Future-Ready Payments Processing

abstract aluminum architectural architecture

Payment Processing Platforms

At Consult Hyperion we spend a lot of our time looking into payments processing platforms for our clients. Over recent months we’ve delivered;

  • technical due diligence, assessing their capabilities
  • security and vulnerability analysis on networks and products
  • designed fundamental security architectures for new payments solutions
  • advised clients on the selection of payment platform solutions 
  • and helped design new platforms or extended the capability of their existing platforms

It’s fair to say we have a comprehensive understanding of payments processing.  The products and solutions offered by Fintechs, Banks, Neobanks etc. rely on the capabilities of the underlying payments platform(s). 

Contact-free public transport (Part 3)

person holding smartphone

This is the third of three blogs about technologies to support contact-free use of public transport.

The radio again – I hear that the Transport Minister for England had just reported that there have been fewer than 400 fines for people failed to wear face covering on public transport. More than 115,000 travellers have been stopped and reminded that face coverings are mandatory, and 9,500 people prevented from travelling.

Contact-free public transport (Part 2)

photo of a bus

This is the second of three blogs about technologies to support contact-free use of public transport.

Public transport operators have been making great efforts to make public transport safe during the pandemic. TfL recently launched a new app that makes it easier for passengers to plan their travel and avoid routes where they might come close to large numbers of people. There are claims that the rate of uptake of contactless by passengers has increased significantly since the pandemic and the demand for contact-free transactions on public transport. Visa recently offered a graph relating to global public transport contactless transactions. However, it is not clear what the actual contactless usage is since they are hidden behind month-on-month percentage increases which look enormous when the previous months had fallen off the proverbial cliff.

Payment card issuance errors leave you vulnerable to fraud

Major payment cards

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.

Travel Broke and Broken

The ongoing COVID-19 crisis has been ruthlessly exposing fragile business models and weak balance sheets across a whole range of industries but perhaps never more so than in the travel business. In fairness, no one could have anticipated a global, government dictated total shutdown and no business models could ever be flexible enough to support such an improbable scenario. Still, it’s become clear that many travel industry companies are effectively broke and that the payments model they rely on is broken. Going forward we need a better and more sustainable approach to payments in the industry.

Most travel industry payments rely on payments cards so it’s worth starting by recapping on how most card payment models work. When a cardholder makes a payment to a merchant – either in store or, increasingly, on-line, this is routed to the merchant’s card acquirer. The acquirer has a direct relationship with the merchant in the same way that a card issuer has a direct relationship with cardholders and the acquirer will route the payment request to the relevant issuer – usually by sending the request to a payment scheme who uses the card number to identify the correct issuer. If the issuer approves the transaction then the response is routed back through the same path and the purchase completed. This is no different from any other card payment, although there are hidden complexities where the merchant is an online travel agent sourcing flights, hotels, etc from multiple underlying vendors. However, that’s a detail.

Leveraging the payment networks for immunity passports

COVID-19

As if lockdown were not bad enough, many of us are now faced with spending the next year with children unable to spend their Gap Year travelling the more exotic parts of the world. The traditional jobs within the entertainment and leisure sectors that could keep them busy, and paid for their travel, are no longer available. The opportunity to spend time with elderly relatives depends on the results of their last COVID-19 test.

I recognize that we are a lucky family to have such ‘problems’. However, they are representative of the issues we all face as we work hard to bring our families, companies and organizations out of lockdown. When can we open up our facilities to our employees, customers and visitors? What protection should we offer those employees that must or choose to work away from home? What is the impact of the CEO travelling abroad to meet new employees or customers, sign that large deal or deliver the keynote at that trade fair in Las Vegas?

Paying for food

It feels strange to be writing about paying for food, one of the basic skills we learn in early childhood. However, these are exceptional times, when the basic notion of how we pay is being challenged. It seems we are now considering the different options for paying safely when physical contact must be kept to a minimum.

Consult Hyperion has been alerted to many requests for advice from community groups who normally rely on cash payments, so in response we have drawn up some guiding principles:

1. Maintain good practice: be aware of the vulnerability, both real and perceived, of people unable to leave their homes. Asking them to do things differently risks increasing anxiety and leaving them open to fraud.

