access to such merchants and businesses an infrastructure shop, will also support POS apps tailored technological top-notch solutions, which that enables them to embrace this alterna- for retail stores. will help them to accept payments in a tive payment method.” During the initial stage, Vietnamese busi- much safer way while opening up their ser- Over the coming month, the companies nesses will receive payments in bitcoin or vices to a truly global audience.” also plan to bring advanced blockchain 16 other blockchain currencies supported Coinify CEO Mark Højgaard said: “The merchant processing tools to Vietnam.<

SECURITY Gemalto: Companies need to beef up payment data security Organisations need to improve their pay- either not PCI DSS-compliant, or are only ment data security practices, as acceptance partially compliant. of mobile and other new forms of payment Gemalto’s senior vice-president for identity, is expected to double in the next two years, data and software services, Jean-François according to a new survey report pub - Schreiber, said: “Given what was found with lished by the Ponemon Institute on behalf traditional payment methods and data secu- of Gemalto. rity, companies involved with payment data The survey, which involved 3,773 IT secu- must realise compliance is not enough and rity practitioners, has shown a critical need fully rethink their security practices, espe- for organisations to improve their payment The report added that 54% of those sur- cially since a full one-third of those surveyed data security practices. veyed said that payment data security is not said compliance with PCI DSS is not suffi- According to the report, the major - a top-five security priority for their company cient for ensuring the security and integrity ity (54%) of the surveyed IT staff said their with only one-third (31%) feeling their com- of payment data. companies had, on average, a data breach pany allocates enough resources to protect- “The financial fallouts from data breaches involving payment data four times in the ing payment data. and the damages to corporate reputation and past two years. Nearly 59% of the survey respondents said customer relationships will carry even great- The study also found that 55% of respond- their company permits third-party access to er potential risk as newer payment methods ents did not know where all their payment payment data, and of these only 34% uti - gain adoption. data is stored or located. lise multi-factor authentication to secure “The majority of respondents felt protec- Survey data revealed that ownership of data access. tion of payment data wasn’t a top priority at payment data security is not centralised: The study found that less than half of their companies, and that the resources, tech- 28% of respondents believed responsibility respondents (44%) feel that their companies nologies and personnel in place are insuffi- is with the CIO, 26% said it is with the busi- use end-to-end encryption to protect pay- cient,” added Schreiber. ness unit, 19% with the compliance depart- ment data from the point of sale to when it “It is clearly critical for companies to look ment, 15% with the CISO, and 14% with is stored and/or sent to the financial insti - for and invest in solutions to close these data other departments. tution, while 74% of their companies are protection gaps expeditiously.” <

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EPI 345.indd 3 22/02/2016 10:40:29 Electronic Payments International NEWS DIGEST

M&A TSYS to buy TransFirst for $2.35bn

Payment solutions provider TSYS has and referral partners in high-growth areas significant scale and strength across issuer agreed to acquire TransFirst, a portfolio including integrated software vendors, processing, merchant services and prepaid company of Vista Equity Partners, for healthcare, not-for-profit, referral banks, program management,” Woods added. $2.35bn in an all-cash transaction. associations and e-commerce. TransFirst president and CEO John The acquisition, which is scheduled to Following the acquisition, TSYS will Shlonsky said: “We believe the combina - close in the second quarter of 2016, is support over 645,000 business outlets. tion of our two organisations will form an expected to enhance TSYS’s offering in the Commenting on the deal, TSYS presi - even stronger platform for us to grow new high-growth areas of integrated payments, dent and CEO Woods said: “Trans - sales, provide more robust solutions for e-commerce and omni-channel services. First significantly increases our scale and our partners and merchants, and expand TransFirst provides merchant solutions opportunity within the highly attractive an already outstanding service model.” to over 235,000 small and medium-sized merchant space, and particularly the prof- On completion of the acquisition, John businesses in the US through its propri - itable and fast-growing small and medium- Shlonsky will be named as senior execu - etary technology, and end-to-end custom- sized business segment. tive vice-president and president of the ised and multi-channel products. “With the added strength of TransFirst, TSYS Merchant segment; he will replace It has over 1,300 integrated technology TSYS will be uniquely positioned with Mark Pyke.<

RESEARCH Monthly UK contactless card spending reaches £1bn Contactless card spending in the UK has Overall online card spending surged to fold since the beginning of 2015, and for reached £1bn ($1.4bn) in a single month for £11.8bn, from £10.4bn in November 2014, £1bn to be spent via contactless in a month the first time, according to data released by while the number of online purchases record- is a major milestone. The UK Cards Association. ed a 23% year-on-year rise. “Whether it’s buying lunch or paying for The data revealed that contactless card The average transaction value of a travel, there is a real appetite for contactless transactions amounted to £1.02bn in rose to £8.03 in Novem- payments, and this is only going to grow. November 2015, a significant rise compared ber, from £7.72 in October, driven by an “Making a contactless payment is fast, to £287m in January 2015. increase in the contactless payment limit easy and secure. With so many retailers Total payment card spending reached from £20 to £30 in September. now accepting this technology, we are sure £53.2bn in November 2015, with the num- UK Cards Association head of policy consumers will continue to vote with their ber of purchases hitting a monthly record Richard Koch remarked: “Spending on wallets and use contactless cards as their pre- of 1.174 billion. contactless cards has increased almost four- ferred way to pay.”<

MOBILE MOBILE NAB introduces Visa-backed US Bank adds Apple Pay to its mobile payment service credit cards National Australia Bank (NAB) number with a unique digi- US Bank has announced that the actual card numbers are has rolled out its mobile pay - tal ‘token’ that can be used consumers who use the US Bank not stored on the device, or on ment service, NAB Pay, which for online payments, without FlexPerks Apple’s servers. allows customers to make pur- revealing sensitive account credit card can now make pur- Instead, a unique device chases without the need for a information. chases with Apple Pay. account number is assigned, physical card. NAB executive general man- The US Bank FlexPerks encrypted and securely stored in The service is available as ager for consumer lending American Express card portfolio the secure element on the device. part of NAB’s mobile internet Angus Gilfillan said: “Tokeni- includes the US Bank FlexPerks Each transaction is authorised banking system. sation improves protection for Reserve American Express Card, with a one-time unique dynamic Bank customers with a com- customers because physical the US Bank FlexPerks Travel security code. patible Android mobile device card details are never used in Rewards American Express US Bank’s retail credit-card and a NAB Visa Debit Card the payments process, reducing Card, and the US Bank Flex - division senior vice-president, can start using the NAB Pay the risk of fraud. Perks Select+ American Express Cliff Cook, said: “Enabling service immediately. “Our partnership with Visa Card. Apple Pay for our US Bank Flex- The service – which is backed is enabling us to significantly The Apple Pay mobile wallet Perks American Express Card by Visa – makes NAB the first invest in our credit and debit allows customers to make pur- members continues our efforts bank to use Visa’s tokenisa- card portfolio and act more chases at participating stores to give customers choices in tion service as the mobile quickly to deliver innovative with an iPhone 6, iPhone 6 how they manage payments, security platform. solutions for our custom - and Apple Watch. as well as providing them an The Visa Token Service ers – as today’s announcement When a consumer registers easy, secure and private way replaces a user’s credit card shows.”< a credit card with Apple Pay, to pay.”<

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EPI 345.indd 4 22/02/2016 10:40:29 Electronic Payments International DIGEST NEWS

M&A Barclaycard launches contactless app

Barclaycard has rolled out a payments app to increase the transaction value limit to £100. enable clients to make contactless payments Additionally, the contactless mobile pay- using Android smartphones. ment app will allow customers to replace lost Based on host card emulation technology, and stolen cards with a virtual card, which the app will enable users to make ‘touch and can be downloaded onto the app. go’ payments at over 300,000 locations in The contactless payment platform also the UK, and on London’s transport network. works for non-Barclays customers, allowing The transaction value is restricted to £30, them to debit or credit cards to key fobs, but adding a PIN to the mobile device will stickers and wristbands. <

PAYMENTS DISTRIBUTION WorldRemit launches instant Diebold launches transfer service to Nigeria contactless checkout concept for retailers

