For the third year running, my colleague Gary Munro facilitated a thought-provoking debate around the use of mobile phones and tablets as contactless payment terminals during last week’s virtual Merchant Payments Ecosystem (MPE) conference. For the last three years, Gary and his panellists have tracked the progress of the SoftPOS technology and standards. The three key messages that I took away from this year’s conversation were that:
This weekend marks an anniversary. Although Consult Hyperion’s romance with smart cards had started many years before that, it will be fifteen years on Sunday that chip and PIN went live in the UK. I remember St. Valentine’s Day 2006 as if it was yesterday!
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.
A couple of weeks ago I wrote a piece for our friends at Smartex; ‘Brexit and the UK Finance’s proposed £100 contactless limit’. Perhaps a title more worthy of grabbing readers would be ‘Will Brexit make stealing bank cards attractive again?’
The pandemic has accelerated consumer behaviour that has been teetering for the last decade. The desire for contact-free (and therefore contactless) transactions, has meant a significant trend in consumers becoming comfortable with tapping their cards and perhaps more interestingly, their phones (devices/wearables). We’ve seen merchants switch from hand scribbled ‘cash only’ signs, to ‘please use cards (devices etc) wherever possible’. Some stores have completely rejected cash altogether.
Guest blog post by Mirela Ciobanu, The Paypers
The topic of Central Bank Digital Currency (CBDC) is gaining momentum. Across the globe, many CBDC initiatives aim to digitalise payments, support financial inclusion, make cross border payments faster and cheaper, support fiscal transfer, etc. What is firing up discussions around CBDC and why is it important today?
Adoption of new technologies and understanding of their huge potential to support and stimulate our life has caused the world to change a lot in the last year. The current pandemic has triggered the decline of cash usage to avoid getting the virus and safeguard the most vulnerable ones (health-wise). Economic wise, as many governments wanted to protect their citizens and directly stimulate the economy down to every citizen, they offered ‘helicopter money’ via digital wallets.
As Consult Hyperion, and as many other analysts, predicted, Covid-19 has driven the adoption and use of contact-free technology at the point of service. A recent survey funded by the National Retail Foundation, found that no-touch payments have increased for 69 percent of US retailers surveyed, since January 2020. In May, Mastercard reported that 78% of all their transactions across Europe were contactless.
Fraudsters are always looking for ways to take advantage of potential weaknesses or even inexperience in new payment devices. A recent news story promoted a man in the middle attack in which two phones are used to transfer and manipulate the transaction message between a stolen contactless card and the point of sale terminal.
The Use of Contact-free is Accelerating
At Consult Hyperion, we have already seen the pandemic accelerate the adoption of contact-free payments in the face to face environment as customers have become wary of catching COVID by touching shared devices, such as self-service terminals and PIN pads. The use of personal devices for payments is hardly new but the attraction of an in-app/in-store version of mobile payments, whereby the consumer uses an app on their own device to interact with the retailer or service provider and pay for services, has just increased dramatically. Solutions for parking (RingGo) and for restaurants (like the Wahaca app, powered by Judopay) were already demonstrating the benefits of such an approach for customers and businesses before COVID struck.
I was delighted to have the opening speech at the Transport Card Forum (TCF) in London in which I talked about Mobile Wallets. At the previous meeting there was a presentation about mobile ticketing and a member of the audience asked why there was no mention of the use of mobile wallets. I tended to agree since most of our mobile ticketing projects have been about clever ways of using mobile wallets to get around the technical barriers associated with barcodes, HCE and the like.
There is a problem which Transport Scotland have termed the “Glasgow Conundrum”. Within one city or region, a passenger door-to-door journey might consist of several legs and each of these legs might be services by a different transport operator. Each operator might use a different ticketing technology and accept payments in different limited ways. From a customer point of view, it stinks; integration is what they need. But it is clear that there are two distinct questions:
- 1. How can the customer pay for travel rights?
- 2. How can the customer prove they own travel rights when travelling?
Ideally the payment mechanism would be decoupled from the type of travel rights and the transport operator. MaaS Providers should be free to accept payments from whatever means suit the customers. If you are interested in this aspect of things, download our white paper: MaaS Payments, a billion dollar opportunity. The download includes a discount code for Transport Ticketing Global 2020 where I will be chairing a panel again in January and judging the awards entrants.