2. Keep it simple: work with payments options people already use, and those they are familiar with. The large spike in phishing attacks over the past month highlights scammers’ eagerness to abuse this situation.

3. Maintain records: clear and consistent transaction logging is essential to protect both organisers and the people they are helping. Keep invoices for tracking and reconciliation purposes.

4. Work with existing networks: local authorities, housing associations, care providers, charities, community groups, faith groups, even village shops. The mix will vary according to the community.

5. Only allow demonstrably trustworthy individuals to handle payments: the list of people permitted to countersign passport applications could be a good starting point, but each community is different. Trust is vital in payments.

6. Keep payments and shopping separate: older readers will remember having an account with their local shop and having items added to their tally, paying the bill weekly or monthly.

7. School meals provide a good example: cards (or biometrics) are used to ensure all students have equal access to food, without the stigma attached with free school meals. Food is still served, even if the system has technical issues.

8. Take the time to discuss people’s preferences over the phone: The person receiving the shopping doesn’t have to be the person who pays. Be creative in encouraging people to contribute a little extra, or allow friends and family to pay on their behalf.

When organising payments, only use options people already have. This is not the time for a stressful sign-up process. In order of preference:

Online – PayPal, Bank Transfer, Pingit

With any new online payment, if there is a level of trust through an existing relationship, ask the account holder to send a small sum of 1p or 10p to the intended account, to check that it does arrive in the right place.

PayPal: convenient if you already have an account. Allows you to choose different sources of funds to transfer. Can be used for paying individuals as well as organisations. Includes a degree of protection.

Bank transfer (frequently referred to as Faster Payments): Despite communication from many of our banks, the full roll out of Confirmation of Payee is delayed. There is uncertainty over whether the money will arrive in the right place, so test initially with small amounts. It is irreversible. It can be performed easily via internet banking if you have the capability. Telephone banking is currently overloaded.

Some apps enable an invoice with bank details to be presented through a link to web page. This is better than simply sending requests for payments within an email, as fraudsters can’t just intercept the email and change the recipient details. It requires more effort to set up a fraud and is more likely to get spotted.

Pingit: Less widespread but convenient person-to-person payments which can be sent to a mobile number.

Contactless at the door

Using a portable reader from companies like iZettle, SumUp and Square. Apple Pay and Google Pay are good options as they allow higher value payments without the need to touch the device, if people already have the capability. Appropriate distancing must be observed.

Cheques

The householder only has to part with a single piece of paper and does not have to receive change. Cheques will have to be paid in and take a while to clear but there is very little risk of the householder absconding.

Cash

People are encouraged to avoid handling cash and avoid touching ATMs. Keeping cash in the home makes people more vulnerable. However, some people rely on cash. Where change is to be given, this should be arranged in advance and put in an envelope.

These are extraordinary times, which force us to look differently at the way we pay. Consult Hyperion have been enabling secure payments for over 30 years and we are able to apply our own Structured Risk Analysis process to understand the threats and possible countermeasures in every situation. These threats normally relate to the security of systems but in this case also encompass the risk of infection and people being left without essential supplies.

Finally

If you are reading this from home and need help, try phoning your local shop. If they are not organising deliveries themselves, they may well be aware of groups who are. Many local stores and community groups are providing help to these who need it, providing a much needed service. Get in touch with your local group.

Raising contactless limits to allow more paying without the PIN

In these extraordinary times with the need for social distancing, the payments industry is raising the contactless limits across many countries in order to prevent the need to touch PIN Pads in order to pay for our essential supermarket and pharmacy shopping.  Indeed, such is the concern over the use of cash that contactless payments are being actively encouraged over cash, with some countries, notably China and Russia[1] now requiring that cash is sanitised before it is allowed back into circulation.

The Dutch Payment Association[2] has moved to double their contactless CVM limit from €50 to €100, similar increases are being introduced by Poland; Norway; Canada; Turkey etc.  Yesterday the British Retail Consortium[3] announced that the UK too will raise its contactless limit from £30 to £45 on the 1st April.

So why do we need to wait a week? What does it mean? What are the alternatives?

