Earlier this year we were delighted to be part of the Consult Hyperion webinar on Request to Pay. A common thread in post-event conversations that followed was an interest in the parallel developments of the UK and European flavours of Request to Pay and how they might work together. With the launch of the European version on June 15th, we thought it an ideal time to signpost the bigger differences.
In our Live 5 for 2021 we raised micro-location as an area of technology where we expect to start seeing significant advances being made. UWB (Ultra Wideband) is just starting to get traction in consumer electronics and we believe that this will trigger innovation in micro-location technology.
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.
At this time of year my colleague, Dave Birch looks forward, his annual “Live Five” started as a bit of fun, but over the years has become a thought provoking look at what might impact our industry in the coming year, if you haven’t read it yet, please follow this link.
As we come to the holiday season, we know that we will be bombarded with reviews of 2020 on television, in our newspapers and online. A conversation with some colleagues about how long they had worked in the payments industry, prompted my own review when I realised that on the 8th December, I clocked up 40 years in the industry, how technology has changed our lives in that time.
It’s that time of year again: where’s it’s traditional to take stock and look to the future. At Consult Hyperion, we do that through our ‘Live 5’ process; where we look at major trends in business, technology and consumer attitudes and project them onto our areas of business focus, with twists of our own. This is more than a marketing exercise. It informs our advisory services, but also sets our own strategy, for example by determining what technologies are investigated, and protypes built, by our Hyperlab unit.
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).
Early on in the pandemic my colleagues at Consult Hyperion and I did a lot of research to explore how it might impact our customers and our customers’ customers, just as I am sure every other organisation in the payments sector did. We looked at a lot of speculative forecasts, we looked at research and analysis from quite a wide range of organisations in the financial sector and beyond, we spoke to a number of people in the industry and we took part in a fair few discussions and debates on the topic. As a result of this, we identified a number of strategic areas where stakeholders in the payment space should be developing or at least preparing their strategies and where they should be planning for some changes to take them through and beyond the COVID-19 crisis.
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.