Diebold, a US-based provider of wallet within the retailer’s mobile self-service solutions for retail- app, or with cash inserted into the ers, and the US’s largest ATM terminal. manufacturer, has launched a new The concept also offers cashback contactless self-checkout concept through the checkout termi - WorldRemit, a UK-based by far the largest volume of for the retail market. nal, which can also function as online money transfer service, remittances to any country in The new mobile-enabled an ATM. has launched instant transfer Africa, and the sixth-largest self-checkout concept has been Diebold executive vice-president, services to Nigeria. figure globally. designed to combine the core self-service technology, Frank The service will enable WorldRemit CEO & capabilities of the ATM with the Natoli said: “Our omni-channel people in more than 50 coun- founder Ismail Ahmed said: convenience of contactless mobile expertise has enabled us to reim- tries to transfer money from “At WorldRemit, we offer payments and self-checkout. agine the use of our fast, secure the WorldRemit app to 140 people a of the most Consumers scan items they ATM technology to power the new, branches of Skye Bank. convenient ways to send and want to purchase while shopping mobile-enabled self-checkout. WorldRemit clients current- receive money. in-store with a mobile device, and “A convergence of the ATM, self- ly make over 400,000 trans - “Today, Nigerians can use pay by simply tapping the phone at checkout and mobile would not actions each month. our app or website to send the self-checkout unit. only deliver speed and convenience According to the World money to a bank account or Diebold said that payment will to consumers, but also standard- Bank, Nigerians living abroad cash pickup location, instant- be made via preloaded card infor- ises all cash handling into a single sent home $20.8bn in 2015, ly,” he added. < mation in the consumer’s mobile automated experience.” <

MOBILE CaixaBank launches Spain’s first mobile-only bank Spanish banking giant CaixaBank has at younger customers. He said: “It shows digital experience to shape a highly com - launched Spain’s first mobile-only bank our commitment to providing new services petitive model and a set of benefits that is aimed primarily at ‘millennial’ consumers. that perfectly complement the more tradi- completely unique in the market.” imaginBank will operate exclusively tional banking model, helping CaixaBank imaginBank will operate mainly through through a mobile app and social networks, to secure greater loyalty among a large the app, but customers will be able to use offering a range of commission-free products swathe of existing young customers, as CaixaBank’s ATM network to make trans- and services. well as to drive new customer acquisition.” actions using a personal interface. These include current accounts, credit He added: “We have created a simple The bank will also operate on social cards, consumer loans, personal finance service offering; one that charges cus - media networks, allowing customers on management tools and mobile and P2P pay- tomers no maintenance fees but is com - Facebook to check bank balances in a ments. The move marks a shift from Caixa- prehensive enough to cover all the finan - secure environment. Bank’s traditional multi-channel means cial services demanded by the young CaixaBank currently services 2.9 million of banking. target market. customers aged 18-35, meaning that nearly CaixaBank CEO Gonzalo Gortazar “We have combined this with advanced one in three individuals in Spain in this age explained that the scheme will be aimed technological capabilities and a genuinely range are CaixaBank customers. <

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EPI 345.indd 5 22/02/2016 10:40:30 Electronic Payments International FEATURE FAST PAYMENTS

America’s need for speed: The US readies for Vocalink’s faster payments Faster payments is a hot topic the world over and the latest news that The Clearing House (TCH) in the US and the UK’s VocaLink have teamed up to implement a system for the US market is no small development in global payments. Anna Milne speaks to the CEO of VocaLink and the president of TCH about the venture

n October 2015, VocaLink and The TCH spent over a year on intensive design we do everything we need to do to make a Clearing House (TCH) announced work- working hand in hand with their success of TCH implementation but look- their intention to reach an agreement banks and other partners in the financial ing towards the future, what we'd like to try on implementing a faster payments system to build out the specifications and and achieve are our objectives, to see the UK I understand the use cases, etc, etc. solution in the US. By the end of 2015, system modernised, up to the standards that this agreement was reached and a con - Then TCH put it out for bid and spent sev- TCH will now be leading in - because then tract was signed. eral months looking at VocaLink and others. the UK will actually be slightly behind. In that time, David Yates, CEO of Aramanda concedes VocaLink was always to “And beyond that, we want to participate VocaLink, said ‘a great deal of work was the fore because of the success they have had in one format or another in the instant pay- done and we are halfway through the project with this in other markets, but it was by no ments programme inside the SEPA zone," already in advance of signing the contract’. means a foregone conclusion. says Yates. A great deal of the work involved was A crucial part of a payments system, in par- He continues: "This project is a repu - gaining the support of US banks and ensur- ticular a fast payments system is the financial tational 'bet the ranch' project, we had to ing that the system would be fit for purpose messaging- the details of the transaction. As persuade ourselves through a lot of different and that they would be able to easily connect Aramanda says, ‘moving payments is the easy instances of governance inside our company to the system. part, moving the data is more problematic’. that undertaking this project is something The US system will be VocaLink's third that's viable for us and that both parties will non-UK implementation, following Sweden emerge from this in a way that we can clearly and Singapore. declare victory and that's very important." Recently, VocaLink also announced a part- “This project is a Both organisations have tremendous repu- nership with the main Thai interbank pay- reputational ‘bet the ranch’ tations, built up over decades in VocaLink's ments provider to work on developing a Thai project, we had to persuade case, and centuries in the context of TCH. mobile payments system. The US, however, The imperative for a project like this to run is a very different, very complex market with ourselves it was viable” clean is clear. many, many more stakeholders. David Yates, VocaLink As Yates explains, it is very much about James Aramanda, president of TCH, says developing the confidence that the job can a key issue was making sure the system was actually be done properly and that all the adequately performant, not just in the medi- banks involved can be properly served by the um term but in the long term “because there B2B business transactions can be extreme- new system. There isn’t much room for error. is no doubt about it, once real time payments ly complex, with lots of data moving back Aramanda says: "The nuance here is in the are made available in the market we are like- and forth between the businesses, meaning UK, for example, a real time payments sys- ly to see fairly explosive growth. So getting multiple steps in the process to ensure the tem was mandated in every bank - this coun- that growth pattern placed and ensuring the institutions know exactly how to apply the try had no choice - in our country it is not capacity works is very important”. payment. mandated, so it's taken a bit longer to make The sheer number of banks in the US is the "Also, we were pioneers in the US on sure we got to critical mass, with enough of stand-out characteristic to take into account tokenising, masking account data and we the institutions on board and enough under- with such an undertaking, particularly when wanted to make sure that systems we deploy standing and now it's taking off very quickly- compared to the UK, Sweden and Singapore. have the capability to be able to tokenise the so they all get it, they all need it, and they're The system in the US requires thousands of data. Those are just two examples of some looking forward to it." connections. of the complexity we wanted to make sure Says Aramanda, "We have 14,000, or we can cover downstream," Aramanda adds. How long is it all going to take? thereabouts, financial institutions that this Aramanda is keen to be up and running in system will need to connect to and for any Where next for VocaLink? 2017: kind of system like this to work, it's got to The US system is based on the new data "I would say our goal is in 2017 to actu - reach all of them - just reaching a sub-set standard ISO 20022 available in the US. ally have customer transactions, transacting doesn't get you much." "That means we will have a footprint in in real time, I don't know how many that Another key difference in the US imple- the US, London, Singapore, and Thailand. will be or when in 2017 - the earlier the bet- mentation is the fact it was not mandated, There's an obvious gap which is the rest of ter. We're building the infrastructure but it's as it was in the UK, for example, where the Europe and the modernisation of the UK sys- about all the people who need to connect to regulators required it. In the US, there was a tems,” says Yates. it. That will really be the gating issue of when gentle push towards it. “The top priority for 2016 is making sure this thing will be live in the market." <

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EPI 345.indd 6 22/02/2016 10:40:30 Electronic Payments International CROSS-BORDER PAYMENTS FEATURE

