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TableKey of Contents theme COLUMNS & DEPARTMENTS September/October 2016 Volume 7 Number 5 Editor-in-Chief Steve Lloyd steve@paymentsbusiness.ca Managing Editor Sarah O’Connor sarah@paymentsbusiness.ca
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Starting Points Payments News
20 Events 22 Resolutions
FEATURES
Publisher Mark Henry mark@paymentsbusiness.ca
Mobile Technology 10
Contributors Mark Frey, Paul Gordon, Mark O’Connell, David Poole, Phil Valvardi, Cathy Vigrass, Jason Wang
Credit unions’ Mobile Pay the sum of many parts
Creative Direction Jennifer O’Neill jennifer@paymentsbusiness.ca
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Photographer Gary Tannyan
Driving new revenue streams with socially conscious mobile banking models
President Steve Lloyd steve@paymentsbusiness.ca For subscription, circulation and change of address information, contact subscriptions@paymentsbusiness.ca
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The present and future of digital ID&V
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Redefining top-of-wallet customers Next issue…
Nov/Dec Industry forecast—finding new revenue streams in 2017 and beyond. September/October 2016
PAYMENTSBUSINESS
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Starting Points
Canadians expect dynamic digital payment solutions and experiences
By Mark O’Connell Mark O’Connell is president and CEO, Interac Association and Acxsys Corporation.
W
e have truly entered an age of digital transformation. We are, increasingly, a digitally connected people engaging in ever more sophisticated tasks through technology—and this will only continue to escalate. This wave of technological change squarely impacts payments and is marked by the introduction of new technologies, new players and new expectations. At the heart of this transformation is the need to deliver enhanced and optimal user experiences, which the market is expecting and demanding from all players. Canadians want convenience, speed and security and, increasingly, they want flexible access, available anywhere, anytime and on any device.
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Can established players evolve to remain relevant during times of disruptive technological change? These entities exist today because they have been able to make significant investments. They’ve been able to adapt, transform and evolve during periods of disruption. Within this context, yes, established players can do more than simply survive—they can thrive. We’ve demonstrated this consistently over three decades—first as pioneers and now as leaders in the Canadian payments space.
capabilities. It’s something we have done in our organization and continuously do to meet the demanding needs of the market. I also believe that it means partnering with global leaders, as well as new entrants, to deliver best-in-class solutions and user experiences. From the very beginning, we’ve championed innovative, secure solutions for Canadians that make payments easier, simpler and faster. We know that in the world of payments, settling for the status
We know that in the world of payments, settling for the status quo is a one-way ticket to irrelevancy. We are all questioning how we can accelerate our ability to respond to and challenge the current changing environment and future requirements. Fundamentally, it means transforming our teams—assessing our resources and skill sets to expand our
quo is a one-way ticket to irrelevancy. Nor is it enough to simply compete for the moment, following trends and reacting to the changes taking place all around us. We know that the only way to stay relevant in the payments world is to compete for
September/October 2016
Starting Points the future by being proactive and shaping experiences rather than being led by them. In Canada, it helps that Canadians are great adopters of payments technology. They’ve embraced Interac Debit, using it more than any other payment card. They’ve embraced Interac Flash contactless payments, driving year-over-year transaction growth of 163 per cent between 2014 and 2015. And, in larger and larger numbers, they’re embracing Interac e-Transfer, making it the leading digital money transfer platform in Canada. It’s delivering faster payment capabilities by processing more than 958,000 transactions per day with more than half of transfer notifications received instantly, allowing for immediate access to funds once deposited through online banking. But that doesn’t tell the whole story. Currently, 65 per cent of Interac e-Transfer funds are deposited using mobile devices, highlighting how important mobile has become to Canadians for payments. And while Interac e-Transfer began as a P2P (person-to-person) service, it has evolved to offer P2B (person-to-business), B2P (business-to-person) and B2B (business-tobusiness) options as well. More than 13.5 million online bank accounts are connected to the Interac e-Transfer platform to send money securely and