When we look forward to 2021, it is no surprise that COVID-19 is the dominant factor. So far as the merchant payments world is concerned, the shape of the post-pandemic new normal transaction environment must be the key strategic consideration for stakeholders and I am desperately keen to hear the variety of informed opinion on this topic that I have come to expect at Merchant Payments Ecosystem every year. At Consult Hyperion we like to contribute to these conversations by providing a useful framework for discussion: our annual “Live 5”, our yearly set of suggestions for strategic focus. This year, we choose to look at the key issue of pandemic transformation and its impact of on the three key domains where our clients operate: Payment, Identity and Transit, together with (as is traditional!) a suggestion as to a technology that the POS world may not be thinking about but probably should be.
For most of us 2020 isn’t going to be a year to linger fondly in the memory. It’s been a monumental slog in the face of grim news and little cheer but from a payments perspective we’ve seen an unsurprising surge in interest in all things payment related.
People have moved from cash to electronic payments – contactless transaction numbers have soared. People moved from face to face purchases to online. And, there’s been a ton of stress on payment systems as people have demanded refunds for holidays and flights they couldn’t take due to various travel restrictions. It’s been a year like never before.
We can expect this to be exacerbated over what will likely be an extended Black Friday and Christmas holiday shopping period. Online payments are expected to grow even though economies are in recession. For us in Europe it’s the last hurrah before PSD2 requirements on strong customer authentication come into force on January 1st. Merchants and payment companies will be well staffed on News Year Eve as they wait and see how the systems will hold up, and what sort of abandonment figures they’ll see as puzzled customers are presented with confusing authentication screens. We can probably expect a flood of concerned calls about phishing which are actually Strong Customer Authentication requests.
At the (sadly, virtual) Fintech South event the year, I was asked to chair a discussion on identity and privacy with three extremely well-qualified experts who had informed perspectives on the state of, and trends in, those important pillars of a digital society. These were Adam Gunther (SVP, Digital Identity for Equifax), Andrew Gowasack (Co-Founder and President at TrustStamp) and Megan Heinze (President, Financial Institutions, North America for IDEMIA). It was great to talk to a group of people who were not only well-informed on these topics but had some passion for them too.
I won’t go over everything that was discussed, but I do want to pick up on a comment that was made in passing when I was chatting to the panelists: someone said that a guiding principle should be “no scary systems”. Hear hear! But what is a scary system? It is, in my opinion, a system that privileges security over privacy. This is not how we should be designing the identity systems for the 21st century!
COVID-19: Consult Hyperion and you
The effects of the global pandemic, COVID-19, are touching every aspect of our lives, our communities, our businesses and the global economy. I hope that your own health, and that of your loved ones, will not be severely affected, and that your business life is able to continue unabated with some inevitable adjustments.
I personally wanted to reassure you that despite the challenges we are all facing, Consult Hyperion is fully accessible and taking proactive and expedient measures to protect our team and our clients.
It is not unusual for our team to work remotely, as client work often demands, but now both our UK and US teams have mobilised to full remote working in support of the Prime Minister’s guidance that the more people who are able to work from home, should. We have systems and policies in place to protect all information, project work and client deliverables. Our teams have embraced the use of digital tools for their internal communication and briefings, as well as for outbound thought leadership and to continue the narrative on the topics for which we are known as experts.
I take great pride in the team at Consult Hyperion. For over 30 years we have worked for organisations like yours. We have helped deliver products and services that have changed how consumers pay, travel and interact on a daily basis. I have no doubt that the team at Consult Hyperion will continue to deliver for you during this difficult time. Now more than ever, our vision holds true.
Neil McEvoy CEO and Co Founder
Hyperion Systems Ltd trading as Consult Hyperion: Tweed House, 12 The Mount, Guildford, Surrey GU2 4HN Registered in England at the above address, Company No: 1955749
I have often seen payments (especially the card networks) used as an analogy for digital identity. In fact, I brought up the analogy myself at the fun OIX meeting in Amsterdam last Thursday. Certainly when you look at something like GOV.UK Verify there are some striking comparisons:
- A central scheme with a brand, rule book, governance body and switching infrastructure (i.e. Verify itself),
- Issuers (i.e. the private sector identity providers), and
- Merchant acquirers (well merchants anyway, in the form of government relying parties).
We have to keep reminding ourselves that these card networks did not appear overnight. What we have today is a result of 60 or more years of evolution. Admittedly the pace of change has increased significantly but we need to recognise it often takes time to build scale and gain adoption. There are special cases of course. PayPal, for example, grew out of a significant pain point within eBay – which gave it immediate scale.