Same-day, transparent cross-border payments become reality for corporates As the technology that powers the financial world advances, financial institutions are finding it increasingly difficult to keep up with consumer demand for quicker and simpler transactions. One company, however, is enabling banks to speed up their cross-border payment strategies. Alexander Atkins writes

he lack of technology in today’s world options, so banks have to keep up with the The scheme has been in planning since last of cross-border payments means technological change in order to provide a year when SWIFT developed its SWIFT 2020 that financial institutions, as well as high level of client satisfaction.” Strategy, and opened dialogue with various retailers, could be waiting for a con- With those factors at the heart of the banks and stakeholders to define the busi- T scheme, and in agreement with the banks, ness rules and technical specifications. sumer’s money for up to several days before confirmed payment, leaving uncertainty at the initiative aims to improve cross-border So far, 45 banks have signed up, including both ends of the transaction as to where the payments in four areas. Barclays, Lloyds, RBS, ING, Bank of Ameri- money is and whether the payment has The first area concerns payment time. ca and Nordea. However, according to Ray- come through. “The speed of payments today can maekers, the initiative is open to expansion However, for some banks, this be anywhere from one to five and any bank can join. is no longer the case. SWIFT, days, meaning that there is a “Of course they need to meet those service- which operates one of the lot of uncertainty,” explains level agreements, they need to sign into largest financial messag- Raymaekers. the quality and experience, but the banks ing services in the world, Therefore SWIFT aims currently part of the project can service recently launched its global to make all payments with other banks to provide these services to payments innovation ini- same-day value, so that the their corporates,” he says. tiative, and already over 45 money arrives in the account The quality and experience that Raymaek- banks have signed up to use the at the other end on the same day ers refers to is the promise that banks which service. as the transaction. sign up take, in order to ensure a high stand- SWIFT has been operating since The second area is transparency of ard of quality for SWIFT’s service. 1973 and provides services to over 10,000 fees. “That’s also very important because if However, he admits that SWIFT had to act financial institutions in over 200 countries, you make a payment, you should know how quickly to get the service out to the banks providing secure, reliable financial messag- much it costs,” explains Raymaekers. that were keen to move forward. This meant ing services to institutions all over the world. A third area being targeted is in tracking building on the existing infrastructure that The latest initiative is designed for the the payments. The new initiative will mean banks currently have, while building an over- corporate treasurers of companies who that a payment can be tracked, in a similar lay with the service-level agreements. are largely involved in cross-border pay - way to tracking a package with a delivery By building on the existing infrastructure, ments and, in conjunction with the banks, is company, and once the vendor has received the danger is that new technologies that are designed to make things faster and simpler the money, a notification will be sent to the fast-developing, such as blockchain, might for corporate entities. purchaser to inform them of the payment’s pose a threat to SWIFT’s systems. However, Wim Raymaekers, head of banking arrival. Raymaekers is adamant that SWIFT will stay markets at SWIFT, believes that the cross- The final area is concerned with invoicing. ahead of the curve. border payments sector must keep up with Using the service, the banks can ensure that “We are starting with ‘release one’ which technological change in order for banks to the remittance data provided to pay towards we think is quite a dramatic improvement in stay competitive, especially with the growing the invoice is delivered to the client at the terms of speed, transparency and tracking,” number of non-bank competitors. other end without any changes. he says. “These cross-border payments today are “This is extremely important, because the “But we’re looking at future releases as reliable and global, but they require serious client needs to clear off the invoice and they well, and we are already looking to define improvement due to three main drivers,” need to know which invoice is being paid the vision of what this experience should be says Raymaekers. for,” says Raymaekers. like in 2020. “One is that corporates are asking their The service provides advantages for both “We’ll continue to enhance the experi - banks for faster and more transparent ser- ends of the transaction. Corporates are ence and bring in new technologies, but for vices; they are looking at the time frame and happy with faster and more transparent ser- now we wanted to move quickly and that’s the cost of payments. vices, and for the banks, the faster payments why we did it on the existing infrastructure, “A second factor is that due to regula - allows for possible growth of their cross- because it was already there.” tion and compliance, many banks are clos- border payments sector. As for blockchain, Raymaekers admits ing the relationships they have with other “It will be particularly useful for SMEs if that SWIFT has not ruled it out, saying that banks, which makes global payments they have a better, easier and faster service,” it will continue to look into the development more complicated. says Raymaekers. “They can do more busi- of blockchain technology for future use. “Thirdly, the new entrants and alternatives ness cross-border and use this service to grow For now though, banks appear to be flock- in the market mean that clients have more and facilitate their border trade.” ing to this fast cross-border service.<

www.electronicpaymentsinternational.com March 2016 y 7

EPI 345.indd 7 22/02/2016 10:40:31 Electronic Payments International FEATURE LATAM E-COMMERCE

Cross-border e-commerce prepares itself for worldwide expansion A recently announced partnership between cross-border online mall iguama and online commerce provider Ingenico ePayments highlights that cross-border e-commerce has gone from strength to strength, and will play a key part in global payments in 2016. Alexander Atkins reports on this development

ross-border e-commerce (CBEC) up their knowledge and understanding of the ence, m-commerce’s role is growing, has experienced enormous suc - payments landscape,” he adds. according to Rolf Visser, chairman of the cess in the last few years, growing Furthermore, cross-border merchants are Cross-Border E-commerce Community, throughout the world. According finding new ways to increase localisation and vice-president of global marketing C of their offers by, for example, offering the for Payvision. to Barclaycard, its combined global mar- ket value has exceeded $1trn, and shows option to pay in a variety of local currencies. “M-commerce is driving omnichannel no signs of slowing down. convenience, with e-wallets on the rise This latest deal between fast-growing igua- Data as they are very useful to online shop - ma and blooming payments firm Ingenico Just as with many other parts of the finan- pers- secure, personalised and connected to is proof of the rapid expansion that cross- cial services industry, data has, and will loyalty schemes.” border e-commerce has had, especially in continue to, play a vital role in expanding A seamless omnichannel experience is one emerging markets such as the one with which CBEC, according to Tubb, as online retail- of the biggest attractions, Visser explains. iguama is concerned, Latin America. ers are expected to intensify their use of data The need for businesses to integrate their The company, which connects consumers to analyse and understand their customers’ online and offline strategies into one is cru- in Latin American areas with big US brands, behaviour so as to recognise their needs cial to successful cross-border retail, some- plays a key role in exporting business to and intentions. thing that is more challenging for the small countries such as Guatemala, Colombia, “Data analytics will become increasing- and medium-sized businesses. the Dominican Republic, Chile, El Salvador, ly important, particularly for merchants In a recent poll conducted by Payvision, Costa Rica, Panama, Peru and Honduras that want to offer their customers seam - merchants agreed that they need to focus and is hoping to expand to other surround- less multichannel or omnichannel payment more on providing such a seamless, integrat- ing areas, with the help of Ingenico. options,” says Tubb. ed experience. As a large middle representative, iguama Channel consistency and digitisation are Visser states that the shopper must be at provides access, not only for Latin American also proving to be key trends in the cross- the centre of the discussion and their habits buyers looking for high-quality US goods, border payments sector, as merchants look to and preferences must be the indicators. but also to US companies looking to enter closer integration of the physical and digital Sharon Manikon, director of customer new and healthy markets. channels. solutions, global payments acceptance at The cross-border online mall handles local “Merchants want to provide a consistent Barclaycard, states that lower prices for marketing issues, customer service, logistics brand experience, whatever the channel and goods outside a consumer’s domestic coun- and pricing requirements for US firms unfa- device being used by the customer base,” try, and a wider range of products available miliar with new territories, making it simpler Tubb explains. internationally are also key drivers in cross- for them to gain a foothold. Adding to the omnichannel experi - border business. Alongside iguama, Ingenico ePayments will play a key role in helping make the pro- n RETAILER OPINION SURVEY Global promise cesses smoother, from the buyers who are However, the cross-border trend is not lim- purchasing, to the retailers who are accept- Not applicable ited to Latin America: all over the world, the ing the payments, crucially by processing all 4% trade is rocketing. credit card and alternative payments in both “The US remains a top country for cross- Disagree US dollars and in local currencies. 6% border e-commerce, with 54% of US digi- This advantage could easily increase the Strongly tal shoppers making online purchases from amount of cross-border selling, another rea- agree overseas retail sites,” says Manikon. 28% son why iguama is now looking to expand. “In addition, the US is still one of the most In helping iguama’s expansion, Ingenico has popular destinations for international shop- identified what is really driving cross-border pers, given the attractiveness of US brands Agree business. 43% and goods,” she adds. “Understanding local payment preferences However, it is China that is the one to is key in cross-border e-commerce as the abil- watch, according to Tubb. “While much of ity to tailor payment options to customers’ the total Chinese e-commerce flow is domes- To what extent do you agree that cross- preferences increases conversion,” says Nick border retailers are focused on o ering tic, an emerging and affluent middle class in Tubb, vice-president of professional services omnichannel experiences across multiple China is increasingly shopping cross-border online and oine sales channels? at Ingenico. for luxury brands from Europe and the US, “We’re seeing merchants increasingly ramp Source: Cross-Border Ecommerce Community in order to show their newfound status.”