The multiple legs that make up the end-to-end journey might be thought of as what the rail industry called ‘split ticketing’. Rather than having a single ticket, you can buy single tickets for each part of the journey and sometime (usually where Train Operator boundaries are crossed) this can work out cheaper. Mobile apps are very good at hiding this sort of complexity from the passenger and one can imagine that, using geolocation services, the app can decide which ticket should be presented when in order to sail through the gates and turnstiles. And all the split tickets could be stored in the mobile wallets.
Meanwhile, the sales of tickets are diminishing as the areas offering Pay As You Go (PAYG) continue to expand. Project ‘Oval’ round London is seeing the imminent expansion of PAYG contactless bank cards as far as Reading on the new Elizabeth Line from January 2020. For various reasons, Oyster will not be able to be used as far out. So, once again we are seeing contactless bank card technology reaching further than Oyster. There are government plans (election permitting) to add hundreds more rail stations to the TfL PAYG scheme.
London is not the only game in town, and we see other PAYG schemes around the UK. The continued expansion of PAYG represents improved customer experience but is not great news for retailers of travel rights unless they can find a way to sell PAYG and make a profit.
If the PAYG area accepts contactless bank cards (like London), then mobile wallets can be used to allow passengers to travel seamlessly in these areas. Citymapper launched a plastic prepaid Mastercard for this purpose for residents of London only in April 2019. It has recently become available as a virtual card using mobile wallets on both Android and Apple iOS devices. By contrast, the UK smart ticketing standards, ITSO, has partnered with Google and Google Pay wallet has been customised for ITSO so that now ITSO tickets can be loaded into the mobile wallets of Android phones only.
So, lots of choices. And the Glasgow Conundrum continues to some extent, though I can see MaaS Providers apps being able to hide this complexity if they get it right. I was very happy to recently have Ben Whitaker round at Chyp towers explaining Masabi’s take on automatic fare collection using mobile apps. We made a podcast about their Fare Payments as a Service and Ben’s views on where MaaS is going which I found very interesting.
At Consult Hyperion we have a lot of experience with smart ticketing, mobile ticketing and, in particular, mobile digital wallets. If you would like to learn more, give us a call.
By Sanjib Kalita, Editor-in-Chief, Money20/20
This article was originally published on Money20/20.
We are in the midst of seismic societal changes of how people interact and transact. Across societies, geographies and segments, digital is the new norm. Change has accelerated, placing greater value upon flexibility and speed. Historically, money and finance have been among the more conservative and slower changing parts of society, but this has changed dramatically over the past decade by viewing money as an instigator of change rather than a lagging indicator.
Whether you are a marketer in shining armor conquering new territory, a financial wizard casting spells upon the balance sheet, or the queen or king guiding the whole enterprise, here are 4 trends about money that you should keep in mind for your business.
Platforms are the new kingdoms
Platforms are the base upon which other structures can be built. For example, App stores from Apple and Google provide the infrastructure for consumers to complete commercial transactions and manage finances through their mobile phones. While these companies develop their own digital wallets, they also enable similar services from banks, retailers and other companies. Building and maintaining the platform enables services that they would not have created on their own, like Uber or Lyft, which in turn, have created their own platforms.
Marketers trying to address customers’ needs can plug into platforms to broaden offerings or deepen engagement with target markets. Platform-based thinking implies that product and service design is ongoing and doesn’t stop with a product launch. Jack Dorsey didn’t stop when he built the Square credit card reader. The team went into lending with Square Capital. They got into consumer P2P payments with Square Cash. Their ecosystem has grown through partnerships with other companies as well as in-house development.
Digital Identities open the gates
How do your customers interact with you? Do they need to create a username and password, or can they use a 3rd party system like Google or Facebook? Are security services like two-factor authentication or biometrics used to protect credentials? Is your company protecting customer identities adequately? The importance of all of these questions is increasing and often the difference between being forced into early retirement by a massive data breach or surviving to continue to grow your business.
While identity management and digital security might not be top of mind for most marketers, they are table stakes for even the most basic future business. History is full of tales of rulers successfully fighting off armies laying sieges on castles and fortresses, only to fail when another army gets access to a key for the back door.
