September / October 2016 / paymentscardsandmobile.com in this issue CARD NOTES Mastercard buys VocaLink INNOVATION Can incumbents innovate? ALTERNATIVE PAYM ENT METHODS Alternative goes mainstream DATA SECURITY PCI DSS ten years on Your Quality Confirmed. Test Solutions for the payments world Your success is our concern. You have ambitious goals and we are dedicated to helping you get there. We engage with you, help you gain insight and advise you. > Certify your EMV Payment Terminals (accredited solutions & services) > Minimize downtime of your ATMs and release changes easier > Validate your payment host and switch implementations > Onboard your partners and members efficiently We’d love to talk. Contact us at [email protected] www.opentestsolutions.com www.paymentscm.com September | October 2016 Summer's over — back to work. Volume 8, Number 5 As the payments industry dusts itself off after an Editor-in-chief and publisher Alexander Rolfe arduous summer of drinking in the sunshine, there are Tel +44 1263 711 800 [email protected] some stark realities facing us as we get back to work. Staff Writer There is a very real triple threat which could overwhelm us. The coupling of PayTech Joyrene Thomas and the rise and rise of alternative payments methods is great news for those in the Your Tel +44 1263 711 800 industry who see themselves as disruptors. Not so for incumbents who must be [email protected] seeing the numbers and uses of PayTech as a threat and not an opportunity. Contributors Quality Data and cyber security remain very real to all of us. Woe betide anyone who thinks David Brear Francesco Burelli that as an industry we are doing enough to protect ourselves and our clients from Gwenn Bézard the threats. Business revenues lost to cyber attacks in the Asia Pacific region alone Confirmed. Dave Birch came to $81.3 billion in the 12 months to September 2015, according to a survey Head of Business Development by Grant Thornton. The region also seems to be more vulnerable to new scams. Wendy Sanders A dangerous combination of a lack of awareness and investment has resulted in Tel +44 1263 711 801 Fax +44 1263 456 100 institutions that are poorly protected – and the problem is not theirs alone. [email protected] Finally, the question has been raised about the ability of payments industry General Manager incumbents to innovate at all. The recent weeks have seen a raft of headlines from Gemma Haywood major banks urging their staff to act and treat the companies they work for as start- Tel +44 1263 711 800 Fax +44 1263 456 100 ups or tech companies, but is this possible or even realistic? Test Solutions for the payments world [email protected] Subscriptions and General Alexander Rolfe, Gemma Rolfe Editor-in-chief and publisher, Your success is our concern. You have ambitious goals and we are Tel +44 1263 711 800 Payments Cards & Mobile dedicated to helping you get there. We engage with you, help you gain Fax +44 1263 456 100 [email protected] insight and advise you. Address Editorial Advisory Board Payments Cards and Mobile > Certify your EMV Payment Terminals (accredited solutions & services) The Stable, Hall Yard John Berns Kelling, Holt Managing Partner, Accourt > Minimize downtime of your ATMs and release changes easier NR25 7EW United Kingdom Sylvie Boucheron-Saunier General Manager, Continental Europe, ACI > Validate your payment host and switch implementations Cover, Design and Origination > Onboard your partners and members efficiently Adam Unsworth Robert Courtneidge Printing Global Head of Cards and Payments, Micropress Printers Locke Lord We’d love to talk. Contact us at [email protected] All rights reserved. No part of the publication June Felix may be reproduced or transmitted in any President – Europe, Verifone form without the publisher’s prior consent. While every care is taken to provide accurate Denise Gee information, the publisher cannot accept liability for errors or omissions, no matter how Director, Magna Carta caused. Simon Hardie Payment Cards and Mobile™ Director, Magna Carta is owned and published by PaymentsCM LLP ISSN 1759-829X © PaymentsCM LLP 2016 www.opentestsolutions.com contents 26. BANKS TRUSTED TO DELIVER COVER FEATURE BIOMETRIC AUTHENTICATION The UK is placing its trust in banks over 14-16. government agencies to protect their CAN INCUMBENTS biometric data such as fingerprints and INNOVATE ANY MORE? iris scans, according to new research from Visa. Innovation is one of the few ways to sustain competitive advantage over 27. US DEBIT CARD PERFORMANCE NEWS IN BRIEF time. But can incumbent banks and HOLDS STEADY payment companies truly innovate any more? PULSE debit card issuers saw card 6-7. THE PAYMENTS WORLD performance metrics in 2015 hold IN 60 DAYS steady, according to a recent study. FEATURE However the adoption of mobile CARD NOTES ALTERNATIVE PAYM ENT payments and EMV chip migration has METHODS been disappointing. 