8 y March 2016 www.electronicpaymentsinternational.com

EPI 345.indd 8 22/02/2016 10:40:32 Electronic Payments International LATAM E-COMMERCE FEATURE

The EU is China’s biggest market, fol - n CHINESE ONLINE CROSS-BORDER CONSUMER ment of the trade, especially when needed in lowed by the US. Though cross-border shop- SPENDING trying to create a seamless experience for the ping is still tiny as compared to the whole consumer. e-commerce market in China, it is growing CNY bn “In other words, the less appealing the pay- rapidly, and Chinese shoppers are expect- 150 ments sector becomes, the fewer providers ed to drive most of global CBEC by 2020, become available, due to a lower incentive according to a report by Accenture. 120 for technological investment to enter the Retail is China’s biggest cross-border market, and thus the less consumer choice e-commerce sector, according to Ingenico, at there is,” says Visser. 90 almost 92%, closely followed by travel. However, despite the challenges, CBEC It is not just coming into China, howev- can sometimes rely on government help to er, as Chinese payment schemes and online 60 overcome these difficulties. In September retailers are also exploiting the growing 2015, the UK government signed a partner-

popularity of cross-border e-commerce. This 30 ship with China which will help UK export- is especially true for emerging markets and ers promote online sales in China. customers in developing nations. “And in September 2014, the government One such example is in Africa where a 0 launched the UK Trade and Investment growing middle class in many African coun- 2010 2011 2012 2013 2014 e-Exporting Programme, which is aimed at tries is leading to more international pur- helping UK businesses of all sizes promote chasers in search of higher-quality goods. Source: Ingenico ePayments their goods on international online market- Chinese e-commerce company Chinabuy places, such as Tmall China, Japan Rakuten recently entered the Kenyan market to least for the payment services providers and many others” says Manikon. answer growing demand to link local buy- which have to invent new ways to make There is also the Multi- ers to Chinese manufacturers and Chinese the processes seamless for consumers from regulation that came into effect in early online sites. nations all over the world. December 2015. Regulation caps all the “China is the biggest manufacturer in “Very few PSPs can process and collect consumer interchange rates within the EU the world today and, using cross-border from anywhere in the world in a full-service at 0.30% for credit and 0.20% for debit e-commerce, clients from all over the world model with a single connection and single meaning it is much cheaper for merchants can buy whatever they want directly from remittance,” says Tubb. to accept cards. factories in China without middle men and The global reach of CBEC also provides “On top of that, surcharging is forbidden a long, costly supply chain at affordable its own challenges for both merchants and now for the regulated cards, which means prices,” says founder and CEO of Chinabuy acquirers, which have to deal with a wide that consumers don’t have to pay extra fees Group, Joe Zhang. variety of languages, cultures and currencies for using their credit cards,” Tubb says. Southeast Asia is also forming a growing with which to transact. These can be solved “These two things combined drive market for cross-border selling, especially with the right delivery partner who can pro- acceptance and authorisation rates for the for nearby Chinese companies such as JD vide seamless access to different areas. merchants, and are ultimately expected and Alibaba, which have already entered the to increase cross-border e-commerce,” Indonesian and Malaysian markets. Regulation and compliance he explains. Yet while admitting that the BRIC coun- Regulation adds to the numerous challenges It is also in governments’ interests to sup- tries and other developing nations will be facing CBEC, as many countries have dif- port cross border initiatives says Visser, add- playing key roles in the expansion of CBEC, ferent regulation and compliance issues that ing that governmental awareness is growing Manikon asserts that certain European coun- merchants need to adhere to. But Tubb says year on year. tries such as France, Italy and Poland have that is where the PSPs can play a vital role “The Digital Single Market Strategy, a yet to fully realise their cross-border oppor- in helping the merchants to understand the European Commission initiative, is looking tunities, and will likely grow. markets they are trying to enter, something to eliminate the barriers to inter-European With global expansion on the up, the Ingenico will be doing with iguama. cross-border shopping. Deploying affordable total amount that cross-border e-commerce For the consumers, improved regulation is logistics and delivery methods is a key step in makes up of the global e-commerce market always reassuring, but it provides additional the process,” he explains. is growing. According to Ingenico, for the cost and complexity for merchants. Continuing developments in another ini- larger, global merchants, around 75% of In Europe, for example, explains Manikon, tiative launched by the European banking their total e-commerce is cross-border. Fur- companies have to have started researching industry back in 1999, the Single Europe thermore, its importance for a country’s and deploying two-factor authentication Payments Area (SEPA), will continue to development is crucial. from August 2015 onwards. prove extremely useful for CBEC as it is “With only 12 countries accounting for In the US, there are many types of fed - designed to streamline payments between 80% of the world’s cross-border shop - eral, state and international law govern - businesses and merchants in the eurozone. pers, there is a huge opportunity to tap ing e-commerce, to help the consumer, but The deadline for compliance with SEPA into CBEC and generate domestic revenue,” again this adds to the challenges facing regulations for non-euro countries is 31 says Manikon. the merchants. October 2016, and, if it is entered into by all The benefits extend beyond the shopper However, it is in the innovation of the concerned parties, it will greatly simplify the who is receiving the product, helping to sup- industry that regulation could provide the conditions in which CBEC must take place. port local auxiliary services such as the in- biggest hurdle, according to Visser: The dan- CBEC presents an exciting and grow - country delivery firms who deliver the goods. ger is that regulation could discourage invest- ing opportunity. For now, the future looks Yet it still faces significant challenges, not ment in technology, crucial to the develop- bright.<

www.electronicpaymentsinternational.com March 2016 y 9

EPI 345.indd 9 22/02/2016 10:40:32 Electronic Payments International FEATURE EUROPEAN REAL-TIME CLEARING

European real-time clearing has come of age While the outlook for real-time clearing in the US market remains fragmented and uncertain, in Europe the pace of development and usage is quickening, and real-time clearing – or instant payments – is clearly a key topic. Jip de Lange, senior consultant at First Annapolis, writes

nstant payment schemes for retail pay- ates on general SEPA infrastructure, but can largely be explained by the migration ments based on bank transfer are now still enables real-time guaranteed payments of certain volumes from legacy networks present in around ten markets world- for merchants. It does so by operating an (UK) or even the closure of an entire leg- wide, depending on your definition. alternative set of tools and processes to acy network (Switzerland). I authorised transactions. Volumes on these new networks remain mod- The most visible new use case that is est to date, given that few of them involved Similarly, bank buttons (pay-by-link), as enabled with real-time clearing is P2P, and wholesale migration from the legacy ACH can be found in many markets, are a way although we see large numbers of subscrib- network counterpart. to communicate authorisations in real time ers in the Nordic markets, it is still too However, expectations are high. In this when funds are cleared asynchronously. early to speak of real success. article, we evaluate the potential along with Based on these examples, P2P apps the challenges for the business development Do we need really need real-time? appear to have some traction, but it is too of real-time clearing networks in Europe. Ideally, the workarounds native to iDEAL early to tell if the migration into C2B pay- or bank buttons would not be necessary. ments will be successful. Generally speak- Need for improvement – legacy clearing In a perfect world, the bank transfer mes- ing, few of these new networks displaced networks are not ideally aligned to sage itself is a single message and clears old networks, which arguably increases the today’s business practices instantly, because the alternative require- overall cost of the combined systems. ACH payments traditionally take time to ment for workarounds limits the practical- Finally, it is interesting that networks clear and generally have no corresponding ity of using the network. developed to date are purely domestic, function for obtaining real-time authorisa- The promise of real-time clearing is that which runs contrary to the objectives of tions. Clearly, this makes such networks with an instant payments backbone in place, the European Commission and the Euro- deficient for retail payments and other front-end applications built to facilitate retail pean Central Bank to consolidate and use cases in which instant certainty is a payments and other use cases will proliferate, to make interoperable payment networks requirement. allowing the network itself to scale. across Europe – which by the EBA Clear- ACH networks are simply not built to The counter-argument is simply that the ing’s stated real-time initiative carries sig- operate in real time; they are built around investment and costs required to build nificant weight. batch processing, which typically takes and maintain real-time clearing networks place overnight. Similarly, the core bank rely on a flimsy business case: that either Real-time payments require collaboration interfaces were also not built for real-time the work-around option is perfectly fine, As payment services rely on collaboration or retail payments. or simply that the front-end applications between market participants, no one bank Additionally, batch processing is less and use cases envisioned to propel net- can create a scaled payment scheme on expensive and naturally more resilient than work scale will never develop (in the face its own. real-time, which by default, relies upon of competition from card networks for Banks therefore must collaborate on the robust resilience at all times and for all example). development of the network infrastructure individual transactions. ACH networks are Let us look at the current fact base on (processing, payments settlement, risk and built for a specific purpose, pre-scheduled this debate based on existing real-time collateral management) itself, and on the cor- payments, for which they are highly effec- clearing networks in Europe. responding bank systems to accommodate tive and efficient, but this purpose is not real-time insight in balances, messaging and real-time payments. What we see today in European real-time risk management. The processing limitations of tradi- clearing Establishing real-time clearing requires tional ACH networks do not completely There are currently five real-time bank broad participation and coordination, which restrict their use for retail payments. transfer networks operating in Europe. Of is why we generally observe these new instant iDEAL, the primary method of payment these, the UK and the Swiss solutions have payment schemes in relatively consolidated for e-commerce in the Netherlands, oper- seen the highest volumes, although this banking markets.