First let us explain how contactless limits work and understand the difference between contactless payments in the UK compared to most other countries.  Contactless payment terminals have 3 limits:

  • Floor Limit
  • CVM Limit
  • Transaction Limit

The Floor Limit determines if the transaction should be sent online to the Issuing bank for authorisation. In the UK the contactless floor limit has been set at £0 for some time, ensuring all transactions are sent online, preventing spend from any cards that have been reported lost or stolen.

The CVM Limit is the one which is being changed on the 1st April. Above the CVM Limit a transaction requires a cardholder PIN or biometric authentication in order to be approved, which generally means a Chip & PIN transaction is needed. We are now seeing the introduction of some biometric contactless cards, but there are very few of them in the market today. By raising the CVM limit to £45 any contactless transactions below this will be sent to the Issuer for authorisation, which should result in the need to touch the POS less by reducing the number of Chip & PIN transactions.

The Transaction Limit is the maximum value that is allowed for any contactless transaction at that Merchant. This has been badly handled in the past, creating different customer experiences at different merchants. Ideally the contactless Transaction Limit should be the same as the Chip and PIN transaction limit. This then allows a contactless transaction carried out using a mobile phone, with Apple Pay or Google Pay, to be treated in the same way as Chip & PIN transactions. In the coming weeks, most payments will be made at Supermarkets, and whilst the raising of the limit to £45 will enable a higher number of contactless transactions, a large family shop will exceed £45. To be able to Pay without PIN, people should enable their cards in Apple Pay or Google Pay, this will allow them to Pay by contactless no matter the transaction amount.

In the UK, the Transaction Limit has not been uniformly implemented, in some merchants it is set to the same as the CVM Limit, meaning contactless can only happen below £30. The result has been confusion over when Apple Pay and Google Pay transactions will work and when you need to perform Chip & PIN.  POS providers and merchants need to take the opportunity of this limit change to test their systems to ensure that both the CVM Limit and the Transaction Limit are set appropriately to provide the maximum opportunity to pay by contactless.

As my fellow Principal Consultant Tim Richards points out in our video blog, other countries are using mobile apps to prevent the need for PIN – completely “Contact Free” transactions. We don’t have that capability in the UK yet, Apple Pay and Google Pay being the best options for now. We expect this to change as Open Banking progresses and payments without the need for PIN become more common.

Consult Hyperion have extensive experience in contactless and “Contact Free” payments and testing,  we will be able to help organisations ensure they optimise their payments capability to meet the needs of their customers, get in touch for more information on how we can help.

In the meantime, to avoid PIN Pads, shop below £45 or ensure Apple Pay or Google Pay is working on your mobile device, and stay safe.


[1] https://www.finextra.com/newsarticle/35509/russian-banks-act-to-decontaminate-cash?utm_medium=newsflash&utm_source=2020-3-24&member=56902

[2] https://www.finextra.com/newsarticle/35493/dutch-banks-raise-contactless-limits-for-pin-entry

[3] https://www.theguardian.com/money/2020/mar/24/limit-for-contactless-spending-to-rise-to-45-at-beginning-of-april


Transport Ticketing Global 2020

We were at TTGlobal (28-29 Jan 2020) this year for the fifth year running. It was a much bigger event in Kensington Olympia, London, with around 30% more attendees. This blog is a summary of how the two days went for us.

Day 1

The Plenary session had a surprise guest in the form of the Future of Transport Minister, George Freeman. He spoke eloquently about subjects very close to our hearts:

  • Seamless end-to-end ticketing
  • Integrated PAYG
  • Sustainability: he explained that the emissions of the transport sector are expected to double by 2050 unless something radical is done.

I have written before about a shift in government thinking about mobility that seems to be taking place. Let’s hope this signals more of the same and is followed with positive, decisive action.

Our CEO, Neil McEvoy, moderated the plenary panel on ‘the role of ticketing and urban transport policies in delivering MaaS,’ with panellists from:

  • Visa
  • Mastercard
  • Government of the city of Buenos Aires, Argentina
  • Dallas Areas Rapid Transit, USA
  • Uber

Picture1

It was felt that to meet public policy objectives on congestion, air quality and CO2 emissions, facilitating multi-modal, door-to-door, everyday journeys would be key. Facilitating journeys outside of a traveller’s home city or region is welcome but won’t meet wider goals alone.