8. MASTERCARD ANNOUNCES ACQUISITION OF VOCALINK FOR 18-20. REGULATION £700 MILLION WHEN THE ALTERNATIVE The largest UK banks are set for another 28. FIS UNAWARE OF CUSTOMER windfall with the sale of the bank- GOES MAINSTREAM… ACCOUNT ACCESS OBLIGATIONS owned payments company VocaLink to When bank-account funded UNDER PSD2 Mastercard for £700 million ($920 million). payments, real-time payments, Only five percent of banks and other mobile and other digital payments financial institutions are aware that the 10. PREDICTING THE FUTURE OF are actually the default way to pay in revised Directive on Payment Services many countries, the term ‘alternative’ FINANCIAL SERVICES (PSD2) will require open access to seems a misnomer. The window of opportunity is closing for customer accounts, according to a UK banks to leverage their data to get ahead law firm TLT’s Digital Banking report. in digital services, says a new report from FEATURE the Mobey Forum. DATA SECURITY MOBILE PAYMENTS 12. AUSTRALIAN CARD-NOT- 22-24. 30. MOBILE PAYMENTS STUDY – PRESENT FRAUD INCREASES CARD DATA SECURITY OPPORTUNITIES FOR BANKS Australians spent AU$1.92 trillion using TEN YEARS ON First Annapolis recently completed the cards and cheques in 2015; of which third edition of its semi-annual Study 0.025 percent or AU$469 million worth of Ten years after the founding of the of Mobile Banking & Payments tracking transactions was fraudulent. Payment Card Industry Security consumer adoption and use of mobile Standards Council (PCI SSC), we banking and payments products. present a mid-term report on the 12. THE $19 TRILLION OPPORTUNITY industry’s data security efforts. A new study from the World Bank Group 31. WALMART PAY EXCEEDING and the World Economic Forum estimates RETAILER’S EXPECTATIONS the global value of micro, small and At THE CONNECT Mobile Innovation medium retailers’ transactions at $34 Summit in Chicago, Walmart Services trillion per annum. SVP Daniel Eckert revealed that Walmart Pay, the retailer’s proprietary ISSUING AND ACQUIRING mobile payment app, already boasts 20 million active users . 26. MERCHANTS SUFFER FRAUD FATIGUE 31. CHINESE BANKS STRUGGLE Retail fraud continues to rise as does IN MOBILE PAYMENTS BATTLE its cost. According to the LexisNexis AGAINST THIRD PARTY PROVIDERS True Cost of Fraud Study, fraud as a The rise of third-party m-payments in percentage of revenue has increased China at the expense of credit and debit from 1.32 percent to 1.47 percent in 2016. cards is threatening commercial banks. 4 payments cards and mobile / September / October 2016 www.paymentscm.com contents CONTACTLESS 36. IZETTLE ACQUIRES 41. 20 GLOBAL FINTECH HUBS INTELLIGENTPOS FORM FEDERATION TO PUSH 32. CARD PAYMENTS WORLDWIDE iZettle announced it has acquired INNOVATION INCREASE 55 PERCENT TO intelligentpos, the UK’s leading cloud Financial technology groups from more 417 BILLION based point of sale solution for shops, than 20 cities across the world plan to According to Global Payment Cards bars and restaurants. form a federation of ‘FinTech’ hubs this Data and Forecasts to 2021, the total year in what would be the first attempt number of card payments worldwide E-COMMERCE to coordinate innovation transforming increased by 15 percent in 2015 to 270 the financial industry. billion, almost double the eight percent 37. FAST-TRACK MERCHANT rise in card numbers. GROWTH PATHS IN E-COMMERCE 41. JCB SET TO ROLL OUT APPLE Digital commerce is a growth PAY IN JAPAN 32. GOOGLE RUMOURED TO START imperative for virtually all retailers and JCB announced that Apple Pay will ANDROID PAY SERVICE IN JAPAN merchants as new technologies disrupt launch in Japan in October to make Google is rumoured to be launching the traditional commerce use cases and mobile payments with iPhone 7, iPhone Android Pay, digital payment service, ways of working. 7 Plus and Apple Watch Series 2. using smartphones in Japan. PRODUCTS 33. APPLE PAY COULD LOSE LEVERAGE IN US FROM 39. ACCENTURE STIRS UP AUSTRALIAN BANK FALL-OUT TROUBLE WITH BLOCKCHAIN Australian banks are pushing Apple to EDITING TECHNIQUE loosen its grip on the technology that Accenture is stirring up a Blockchain enables mobile payments. storm within the community by patenting a technique for editing 33. CONTACTLESS MOBILE PAYMENTS information stored using the nascent CONFERENCES VIA MOBILE – NO ADDITIONAL technology in a move designed to make PASSWORDS it more commercially viable. 42. THE MAIN AUTUMN For the first time in the Russian market, CONFERENCE SEASON BEGINS MDM Bank, one of the largest private 39. MASTERPASS GATHERS banks in Russia, has launched single- MOMENTUM IN EUROPE tap Mastercard contactless mobile As the share of digital payments in payments with no additional passwords. Europe keeps on growing to reach 38 percent of payments by 2020, POS TERMINALS Masterpass adoption continues to grow. 35. US EMV MIGRATION: CHIP 39. PAYWORKS LAUNCHES Money 20/20 has developed a well- IMPACT ON MERCHANTS PAYMENT GATEWAY PULSE deserved reputation for bringing As the one year anniversary of the US Payworks has launched a next together everyone from large financial EMV migration shift to chip approaches generation payment gateway to institutions, payments companies and new data has been released.