10 y March 2016 www.electronicpaymentsinternational.com

EPI 345.indd 10 22/02/2016 10:40:36 Electronic Payments International EUROPEAN REAL-TIME CLEARING FEATURE

Components of real-time payments: four is building a merchant acceptance network. with stuffed IT queues and a reluctance to reasons to invest now, believing in the risk major setbacks. Banks seem to want promise of real-time clearing 4. To innovate and be seen as innovative to dabble in use of real-time clearing, rout- Despite the relative lack of overwhelming Banks increasingly see innovation as a ing only incrementally new volumes to the business case proof, and the challenges (eg. key strategic objective; BBVA for example instant payment networks, which simply broad collaboration), there are good argu- believes that innovation is the bank’s number drives us back to the business case challenges ments for banks to develop such networks one success criteria and that it will succeed observed in #1. in Europe. by offering its customers the most innovative digital services. Real-time clearing networks 4. True network scale requires broad 1. It defends the relevance of the current create a platform on which innovation can participation and alignment account easily develop. Clearing networks are, by default, commu- A real-time payments infrastructure allows nities. These communities must be aligned banks to more easily develop front-end appli- There are four main reasons to be discern- around a common set of objectives and cations that raise the prominence of their ing and patient: investments if the proposition is to be suc- deposit accounts with consumers. cessful. Technical innovators such as Apple, Goog- 1. Bad business case In the Netherlands, iDEAL succeeded le, Samsung, and Facebook are coming into SEPA batch ACH payments are incredibly because the Dutch banks aligned around sup- the market with new payment front-ends. cheap, often costing banks small fractions of porting the product. Simultaneously, PSD2 will encourage other a cent. MyBank, on the other hand, has failed to third-party payment providers to enter by New real-time networks typically have gain traction because the community was too making it easy to access the bank account. higher variable cost than the legacy net - broad and not cohesive. Within this environment, banks are afraid works they are intended to replace (particu- Obtaining and maintaining the alignment of being disintermediated in payments and larly absent the scale that must come from necessary to build a successful new real-time relegated to operating accounts which have a wholesale migration). And, fixed costs for clearing network is difficult in a market in little relevance or revenue, but too much cor- development are high while volumes on real- which there are many banks. responding cost. time networks appear slow to develop. So, what’s the answer? Should we invest Of course, banks still have the challenge This all suggests long break-evens and in developing new, real-time clearing net- to develop and to market such front-end challenging medium-term business cases. At works? “It depends,” is the easy answer: applications, which is not an easily achieved a time when banks have to be careful where • It depends on the complexity of the ambition. to deploy their capital and are challenged to market community and the alignment improve profitability, the Payments Infra- around objectives and commitment to 2. Mobile apps are an additional weapon structure may not be the first priority. invest. in the war on cash and cheques • In markets where participation is highly Cash, less so cheques, is still prominent in 2. Banks are challenged to win the battle complex due to the sheer number of many European markets. However, cash is to own front-end applications banks, such as Germany and the US, a expensive to accept and to process, certainly Banks are generally not market leaders on business case that requires collaboration relative to a bank transfer. mobile applications, online services, and is fundamentally challenged. Thus, a real-time backbone which again other modern, technology-led solutions • It depends on customer behaviours. could drive customers towards alternative relative to competitors such as Apple and Markets which are conditioned to using form factors should generate a positive cost Google. bank transfer as a primary means of -replacement business case for banks. Banks often have strong brands and distri- transacting are better suited to expand bution networks, but they must work hard this behaviour onto new mobile applica- 3. It creates an alternative to card to foster innovation and to demonstrate nim- tions, such as the Nordics. networks for retail payments bleness in developing front-end applications. • It depends on the card network land- A real-time payment infrastructure offers Of course, the banks do not necessarily scape. In markets such as France where a banking community the opportunity to have to win the battle for the front-end appli- there is already a viable alternative to develop retail payments solutions that are an cations in order to make the network a good Visa and MasterCard, hedging Visa and alternative to cards. Smartphones, and pos- platform for new applications that support MasterCard via a real-time bank trans- sibly even biometrics, provide a form-factor the bank’s objectives to maintain account rel- fer network may be unnecessary. on which new front-end applications can be evance and to replace card networks. Banks which see the merits of building such developed riding on the new real-time rails. Even if the application is owned by networks should move quickly and robustly. Although cards are often still preferred by Google, if the account inside is the banks, Five years from now, technical power- banks, the card networks’ continual drive and the infrastructure is lower cost or oth- houses, innovators, and others introduced to to own more of the card chain economics erwise more profitable than cards, then the the market because of PSD2 will crown the makes building alternative networks a sound benefit is still there. market for front-end payment applications strategy. making it more difficult for banks to own the For example, in Poland, scheme fees paid 3. It will require significant migration front-end. by the acquirer and issuer now exceed inter- effort within the bank Real-time clearing networks offer great change, creating a clear economic argument In order to drive a superior business case out- potential, but also present certain business to replace Visa and MasterCard. come, banks must embrace more wholesale case risks. We will watch closely as these This rationale is not without challenges, change. New networks must replace old net- networks evolve in Europe in pursuit of the however. Getting consumers to change pay- works; migrations must occur. broad objective to potentially reshape retail ment behaviours is notoriously difficult, as This is a hard pill to swallow for banks payments. <

www.electronicpaymentsinternational.com March 2016 y 11

EPI 345.indd 11 22/02/2016 10:40:38 Electronic Payments International SURVEY COUNTY THE UK

The UK is embracing new payments While the UK remains one of the largest and most mature payment markets, it still needs to keep up with innovation and new technology. Luckily, it has the contactless boom, particularly in travel, and the release of mobile payment options to keep it up to speed