efficiently from one bank account to another. Business use of Interac e-Transfer will continue to increase, in part due to the recent introduction of a Bulk Disbursement service that provides new capabilities for payments that have traditionally been made using cash, prepaid cards or cheques—a costly and inefficient legacy payment instrument that still accounts for nearly a billion payments every year. The Bulk Disbursement service provides businesses with an efficient, secure and streamlined electronic payments system for things like payroll for temporary and casual staff, insurance claim payouts, company rebates, competition winning disbursements and emergency fund disbursements. Through an automated file transfer process, businesses and other organizations can securely and reliably send multiple payments in a single file upload, eliminating the need to issue,
track and reconcile payments. And unlike direct deposit, recipients don’t have to provide any financial institution details, as the recipients just provide an email address or mobile phone number for payment notification, as they would with regular Interac e-Transfer. Our mandate has always been to operate a modern, efficient and secure payments system in Canada, delivering ubiquitous, cost-effective platforms and services with the scale and reach required to be successful in a highly competitive market. While the backbone of our Interac products and services has and will continue to be our Inter-Member Network (IMN), we recently introduced a new foundational platform— the Interac Token Service Provider (TSP)—to allow us to meet evolving consumer and business expectations.
Currently, 65 per cent of Interac e-Transfer funds are deposited using mobile devices, highlighting how important mobile has become to Canadians for payments. Developed in collaboration with IBM, Bell ID and Everlink, the Interac TSP is a natural evolution of the strong security value proposition built into every Interac product and service. The concept of substituting consumers’ financial information with a “token” has always been integral to the security of Interac products, such as debit cards that feature an identifier instead of an account number or Interac e-Transfer transactions that use email addresses or mobile phone numbers instead of account information to allow for digital transfer of funds through web banking. The TSP continues this, offering both the security and customization
September/October 2016
that consumers and clients demand with the capability for tokenized digital debit transactions on any device or mobile wallet that supports it. With our three foundational platforms— the IMN, the Interac e-Transfer platform and the Interac TSP—we’re ready for whatever happens in the world of digital commerce. Whether it’s In-App payments, where we are enabling merchant mobile applications to securely integrate digital debit payment functionality, or In-Browsers, where we do the same for merchant e-commerce websites, these innovative payment solutions will create new customer experiences and value-added solutions to financial institutions. They also extend the consumer and merchant benefits of paying with debit beyond brick-and-mortar transactions into the digital space. Constant innovation and a reliable, always-on systems infrastructure lays the foundation for further evolution in digital payments, including enabling Internet of Things (IoT) solutions to leverage the Interac e-Transfer platform. And we’re always reviewing the platform for even more capabilities, such as transactions within social platforms, be they P2P, P2B or B2P. Canadian consumers and businesses have shown that they want access to digital payment capabilities. They want mobile payment offerings that are fully functional across any device and any platform. They also expect them to be secure and protect their privacy. If existing payment providers don’t give them what they want, they’ll turn to new entrants who will. Fortunately, they don’t have to. If the past 30 years have taught us anything, it’s that you can’t stay relevant by standing still or following the herd. We know our environment, we know what is needed and we adapt. We have domain expertise and know-how to build out capabilities and transform, and that’s what we are doing. Our continual evolution means that we continue to set the standard for secure debit payments and money transfers in Canada, as we accelerate the growth of digital payments by meeting the needs and expectations of consumers and businesses, today and into the future. PAYMENTSBUSINESS
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Payments News