Highlight of the rest of Day 1 included:

  • An update on the Future of Oyster from Transport for London. There are still no plans to turn it off, though the uptake of bank cards by the travelling public continues to rise steadily.
  • The Masabi presentation about Fare Payments as Service which was the subject of a recent podcast I made with Ben Whitaker.
  • Contactless bank card ticketing has come of age. There were lots of presentations about cEMV roll outs. Visa announced that they have solutions to the classic problems with bank cards (they don’t work for the unbanked or family groups). Contact them if you want to learn more.

Day 2

I moderated a panel about the future of ticketing technologies with panellists from:

  • Deutsche Bahn, Germany
  • GVB, Netherlands
  • The Human Chain, UK
  • Department for Transport, UK

Picture2

We made a whistle-stop tour of up and coming technologies relevant to the different actors in the Mobility ecosystem, ranging from big data and augmented reality for Data Providers to Open Banking and distributed ledger technology for Maas Providers.

Other highlights for me from Day 2 included:

  • The UK’s Rail Delivery Group’s presentation on developing insight from barcode data, linking tickets sold with tickets scanned to inform revenue protection.
  • An update from Transport for the North on their Integrated and Smart Travel activities.
  • A presentation by MOTC about the difficulties faced by Qatar which currently is massively dependent on the private car and their plans to address the congestion problems they face.

Exhibition

I spent most of my time in the exhibition hall talking with contacts and vendors. I wish there had been time to attend more of the presentations.

I took the opportunity to record another podcast while at the event. This time with Eric Reese, CEO of ByteMark over from New York.

Awards

Once again, I was delighted to be one of the panel of judges for the awards presented at the Gala Dinner and Awards held at the Science Museum and hosted by comedian Phil Wang. It was decided by the judges to introduce a Highly Commended tier this year within each award category. This is in recognition that the standard or submissions was generally high. So, while Moscow won the Best Smart Ticketing Programme 2020, both of the following were Highly Commended:

  • Flowbird Transport Intelligence & Lothian Buses for their smooth role out of contactless payments card acceptance in Edinburgh in time for the Edinburgh Festival dramatic rise in population and bus usage;
  • Rail Delivery Group & Cubic Transportation Systems for the delivery of barcode ticketing under budget and achieving collaboration between 19 Train Operating Companies.

Overall, the event was a great success and great fun to be part of. Here’s to next year.

At Consult Hyperion we have experience globally with transport and mobile ticketing and deploying the latest technologies. If you would like to learn more, give us a call.

Consult Hyperion’s Live 5 for 2020

At Consult Hyperion we take a certain amount of enjoyment looking back over some of our most interesting projects around the world over the previous year or so, wrapping up thoughts on what we’re hearing in the market and spending some time thinking about the future. Each year we consolidate the themes and bring together our Live Five.

2020 is upon us and so it’s time for some more future gazing! Now, as in previous years, how can you pay any attention to our prognostications without first reviewing our previous attempts? In 2017 we highlighted regtech and PSD2, 2018 was open banking and conversational commerce, and for 2019 it was secure customer authentication and digital wallets — so we’re a pretty good weathervane for the secure transactions’ world! Now, let’s turn to what we see for this coming year.

Hello 2020

Our Live Five has once again been put together with particular regard to the views of our clients. They are telling us that over the next 12 months retailers, banks, regulators and their suppliers will focus on privacy as a proposition, customer intimacy driven by hyper-personalisation and personalized payment options, underpinned by a focus on cyber-resilience. In the background, they want to do what they can to reduce their impact on the global environment. For our transit clients, there will be a particular focus on bringing these threads together to reduce congestion through flexible fare collection.