he UK is Europe’s largest and most Cheques are gradually disappearing from of payment cards with technology such highly competitive industry for consumer payments, primarily due to con- as EMV and contactless are anticipated to payment cards. It accounted for sumer preference for electronic payments, drive card-based transactions over the next 19.5% of Europe’s total transaction and the government’s withdrawal of the five years. T cheque guarantee in 2011. UK consumers – especially the young - value in 2014, and 20.1% of the volume. The UK payment cards market is mature, The government is working to reduce the er generation – are increasingly inclined with high penetration of credit and debit use of cheques, and 2018 has been selected towards faster and more secure payment cards. Banks and issuers were forced to intro- by the UK’s Treasury Select Committee as a options. This resulted in mobile operators, duce bespoke products and services to retain target year for their abolition. traditional and online retailers and other ser- market share following the financial crisis,. Use of payment cards rose between 2010 vice providers introducing quick and efficient Credit transfers account for the majority of and 2014, although it still lags behind cash digital payments during 2010-2014. UK payment transactions by value, and are in terms of transaction value. A growing However, payment cards are anticipated to used for both high-value corporate and low- number of POS terminals, preference for continue to dominate as a payment method, value retail transactions. In the UK, salaries contactless payments, and a rise in the num- largely due to familiarity of use, availabil- are generally paid through credit transfers. ber of retailers accepting cards for payments ity of infrastructure, and the emergence of Paper-based credit transfers usually take contributed to rises in payment card transac- contactless technology. three days to clear, and are generally initiated tion volumes and values. The rising number The rise of digital-only banks is likely to by smaller companies or consumers. of online shoppers and the growing retail accelerate a shift towards electronic pay - Direct debits are used for low-value recur- sector are expected to increase the value of ring payments such as utility bills, and card-based transactions until 2019. n UK CARD TRANSACTION VALUES BY CHANNEL accounted for the second-largest share of Cash continues to dominate in terms of ($BN), 2010-2019 transaction value in 2014. In the UK, preau- transaction volume, as consumers generally Year ATM POS thorised direct debit options are the most use it for day-to-day, low-value transactions. 2010 316.8 692.7 common form of direct debit, and take three According to the UK Payment Council, days to process. cash transactions represented just under half 2011 329.3 794.0 of all payments for the first time in 2014. Use 2012 329.1 815.3 n UK PAYMENT CARDS BY TYPE (MILLION), of cash is anticipated to decrease further until 2013 322.0 867.7 2019, due to a growing preference for pay- 2010-2019 2014 331.7 987.7 ment cards, and a rise in contactless transac- Year Debit Cards Credit Cards Charge Cards tions from September 2015. 2015 306.2 1,015.0 2010 102.9 57.4 5.2 Banks and regulators are taking initia- 2016 306.4 1,120.6 2014 115.5 58.7 4.7 tives to encourage consumers to use cards by 2017 308.6 1,235.6 offering secured payments. 2015 118.8 60.2 4.7 2018 312.3 1,357.9 All payment cards issued after January 2019 129.4 65.7 5.0 2011 are EMV-compliant, offering enhanced 2019 316.6 1,480.7 Source: Timetric security. This and the increased convenience Source: UK Cards Association and Timetric

12 y March 2016 www.electronicpaymentsinternational.com

EPI 345.indd 12 22/02/2016 10:40:42 Electronic Payments International SURVEY THE UK COUNTY

ments. Atom Bank, which was granted a n UK CARD TRANSACTION VOLUMES BY n NUMBER OF ATMS AND POS TERMINALS IN license by the Bank of England in June 2015, CHANNEL (BILLION), 2010-2019 THE UK (THOUSAND), 2010-2019 may become the UK’s first digital-only bank, allowing customers to conduct transactions Year ATM POS Year ATM POS entirely online or by mobile. German-based 2010 2.8 8.8 2010 63.1 1,421.5 Fidor Bank, and UK-based Tandem Bank and 2011 2.9 9.8 2011 64.4 1,544.3 Starling Bank are also entering the market. 2012 2.9 10.6 2012 66.1 1,590.7

Credit card market continues to grow 2013 2.9 11.6 2013 68.0 1,653.9 The UK credit card market is mature, with 2014 2.8 13.0 2014 69.4 1,701.9 a variety of products available to consum- 2015 2.8 14.3 2015 70.7 1,742.7 ers. Banks offer value-add services such as 2016 2.7 15.7 2016 72.0 1,781.0 cashback, reward points and discounts on 2017 2.7 17.0 2017 73.1 1,818.6 credit card purchases. With flexible repay- ment options, UK consumers have shown a 2018 2.6 18.3 2018 74.1 1,852.7 preference for using credit cards for both in- 2019 2.6 19.5 2019 75.1 1,887.0 store and online purchases. Source: UK Cards Association and Timetric Source: UK Cards Association and Timetric With the UK’s economy recovering, and employment opportunities gradually grow- card issuers are likely to compensate for Growing e-commerce market ing from 2013 onwards, consumers have some of the lost revenue by issuing more The UK is Europe’s leading e-commerce started to use credit cards more frequently at commercial charge and credit cards. market. E-commerce recorded a compound POS terminals, as they look to benefit from annual growth rate (CAGR) of 16.02%, interest-free credit periods and reward pro- Increasing adoption of contactless from $90.4bn in 2010 to $170.1bn in 2014. grammes. Contactless cards were first issued in the UK The growth was partly a result of rising Consequently, credit card transaction vol- in 2003. The number of contactless cards online and mobile penetration, high con- umes and values have risen in the last five is expected to reach 78 million by the end sumer confidence in online transactions and years; a similar trend is expected up to 2019. of 2015, equivalent to 42.5% of all UK the presence of secure online gateways. UK banks also offer credit card balance- payment cards. A contributing factor in the growth of transfer services. These have become very The number of contactless card transac- e-commerce in the UK was an increased competitive, as cardholders look to defer tions also rose: In September 2015 alone, focus on customer retention tactics by retail- repayments. Banks offer 103.2 million contactless transactions were ers, including customised emails to consum- long low-rate transfer periods, while increas- made in the UK – 89.7 million with debit ers based on buying patterns, display adver- ing the annual percentage rate on cards out- cards and 13.5 million with credit and charge tising about products and services on social side the repayment period. cards. network sites based on previous purchases, In September 2014, Barclays Bank intro- Since 2013, the UK payment cards market and on-site personalisation features offering duced a balance-transfer card offering 0% has seen the uptake of contactless technology. enhanced shopping experiences. These initia- interest for up to 35 months. This model was According to the UK Cards Association, the tives have led to a healthy relationship with followed by Lloyds Bank, which released a number of contactless transactions rose from customers, and resulted in repeat purchases. platinum credit card offering a 34-month 1.7 million in 2010 to 319.2 million in 2014. The young population has a strong inclina- balance-transfer period. The number of contactless transactions rose tion for mobile phones and online media use, Low-rate transfer periods have become an by 220.5% year-on-year in September 2015. giving a platform for e-commerce companies attractive proposition for banks and issuers Major issuers including Barclays, RBS, to reach more customers. to increase profitability on credit cards, and Lloyds Baking Group, HSBC, Nationwide, Growth in online shopping and a rise in to retain customers. Balance transfers also Santander and American Express have all e-commerce transactions by mobile phone encourage consumers to reduce the number issued contactless cards. are expected to expand the scope of card- of cards owned, and card debt. A key driver of contactless payment has based payments. been its introduction on London’s public Although the UK’s consumer market is Interchange fee regulation to impact profit transport system. In 2014, there were 17 mil- smaller than the those of the US, Germany, The UK government implemented the EU lion contactless payments on bus journeys, China and Japan, UK consumers spend more rule on the interchange fee cap effective from and 14 million on rail trips. on online purchases. By 2016, online retail 9 December 2015, capping fees for credit and According to the UKCA, this upward trend is expected to account for 23% of UK retail debit cards at 0.3% and 0.2% respectively. is expected to continue following a rise in sales, up from 13.5% in 2010, according to The regulation is anticipated to have a the contactless spending limit. The growing the Boston Consulting Group. This is the major impact on profitability in the UK pay- popularity of mobile and wearable NFC pay- highest proportion of any G20 economy. ment cards market. Issuers are likely to cut ments is anticipated to support its growth. Credit and debit cards and payment facili- card offerings and benefits for consumers, The ease of quick contactless payments tators such as PayPal are all used extensively and look at new ways to generate revenue. has led to their growth in popularity among in online shopping. The availability of digital One way could be to increase fees levied on UK consumers and retailers, supported by wallet services such as V.me and MasterPass debit and credit cards. Alternatively, high- a rise in the number of retail outlets accept- are also increasingly being preferred by UK street banks may end free current accounts. ing contactless payments. To encourage consumers for online shopping. The cap on interchange fees is expected to these payments, the UK Cards Association Lloyds Bank, Halifax and TSB Bank are reduce card issuers’ revenue from consumer increased the spending limit from £20 to £30 contemplating launches of their own digital cards, but not commercial cards. Therefore, from September 2015. wallets in the near future. <

www.electronicpaymentsinternational.com March 2016 y 13

EPI 345.indd 13 22/02/2016 10:40:44 Electronic Payments International SURVEY COUNTY FINLAND