Mobile payment technology is accelerating the consumer shift to digital payments and away from cash TORONTO -- By 2030, cash purchases will make up only 10 per cent of money spent in Canada, according to a prediction by Moneris Solutions Corporation (Moneris). Compared to 35 per cent of overall transactions in 2014, the 70 per cent decline will coincide with an increase in the use of digital payment technologies, especially among younger Canadians. Consumer misconceptions about (1) the security of mobile wallets and (2) the ability of mobile wallets to digitally store physical wallet contents (including plastic loyalty cards and receipts) are among the factors slowing the transition. Canadian consumers are increasingly turning to contactless technology to make faster and more convenient payments. A recent Moneris survey of Canadians found that 67 per cent aged 18-34, 56 per cent aged 35-44, 48 per cent aged 55-64, and 49 per cent aged 65 and older preferred to use a contactless-enabled (tap) card to make purchases—the same tap-to-pay method used in mobile wallets. “More Canadians—especially younger ones—are tapping their cards to pay as opposed to inserting them into payment terminals,” said Rob Cameron, chief product officer at Moneris. “We‘ve seen the number of contactless transactions more than double this year, which is a strong indication that mobile payments are going to see a huge lift.” When it comes to mobile wallets, the survey found that 25 per cent of Canadians aged 18-34 preferred paying with a mobile wallet over cash or card (compared to 18 per cent aged 45-54, 10 per cent aged 55-64 and six per cent aged 65 and older). The May 2016 expansion of Apple Pay to include support from all major Canadian banks will also help spur the adoption of mobile wallets. Of Canadians aged 18-34, 46 per cent said they would be more likely to use a mobile wallet if it were available for the kind of credit card they used and 47 per cent said they would use a mobile wallet if it were available for the kind of phone they used—responses collected prior to the full rollout of Apple Pay. When asked their reasons for not using a mobile wallet, 62 per cent of Canadians said they would be more likely to use it if they knew it was secure. Further, 50 per cent of Canadians said that they would leave their wallets at home if they could store all their loyalty cards on their phone. Other reasons Canadians are still holding on to their wallets are the inability to receive receipts via email (48 per cent) and store personal identification (41 per cent).
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Ipsos awards top honours for financial services excellence in Canada TORONTO -- Ipsos is pleased to announce the winners of its 2016 Best Banking Awards, an annual program that recognizes Canadian financial institutions for excellence in customer experience. The overall Customer Service Excellence award for 2016 among all financial institutions in the retail banking sector goes to Canada’s Credit Unions, an aggregate of individual credit unions across the country. This is the twelfth consecutive year that Canada’s Credit Unions have received the award and this year they also matched last year’s record high of nine awards received. Tangerine achieved six awards this year, similar to 2015, including three solo wins, while Desjardins was a recipient of three awards. TD Canada Trust takes top honours among the Big Five Banks for overall Customer Service Excellence for the twelfth year in a row, receiving 12 awards in total this year, two more than last year. RBC also earned 12 wins and Scotiabank received nine awards, which marks the most ever in both cases. BMO Bank of Montreal and CIBC achieved four wins each. “The 2016 Awards demonstrate that Canadians continue to benefit from world class banking services,” said Ray Kong, executive vice president, Canada, Ipsos Loyalty. “We should consider ourselves extremely fortunate to have such a wide array of choices in financial services. As more and more banking options become available, our financial institutions keep innovating, making sure that the true winner remains the Canadian consumer.” Introduced in 1987, the Customer Service Index (CSI) quarterly survey generates the winners of the annual Best Banking Awards. This year’s Awards were based on the combined results of 47,305 completed surveys for the 2016 CSI program year ending with the August 2016 survey wave, received from a demographically and regionally representative sample of Canadians. The awards were presented across 13 categories. “Each year the bar is set higher for customer service excellence,” noted Adrian Murphy, vice president of Ipsos Marketing/Loyalty and leader of the CSI Study. “Today’s competitive environment makes it even more challenging for financial institutions to differentiate their offering, especially as customers increasingly migrate to online and mobile banking.”
To send press announcements, please direct them to Sarah O'Connor, Managing Editor, at sarah@paymentsbusiness.ca
September/October 2016
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EPSON is a registered trademark and EPSON Exceed Your Vision is a registered logomark of Seiko Epson Corporation. All other product and brand names are trademarks and/or registered trademarks of their respective companies. Epson disclaims any and all rights in these marks. Copyright 2016 Epson America, Inc.