Context rules the experience
Credit card transactions moved from predominantly being in-store, to e-commerce sites accessed from desktop computers, and now to mobile phones. As the point-of-purchase expanded, so did the consumer use cases and thought processes. In tandem, mobile screens presents less information than desktop computer screens, which in turn presents less information than associates in a brick-and-mortar environment. Companies best able to understand context and deliver the right user experience within these constraints will build loyal customer relationships.
Apps or services created for a different use cases on the same platform, such as Facebook and Messenger apps, can help achieve this. Banks and have different apps for managing accounts or for completing transactions or payments. On a desktop, you can access these services through a single interface but on the mobile, forcing users to select their use case helps present a streamlined experience on the smaller, more time-constrained mobile screen. The use of additional data such as location, device, etc. can further streamline the experience. Marketers that don’t think about the context will lose the battle before it even begins.
Data is gold
While a marketer’s goal is to generate sales, data has become a value driver. In the financial world, data about payments, assets and liabilities has become critical in how products and services are delivered. PayPal, a fintech that began even before the word ‘fintech’, has recently been using payments data from their platform to help build a lending business for their customers. Similarly, an SME lender named Kabbage has grown to unicorn status by using data from other sources to make smarter lending and pricing decisions. In the payments industry, Stripe distilled a previously complex technology integration into a minimal data set, accessed via API, to easily build payments into new digital products and services.
Those that are able to harness the power of data will be able to predict what customers want and more effectively address their needs. In some cases, it might be using data from within your enterprise or from other platforms for targeting, pricing or servicing decisions. In other cases, it might be using data to reimagine what your product or service is.
Looking for more insights on key trends in money? Hear from 400+ industry leaders at Money20/20 USA. Money20/20 USA will be held on October 27-30, 2019 at The Venetian Las Vegas. To learn more and attend visit us.money2020.com.
This article was originally published on www.money2020.com.
Well, #teamCHYP were out in force in Barcelona. Not for the Formula One testing but for the annual mobile industry shindig, the GSMA’s Mobile World Congress. As usual, we had full days of meetings interspersed with traversing the halls in search of anything that might be of interest to clients. I don’t want to talk about the innovations in mobile (like cool bendy screens and the Samsung S10 under glass fingerprint sensor) here, but I do want to make a point about the renewed focus on digital identity.
We made digital identity one of our “live five” areas for clients to focus on this year, so I was very happy indeed to to be asked to take part in a fireside chat on the subject of trust and identity with Ajay Bhalla, President, Cyber and Intelligence Solutions at Mastercard. He’s a smart guy, and well-positioned to survey the landscape to help us to pick out some routes between the hackers and fraudsters and hucksters and scaremongers.
We didn’t rehearse any questions, we just went on stage to have an intelligent conversation about what can be done to gain, and maintain, the trust of the public. If we cannot do this, then online commerce, online government and online interaction of all kinds will be subverted and the friction associated with online transactions will become so great that the economy will suffer. Ajay was optimistic about the new technologies in this space (as are the team at Consult Hyperion) and explained how biometrics and big data will work together to identify customers and minimise disruption to customer journeys.
(I think Mastercard and the other schemes will want to set the bar quite high here. When PSD2 comes in to effect in September, poor implementations of Secure Customer Authentication, or SCA, will have significant financial impacts on online businesses)
It was certainly educational to discuss these issues with Ajay. The fact is that Mastercard is making significant investments in the digital identity space means that their opinions, and their strategy, are of great interest. As it happened, Mastercard’s executive Vice Chair Ann Cairns was also emphasising their focus on digital identity at the event.
You can see why digital ID is so crucial. Identity theft and fraud have become significant friction in the online world and so tackling them is a priority. But there’s also the strategic role of identity in the always-on, connected world. I can well imagine an ecosystem in which Mastercard switch vastly more identity transactions – everything from letting my garage door identity my car on the way to logging me to the Daily Telegraph – than payment transactions.
It wasn’t all thought leadership, customer meetings and heated debate about bendy screens though. We had some fun at #MWC19 too. Caption competition in 3… 2… 1…
See you all at MWC2020