Post-crisis worries are nearly Finnished The cards and payments industry in Finland was struck severely by the global financial crisis. However, the nation has bounced back to offer a wealth of options and solutions for its consumers, including contactless technology, mobile and online wallets, e-commerce outlets and improved POS terminals

he European debt crisis had a pro - World Bank’s 2014 Global Findex survey. Debit cards accounted for 85.4% of found effect on Finland’s economy, To cater to the growing immigrant popula- the total payment card transaction value with GDP growth slowing to 0.1% tion, the National Discrimination and Equal- in 2014. in 2014. Despite the sluggish econ- ity Tribunal enforced a regulation in July Finnish consumers have traditionally pre- T 2014 requiring banks in Finland to accept omy, the Finnish payment cards market ferred debit cards to make payments. Banks grew between 2010 and 2014 in terms of foreign identity documents as a proof of and card issuers often offer cards with dual transaction value. identity to access and manage bank accounts debit and credit functionality, allowing cus- Improved banking infrastructure, new in Finland. tomers making transactions in Finland or product developments, higher awareness of The move is expected to result in a rise in abroad to opt to pay by debit or credit at electronic payments, and wider acceptance the total number of bank accounts and bank- POS terminals, with cards having a credit of payment cards at POS terminals were ing products such as debit cards. card number on the front, and a debit card key factors driving growth. The adoption number on the reverse. of Europay, MasterCard, and Visa (EMV) Debit cards continue to dominate Combined efforts by card issuers and gov- standards and the emergence of contactless Debit cards have traditionally been preferred ernment bodies and the rapid reduction of technology also supported this growth. by Finnish consumers. Debit cards recorded cheque use, have driven use of debit cards. Frequency of use – transactions per card healthy growth between 2010 and 2014, in As a result, credit cards have been slow to per year – in Finland stood at 170 in 2014, terms of the number of cards in circulation, take off. However, there was a significant one of the highest figures in the world, and transaction value and volume; a similar trend shift in product and marketing strategies the second-highest in the Nordic region is expected over the next five years. over the last five years, and credit card issu- behind Denmark. Rising awareness of the benefits of debit ers are now using a number of initiatives to According to a 2013 study by the Federa- cards, such as reward points, cashback and attract customers, such as no annual fees, tion of Finnish Financial Services, two-thirds issuers’ adoption of security measures, sup- an interest-free period of up to 40 days, of Finns use payment cards for regular pur- ported their increased adoption. reward points, discounts at partner retailers chases at grocery stores, supermarkets and The country’s rapidly growing and cashback. gas stations. e-commerce, retail and tourism industries The government introduced reforms in have driven electronic payments, providing Rising adoption of contactless 2014, making it compulsory for retailers to scope for the use of debit cards. Contactless technology is gaining acceptance offer electronic options for small-value pay- among Finnish consumers, and issuers are ments. This is anticipated to further acceler- n FINNISH PAYMENT CARDS BY TYPE introducing cards enabled with contactless ate the frequency of use of payment cards, (MILLION), 2010-2019 technology to gain a market share in the from 173 transactions per card per year in cards and payments industry. Year Debit Cards Credit Cards Charge Cards 2015 to 185.7 in 2019. The latest initiatives include the collec- The Finnish government has taken initia- 2010 6.3 3.6 0.5 tive introduction of contactless cards by tives to bring the entire population into the 2014 7.4 4.1 0.6 Euroloan Consumer Finance and Compass banking system. As a result, the percentage 2015 7.6 4.2 0.6 Card in August 2015 and the MasterCard of the Finnish population aged 15 or above Bankkontokort debit card with contactless 2019 8.4 4.7 0.8 with a bank account rose from 99.7% in functionality by Bank of Åland in 2014. 2011 to 100% in 2014, according to the Source: European Central Bank and Timetric In addition, Finnish telecommunications

14 y March 2016 www.electronicpaymentsinternational.com

EPI 345.indd 14 22/02/2016 10:40:47 Electronic Payments International SURVEY FINLAND COUNTY

company Elisa and convenience store chain n FINNISH CARD TRANSACTION VALUES BY from foreign websites during each quarter of R-Kioski began selling preloaded near-field CHANNEL ($BN), 2010-2019 2014, with a total annual value of $1.3bn. communication (NFC) payment stickers in The growth of e-commerce in Finland is April 2014, featuring MasterCard’s PayPass Year ATM POS facilitated by the development of informa- technology. By the end of 2014, there were 2010 21.0 47.0 tion technology including online and mobile two million contactless cards in Finland. This 2011 21.3 50.2 payment services. number is expected to reach 7.9 million by 2012 18.9 50.1 Consumers in Finland mainly use credit 2019, registering a compound annual growth transfer to pay for online purchases. While 2013 19.2 52.6 rate (CAGR) of 24.24%. the shares of payment cards and cash on 2014 19.1 53.3 delivery decreased, digital wallets, mobile Digital and mobile wallets gain popularity 2015 15.9 45.5 wallets, carrier billing and direct debit In line with the Nordic regional trend, Fin- 2016 15.9 46.6 increased their shares between 2012 and land has made a significant progress towards 2014, as consumers increasingly began to 2017 15.9 48.2 becoming a cashless society, as several com- use phones to make payments. panies and government offices in Finland 2018 16.0 50.0 have abandoned the use of cash. 2019 16.0 51.7 Rises in retail sales and POS installations Government offices such as the National Source: European Central Bank and Timetric Retail sales grew from $43.8bn in 2010 to Land Survey of Finland stopped accepting $50.2bn in 2014, at a CAGR of 3.47%. The cash in two customer service branches in a card on an NFC-enabled device to make increased acceptance of card-based transac- North Karelia during January-April 2013; contactless payments. This service is avail- tions at POS terminals, improved annual the primary reason was to save costs, as cash able for holders of OP-Visa Debit and OP- disposable incomes, and rising consumer deposits needed to be sent to the bank once Visa Electron cards. demand for high-quality products resulted or twice daily. in the increased use of cards as a preferred As the trial was successful, the National E-commerce offers growth prospects payment channel at retail stores. Land Survey of Finland stopped accepting E-commerce recorded significant growth Banks are partnering with retail outlets to cash in all branches in Central and South- between 2010 and 2014, due to the rise in offer basic banking services and benefits such ern Finland, and Pirkanmaa-Satakunta. internet penetration, increasing consumer as reward points, cashback and discounts to Similarly, Aurinkomatkat, one of Finland’s confidence in online transactions and the serve the rising number of retail customers. largest travel agencies, has terminated cash growing presence of online gateways in the For instance, Danske Bank entered into an payments in its service offices. country. agreement with K-food stores in July 2013, Use of mobile payments – including mobile The growing young and urban populations enabling customers to withdraw cash at any wallets and carrier billing – is growing rap- have a strong inclination for mobile phone K-food store in Finland. idly among Finnish consumers. The two and media use, giving a platform for Retailers are also increasingly allowing payment methods collectively accounted for e-commerce companies to reach more cus- customers to make payments by mobile 6.8% of the total e-commerce value in 2014. tomers. Growth in online shopping is expect- phone. Since May 2014, Finnish hamburger Finnish telecommunications provider Elisa ed to create opportunities in the cards and chain Hesburger has allowed customers to launched the Elisa Lompakko digital wal- payments industry over the next five years. make payments and redeem reward points let in March 2013; other operators offering The value of e-commerce grew from by using the SEQR mobile app, developed by digital wallets include EuTeller and Klarna. $5.4bn (€4.1bn) in 2010 to $10.1bn in Swedish company Seamless. The growth of smartphones and rising con- 2014, at a CAGR of 16.72%. According to The service was initially available in 120 sumer demand for convenient payments has PostNord, Finnish e-commerce from abroad restaurants, and was rolled out to 160 more fuelled growth in mobile payments. To capi- accounted for 40% of the total e-commerce by the end of 2014. talise on this, OP-Pohjola Group launched value in 2014 – the highest percentage in the POS terminal growth is a key infrastruc- the Pivo mobile wallet app in March 2015. Nordic countries. The report indicates that ture driver. In Finland, this number recorded This wallet uses HCE technology to emulate an average of 49% of Finns bought products a CAGR of 1.94%, rising from 197,000 in 2010 to 212,760 in 2014. n FINNISH CARD TRANSACTION VOLUMES BY n NUMBER OF ATMS AND POS TERMINALS IN Monitise, a UK-based mobile solution CHANNEL (MILLION), 2010-2019 FINLAND (THOUSAND), 2010-2019 provider, signed a three-year deal with OP- Year ATM POS Year ATM POS Pohjola Group in January 2014 to launch a 2010 172.8 1,040.0 2010 2.9 197.0 multi-language m-POS service for users of Android and iOS in Finnish, Swedish and 2011 165.7 1,091.8 2011 2.3 190.0 English languages. 2012 157.3 1,155.6 2012 2.3 175.0 The service can be used by small business 2013 150.5 1,222.5 2013 2.2 196.0 and merchant customers to accept card pay- 2014 145.2 1,289.5 2014 2.2 212.8 ments and view transaction details using a mobile phone. 2015 140.9 1,356.5 2015 2.2 227.7 The service can also be used by merchants 2016 137.1 1,422.9 2016 2.2 241.6 to reclaim up to half of the value of invoices 2017 134.2 1,488.7 2017 2.2 254.7 by generating digital tax credit receipts, as 2018 132.0 1,552.6 2018 2.2 265.5 part of a Finnish government scheme. With the rising number of POS terminal 2019 130.4 1,615.2 2019 2.2 274.1 installations at retail outlets, the potential for Source: European Central Bank and Timetric Source: Federation of Finnish Financial Services and Timetric card-based payments will grow.<