Payments News
KPMG launches Digital Ledger Services to help financial services companies implement blockchain technology KPMG to collaborate with Microsoft on blockchain services TORONTO -- KPMG in Canada has announced the introduction of its Digital Ledger Services, a comprehensive suite of services designed to help financial services companies realize the potential of blockchain capabilities—providing faster and more secure transactions, streamlining and automating back office operations, and reducing costs by utilizing blockchain-based technologies. Blockchain is an alternative ledger database that maintains a continuously growing list of transaction records that are considered permanent and unchangeable, and is increasingly becoming the destination platform for financial services companies. KPMG‘s Digital Ledger Services include full lifecycle support—from strategic qualification and business case development to relevant use-case development, systems and operations integration, and ongoing management of a company‘s blockchain infrastructure. The lifecycle support combines management consulting and risk consulting proficiency in financial processes with regulation as the backbone. KPMG‘s specialized in-house coding and development will also be part of the services offered to clients. “Distributed ledgers as exemplified by blockchain are an exciting way to rethink how contracts between multiple parties can be reliably and securely executed
without the need for central intervention. It engenders agility, trust and traceability and opens up entirely new ways that parties can interact with each other, whether for basic payments or more complex activities such as identification or providence verification,” said Lian Zerafa, Canadian lead for financial services consulting for KPMG. In addition, KPMG will expand its strategic alliance with Microsoft to work on blockchain initiatives—with Microsoft providing blockchain as a service platform and KPMG providing its comprehensive suite of services—which will help clients efficiently and securely move to the cloud for storage, while adopting disruptive blockchain technologies. “Through this collaboration, we are combining KPMG‘s proficiency in business transformation and wide-ranging services with Microsoft‘s industry-leading cloud technologies and business solutions. In turn, this will allow companies to improve their scale, agility and gain valuable insights across the enterprise to quickly make well-informed decisions, and meet changing customer demands,” said Yvon Audette, Canadian IT advisory leader. “We‘re excited to be expanding our efforts with KPMG to develop blockchain services,” said Marley Gray, director of business development & strategy for blockchain at Microsoft. “The global availability of Microsoft
Azure, with its hybrid cloud capabilities, extensive compliance certification portfolio, and enterprise-grade security help to enable blockchain adoption, especially in highly regulated industries like financial services, healthcare and government.” Across its member firms worldwide, KPMG has dedicated more than 80 partners and executives to focus on blockchain, including its industry leading data and analytics services that will focus on coding and development in support of proof of concept, prototyping and integration of blockchain capabilities. In addition to increasing the speed and security of transactions worldwide by using cryptology, blockchain technology also can be used to reduce costs by leveraging cloud technology and improve regulatory compliance by offering detailed factual evidence and a solid audit trail of transactions for auditors and regulators. Currently, KPMG is working with clients worldwide on a range of global blockchain projects. Among these projects is the qualification of a blockchain solution for a major bank‘s global payments, the development and prototyping of smart contracts in insurance and involvement in blockchain workshops across Canada and Europe.
U.S. EMV merchant adoption remains sluggish a year later TSG survey estimates 44 per cent of U.S. card-accepting merchants have EMV terminals; 29% of merchants can accept chip-based transactions OMAHA -- The Strawhecker Group (TSG), a management consulting company focused on the global payments industry, released survey results today that estimate 44 per cent of U.S. card-accepting merchants have EMV terminals. Alternatively, 29 per cent of U.S. merchant locations are currently activated and capable of 8
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accepting chip-based transactions, less than a month away from anniversary of EMV. TSG’s previous survey of payment processors and other payment providers completed in January estimated that over 50 per cent would have an EMV terminal by this time, showing a slower pace of implementation than expected.