There is however one key difference between payments and identity. You cannot sell stuff online without a means to receive payment and normally that means integrating with a payments scheme that works for your customers. You can however sell stuff without leveraging an external identity scheme – you just give the user an ID and password specific to the service. This is however bad news for users – resulting in the fragmented personal data and password mess we find ourselves in today. There needs to be an incentive for merchants to do something different to this. Perhaps merchants need a big stick? Like GDPR for example. Merchants are going to have to be a lot more careful with personally identifiable information in the future. One thing they could do is use an identity provider to hold that data and in the process reduce their risk.
Individuals also need to realise that their personal data is valuable, just like their money. That is going to require some education because so far they’ve been taught to share data without considering the consequences.
In the UK, arguably the most significant digital identity initiative over the past 5 years has been the GOV.UK Verify programme. They are at the stage where they need to grow. The scheme is up and running and so they are now busily signing up citizens and services. It is a critical point in its development. We are very pleased that David Rennie who leads industry engagement on the programme will be taking time out of his busy schedule to join us at Tomorrow’s Transactions. Come along and find out how it is going.
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The BBC World Service has a podcast series called “50 things that made the modern economy” hosted by the economist Tim Harford. It features inventions ranging from COBOL and banks to antibiotics and, interestingly, M-PESA. This caught my attention because M-PESA is one of the Consult Hyperion projects from the last couple of decades that we might find ourselves chatting about at the forthcoming 20th annual Forum, Tomorrow’s Transactions 2017. The Forum will be held at the America Square conference centre in London on 26th/27th April and Kevin Amateshe, the current M-PESA product manager will be coming in from Nairobi to give us a detailed picture of where M-PESA is now and where it will be going next.
The Forum, thanks to the wonderful support from our friends at Vocalink, PaySafeGroup, WorldPay and Olswang, will once again provide a unique environment for learning, investigation, discussion and debate about the future of electronic transactions. The future of people, businesses and government in the post-industrial online and interconnected economy.
This year’s invited keynote will be given by Professor Lisa Servon, one of the world’s leading authorities on financial and social inclusion. All delegates will receive a copy of Lisa’s new book “The Unbanking of America: How the New Middle Class Survives”.
Incidentally, listening to the BBC podcast narrating the story of our good friends Nick Hughes and Susie Lonie (Susie will be at the Forum too if you’d like to come along and say hi to her) brought back many memories, so I decided to conduct a little bit of post-industrial archaeology and I tracked down the presentations on M-PESA that Nick Hughes and our very own Paul Makin (who led the original feasibility study for M-PESA!) ave at the Centre for the Study of Financial Innovation (CSFI) in November 2005 when M-PESA had 300 users and eight agents!!! As of today, it has 25 million users and 261,000 agents across 11 countries.
You can read them here….
See you all in April when we get together and try to work out what the next M-PESA will be!
We’ve been having a lot of fun in recent months leading workshops for transport operators about account-based ticketing. Sharing our recent experience with clients such as the UK’s Transport for London (TfL) and Transport for the North (TfN), Hungary’s BKK, New Zealand’s NZTTL, Belgium’s De Lijn and Stockholm’s Storstockholms Lokaltrafik (SL) and Singapore’s LTA.
The workshops are designed to help transport operators who are new to account-based ticketing understand the issues and options, including how Open-Loop bank cards can be blended with existing smart ticketing. A typical agenda covers the following subjects:
- Customer propositions should drive everything
- Smart ticketing trends
- Technology roadmap
- Benefits of ABT and Open-Loop
- Basic architecture overview
- Generic architecture
- Open loop vs closed loop (the back office)
- Providing for the unbanked
- Open loop implementatons in other countries
- The 4-party model for payments
- Transit Transaction Models (’Models 1-3’)
- Transit Charging Framework (generic, global)
- PCI DSS
- Working with a QSA
Our latest workshop was sponsored by Mastercard and hosted by Swedbank in Riga, Latvia, and had an audience of 40 including:
- Transport operators
- Government bodies
- Industry suppliers
We are looking forward to leading more similar workshops in 2017 across Europe.
The figures show very clearly that Bitcoin isn’t being used as a retail payment mechanism. Will it ever be? I wouldn’t think so, but that doesn’t mean that cryptocurrency will never be used in retail.
Over the years, what was once the London BarCampBank has, with the support of Consult Hyperion, turned into an annual fintech unconference held the day before Finovate Europe. I think – apart from great networking and enjoyable discussions – it provides a useful weathervane for our clients. This year – no surprise – two topics dominated the conversations: blockchain and identity.