www.electronicpaymentsinternational.com March 2016 y 15

EPI 345.indd 15 22/02/2016 10:40:48 Electronic Payments International COMMENT MOBEY FORUM

The year that fintech well and truly hit form What a difference twelve months can make. Sirpa Nordlund, executive director at Mobey Forum, analyses the past year, and looks ahead what the industry can look forward to. This includes contactless technology in payments, blockchain innovation and the ‘year of the pays’

ndustry conversations at 2014’s that these services take, together with their welcomed. Then again, blockchain also has Mobey Day, (Mobey Forum’s annual success. The degree to which value-added ser- the potential to disrupt and disintermediate all open conference for all mobile money vices can be used to generate engagement with manner of traditional stakeholders, including stakeholders) told of an industry a bank’s customers will be key here, and will payment processors, schemes and even banks I present a challenge for the international pay- undergoing major disruption. Just twelve themselves. As the hype settles, it will be fasci- months later, towards the end of 2015, the ment brands. An unsolicited ‘suggestion’ may nating to track commercial deployments. industry vibe had changed almost beyond be welcomed in one market, but disregarded, recognition, particularly in the mobile or worse, branded intrusive in another. Year of the ‘pays’ payments arena. Spain’s innovative CaixaBank has been par- It was also the ‘year of the pays’, with Apple, Consternation, hesitancy and all-out frus- ticularly active in this emotive area recently. Samsung and Google all entering the mar- tration gave way to optimism. Last year’s dis- The bank is converging its multi-channel ket and launching, or planning to launch, in ruptions became this year’s tools of liberation, approach into a single ‘ubiquitous banking’ Europe. Microsoft is also waiting in the wings. enabling banks, finally, to make progress. user experience, through which it is delivering As a result, most banks are likely to back more action-, time- and location-specific personal- than one horse to reach as many as possible. Viva la contactless revolution ised services to customers, over devices and Some will launch proprietary solutions, as Contactless adoption has rightly been cel- channels they choose. well as participate in the OEMs’ ‘pay’ solu- ebrated. Andrea Fiorentino of Visa Europe, The aim here is to provide customers with a tions. Questions remain, however, over wheth- for example, told Mobey Day delegates that continuous line of personal finance support; a er the solutions hold long-term benefits for he has never seen a faster shift in European service that interjects at just the right time to banks. Sure, via an OEM solution they have consumer payments behaviour than with help users see the full picture and make bet- an off-the-shelf route through which they can contactless take-up in the last twelve months. ter financial decisions by managing their bills deliver NFC services to customers quickly, but Shortly after, Chris Kangas of MasterCard, before they are due, for example, track spend- they also have to surrender valuable transac- revealed that European MasterCard mobile ing at their favourite stores, or avoid nasty sur- tion data for the privilege. NFC taps are up 170% year-on-year, and prises with smart spending and balance alerts. As 2016 takes shape, banks will need have tripled total transaction values. In terms The success of this approach draws heavily to think carefully about how they engage of uptake, 2015 provided a strong indication on the willingness of the customer to get ‘up and what they are sacrificing in order to do of things to come. close and personal’ with their bank and will so. What is clear is that banks can no longer The spread of tokenisation as a means for need to be tailored sensitively. choose whether to share customers or not, and securing cloud-based HCE and embedded SE will have fight to keep their brands alive. NFC solutions has spawned a new market. Blockchain: friend or foe? Payments aside, the launch of Apple Pay has Inevitably, this sector began life with the pay- No fintech review of 2015 would be complete had another transformative effect on financial ment schemes that defined the EMVCo frame- without discussion of the endlessly fascinating services: it has popularised biometric authenti- work, and are now seeking to recruit banks topic of blockchain. With a wry nod to the cation. Compared to entering a PIN or a pass- to their proprietary platforms, levying fees for media frenzy that has engulfed the technology, word, biometrics offer a hugely convenient tokenisation and detokenisation as a result. Consult Hyperion’s Dave Birch described the experience, one that is well suited to mobiles, However, the space is quickly being popu- technology as ‘the answer to everything’. so it is easy to see why Touch ID has been a hit. lated by other stakeholders, including pay- The satire is, of course, justified; coverage Naturally, banks and financial institutions ment processors and independent platform of this emerging tech has been inconsistent, are keen to offer this experience outside of developers, which are all intent on delivering a to say the least. Are we talking blockchains Apple’s domain, but first, they must ensure greater degree of control and commercial inde- or the blockchain? Or the private chain? they strike the right balance between conveni- pendence to banks and other issuers. This will Or are they shared ledgers? Permissioned ence and security. become a crowded market in 2016. or permissionless? For most financial use cases, biometrics It was good in 2015 to hear the industry Fortunately, he and Veronica Lange of UBS should form no more than a component in a validating a much-vaunted message of Mobey brought clarity to the debate and offered guid- multifactor authentication environment. Forum’s: that value-added services are a nec- ance for banks looking to make sense of it all. Current positive consumer attitudes give a essary prerequisite for mass-market mobile What is clear amid the hyperbole is that degree of early-mover advantage, but there is payments adoption. In this regard, Proxama’s blockchain’s potential stretches far beyond its much more work to do to develop common Andy Ramsden presented Mobey Day del- first incarnation as the technology underpin- standards, evaluation criteria and certifications. egates with some compelling VAS deployment ning bitcoin. Putting definitions aside, the idea Rarely has there been a more exciting time use cases, enabling mobile users to tune in and of the shared ‘single version of truth’ is hugely to work in fintech, and I have a sense that 2016 out of mobile marketing promotions that are exciting in financial services terms. will be no different. tailored not only to their buying preferences, Any technology that has the potential to Right now I’m finding it harder to see what’s but also to their whereabouts. make banking and financial services a more around the corner than in years gone by. And Cultural variations will determine the form transparent and auditable practice should be you know what? That’s no bad thing at all.<

16 y March 2016 www.electronicpaymentsinternational.com

EPI 345.indd 16 22/02/2016 10:40:48 Prepaid Summit: Middle East and Africa Conference & Awards 27 April 2016 • Dubai

Prepaid Middle East & Africa 2016 brings together prepaid Why Attend? professionals and industry disruptors in an active discussion of the • Hear from senior industry figures on current challenges and key issues facing the cards industry: benchmark your success • Exploring the Prepaid Landscape across MEA • Network and share best practise with your peers in the prepaid • Capitalising on Collaboration Programmes community • Identifying the Latest Innovative Products • Discover high level content and case studies delivered over four comprehensive sessions • Creating a Customer Focused and Competitive Market • at our black tie awards dinner recognising those at the • Future Growth – What is Next for Prepaid? Celebrate top of their game The informative keynote sessions and inspiring case studies provide you with first hand exclusive insights.

Top industry movers and shakers will meet to debate the importance of new strategies, business practices and partnerships. We invite you to become an active voice in this discussion to shape the future of prepaid. For more details please contact Victoria Pennell on [email protected] or call +44 (0) 20 3096 2634.

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