“EMV merchant adoption has slowed down a bit, at least comparatively speaking to our last EMV survey results in January 2016,” said Jared Drieling, business intelligence manager at TSG. Approximately one-third of merchants have activated EMV systems (ability to accept chip on chip transactions) despite the larger base of
September/October 2016
Payments News U.S. merchants with EMV terminals in place. “EMV terminal vendor supply and delays in the terminal activation/certification process are the bottlenecks in the migration,” says TSG’s Drieling. By December 2016, it is estimated that consumers will be able to use their chipbased credit and debit cards at 51 per cent of U.S. merchant locations. “It is also important to note that EMV adoption by merchant industry can vary drastically; for example, quick service restaurants are suspected to be laggards in the transition,” said Drieling. The survey also indicated that over 60 per cent of respondents have experienced an increase in the number of chargebacks due to a lack of EMV compliance. “It is clear that non-EMV compliant merchants have felt the impact of the liability shift,” says Drieling. “The good news is that as merchants refresh their terminals for EMV, they are also adopting the contactless capability which lays down the foundation for future payments such as mobile proximity payments,” Drieling added. EMV is a globally accepted card standard that uses an embedded microchip to provide unique data protection when the card is inserted into a chip-card reader. EMV is an acronym for Europay, MasterCard and Visa. After the October 2015 liability shift, U.S. card-accepting merchants without the ability to accept EMV cards may be liable for fraudulent transactions. TSG’s sample included 79 payment service providers that service more than 3.4 million merchants, or nearly half of the U.S. card-accepting market.
Aria Systems launches Aria Crescendo SAN FRANCISCO -- Aria Systems has announced the general availability of Aria Crescendo, the platform that defines the new standard for cloud-based monetization for multi-dimensional customer choice. Aria Crescendo enables businesses to better serve and retain today’s ever-demanding customers, including both individual consumers and business entities, who require offerings that meet their preferences. With Aria Omni-node technology, a hierarchical, n-tier product catalog and account management architecture, enterprises can create offerings and elegant account structures in limitless variations. Customers are afforded greater choice to match their preferences surrounding their purchasing and consumption experience; paying how and when they want—versus conforming to constraints and frustrations imposed by the enterprises’ outdated billing technologies. Innovative enterprises like Sungard Availability Services (Sungard AS) already depend on Aria Crescendo for increased agility, greater billing transparency and flexibility that maximizes customer lifetime value and ultimately fuels growth. While other platforms are focused on how products are sold, Aria Crescendo is designed for how customers buy, which is increasingly recurring and usage-based. The customer now calls the shots and enterprises serving them must adapt accordingly. Yet, the plethora of permutations required for success have hamstrung existing billing systems, spawning multiple inefficient and manual processes or forcing companies to abandon initiatives that
capitalize on these market trends. Aria Crescendo is the first monetization platform to provide multi-dimensional customer choice by enabling highly tailored product offerings that support this new business reality. User friendly configurations define attributes including: pricing, promotions, consumption options, payment methods, dunning processes, product and account hierarchies, and business terms such as payers, channels, business units, geographies, entities, and the like. This is also the first platform with the ability to aggregate bills for multiple locations and to make services portable for customers as they change location, device or use case. Customers now also have the ability to move digital add-on services for “child” entities from simple “parent-pay” to “self-pay” or to split components of service bundles among payers and users. Importantly, Aria provides all of this capability without imposing the risk associated with replacing legacy systems. With state-ofthe-art integration, businesses can benefit from Aria’s agile augmentation while allowing incumbent systems to remain in place, as enterprises choose. “As Sungard AS’ monetization partner, Aria provides us with the speed and agility required for our product releases that we can’t provide on our legacy billing platforms,” said Josh Crowe, CTO, Sungard AS. “With the new Aria Crescendo platform, we are increasing our ability to craft and launch new services that meet the consumption and billing preferences of our customers.”