So here we go…

1. This year will see privacy as a consumer proposition. This is an easy prediction to make, because serious players are going to push it. We already see this happening with “Sign in with Apple” and more services in this mould are sure to follow. Until quite recently privacy was a hygiene factor that belonged in the “back office”. But with increasing industry and consumer concerns about privacy, regulatory drivers such as GDPR and the potential for a backlash against services that are seen to abuse personal data, privacy will be an integral part of new services. As part of this we expect to see organisations that collect large amounts of personal data looking at ways to monetise this trend by shifting to attribute exchange and anonymised data analytics. Banks are an obvious candidate for this type of innovation, but not the only one – one of our biggest privacy projects is for a mass transit operator, concerned by the amount of additional personal information they are able to collect on travellers as they migrate towards the acceptance of contactless payment cards at the faregate.

2. Underpinning all of this is the urgent need to address cyber-resilience. Not a week goes by without news of some breach or failure by a major organisation putting consumer data and transactions at risk. With the advent of data protection regulations such as GDPR, these issues are major threats to the stability and profitability of companies in all sectors. The first step to addressing this is to identify the threats and vulnerabilities in existing systems before deciding how and where to invest in countermeasures.

Our Structured Risk Analysis (SRA) process is designed to help our customers through this process to ensure that they are prepared for the potential issues that could undermine their businesses.

3. Privacy and Open Data, if correctly implemented and trusted by the consumer, will facilitate the hyper-personalisation of services, which in turn will drive customer intimacy. Many of us are familiar with Google telling us how long it will take us to get home, or to the gym, as we leave the office. Fewer of us will have experienced the pleasure of being pushed new financing options by the first round of Open Banking Fintechs, aimed at helping entrepreneurs to better manage their start-up’s finances.

We have already demonstrated to our clients that it is possible to use new technology in interesting ways to deliver hyper-personalisation in a privacy-enhancing way. Many of these depend on the standardization of Premium Open Banking API’s, i.e. API’s that extend the data shared by banks beyond that required by the regulators, into areas that can generate additional revenue for the bank. We expect to see the emergence of new lending and insurance services, linked to your current financial circumstances, at the point of service, similar to those provided by Klarna.

4. One particular area where personalisation will have immediate impact is giving consumers personalised payment options with new technologies being deployed, such as EMV’s Secure Remote Commerce (SRC) and W3C’s payment request API. Today, most payment solutions are based around payment cards but increasingly we will see direct to account (D2A) payment options such as the PSD2 payment APIs. Cards themselves will increasingly disappear to be replaced by tokenized equivalents which can be deployed with enhanced security to a wide range of form factors – watches, smartphones, IoT devices, etc. The availability of D2A and tokenized solutions will vastly expand the range of payment options available to consumers who will be able to choose the option most suitable for them in specific circumstances. Increasingly we expect to see the awkwardness and friction of the end of purchase payment disappear, as consumers select the payment methods that offer them the maximum convenience for the maximum reward. Real-time, cross-border settlement will power the ability to make many of our commerce transactions completely transparent. Many merchants are confused by the plethora of new payment services and are uncertain about which will bring them more customers and therefore which they should support. Traditionally they have turned to the processors for such advice, but mergers in this field are not necessarily leading to clear direction.

We know how to strategise, design and implement the new payment options to deliver value to all of the stakeholders and our track record in helping global clients to deliver population-scale solutions is a testament to our expertise and experience in this field.

5. In the transit sector, we can see how all of the issues come together. New pay-as-you-go systems based upon cards continue to rollout around the world. The leading edge of Automated Fare Collection (AFC) is however advancing. How a traveller chooses to identify himself, and how he chooses to pay are, in principle, different decisions and we expect to see more flexibility. Reducing congestion and improving air quality are of concern globally; best addressed by providing door-to-door journeys without reliance on private internal combustion engines. This will only prove popular when ultra-convenient. That means that payment for a whole journey (or collection or journeys) involving, say, bike/ride share, tram and train, must be frictionless and support the young, old and in-between alike.

Moving people on to public transport by making it simple and convenient to pay is how we will help people to take practical steps towards sustainability.

So, there we go. Privacy-enhanced resilient infrastructure will deliver hyper-personalisation and give customers more safe payment choices. AFC will use this infrastructure to both deliver value and help the environment to the great benefit of all of us. It’s an exciting year ahead in our field!




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