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PAYMENTSBUSINESS
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Mobile Technology
Credit unions’ Mobile Pay the sum of many parts By Paul Gordon
O
n the surface it might appear that credit unions have entered the mobile payment space a bit later than the competition. The reality is that the delay was a conscious decision on the part of credit union leaders. The decision was based on a simple premise: let the banks test the available technology and the appetite for mobile payments and credit unions will wait until the technology has stabilized and there is clearer direction on where it makes sense to invest. This approach was intended to help maximize our investment dollars and result in a flexible, adaptable and scalable solution that would deliver a longer shelf life and be accessible to a wide number of credit unions across the country. Mobile payment initiatives in Canada date back to as early as 2011. In the early stages, available solutions were based on technology that required the involvement of third parties (i.e. the telcos) that were not previously part of the payments ecosystem and were generally too expensive for credit unions to deploy. In 2014, the Large Credit Union Coalition (LCUC) CIO group undertook a project to develop a proof-of-concept mobile payment app which used similar technology to what the large banks had launched in-market. Based on the experience of that proof-ofconcept, the decision was made to delay entering the market until the technology could provide the type of positive, consistent and secure transaction they wanted their members to experience. The opportunity to develop a viable, commercial mobile payment solution came with the advent of two key technology milestones that credit unions were able to use: Host Card Emulation (HCE) on the Android mobile phone operating system; and the decision by Interac to develop a mobile enablement platform that would allow it to act as a Token Service Provider (TSP) to Canadian financial institutions. Tokenization services are a critical component in any HCE solution as they provide an enhanced level of security by replacing a consumer’s payment credentials with a secure token on the mobile device. In hindsight, taking a wait-and-see approach has paid off. Under the direction of the LCUC CIO group, the credit union community introduced Mobile Pay in June of 2016—the first service of its kind 10
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to use HCE and the Interac TSP. The same underlying technology used for Mobile Pay will also be used to deploy debit-based payment capability on other mobile wallets either already launched or expected to launch in the Canadian market. Mobile Pay provides members with a secure and user-friendly mobile debit payment experience wherever Interac Flash is available. Mobile Pay was far from being a standalone project on the part of the individual credit unions involved. Success very much depended on working collectively with key technology partners like Everlink Payments Services, Interac and Central 1, among others, to enable the service to work across the credit union’s existing mobile banking and payments infrastructure. The LCUC CIO group that represents the 15 largest credit unions in Canada spearheaded and funded the Mobile Pay project. The steering committee was responsible for establishing vendor relationships and project plans, developing support materials and assessing user requirements. Four “champion” credit unions volunteered to take on the ‘heavy lifting’ for the project and they all committed significant time and resources as the first participants: Affinity Credit Union and Conexus Credit Union in Saskatchewan; First West Credit Union in British Columbia; and Meridian in Ontario. Now that the service is up and running, the plan is to bring the other LCUC credit unions on board over the next few months and then open up the service to the rest of the credit union system starting in early 2017. “The initiative was challenging in that it involved multiple platforms and technology layers that are not always the same at credit unions,” says Eric Dillon, chief executive officer at Conexus Credit Union. “We had to develop this in a way that was scalable and usable for everyone. We knew we had to take the extra time and caution to make sure we were delivering best-in-class technology.” Atul Varde, executive vice president and chief information officer for Affinity Credit Union is a member of the LCUC group as well as one of the four credit unions chosen “to kick the stones out of the way first and clear the path for the rest of the credit unions to follow,” he says. “Mobile Pay is the second major project to come out of the LCUC research and development system. The first was September/October 2016
Mobile Technology remote deposit capture which was pioneered by Canadian credit unions in 2013.” Affinity was also one of the credit unions that experimented with a SIM-based mobile payment solution in the past. “The results were quite revealing,” Varde says. “We felt the user experience was unacceptable and wasn’t the sort of thing to be launching to our membership. It was unreliable, onboarding was clunky and the technology had limitations. A lot of stars had to align to make a simple payment, when a piece of plastic did it just as well and arguably better.” Gary Genik, chief information officer with Meridian agrees with Varde and believes technologies have only recently caught up to the market hype and matured to the point where credit unions can be confident they can deliver mobile pay services in a highly secure, efficient and reliable manner. “For example, the availability of cloudbased services and secure tokenization technology has enabled a more ubiquitous service with an easy and intuitive provisioning capability.”
The HCE connection As mentioned, a key driver in making Mobile Pay a reality for the committee was the availability of HCE technology which allows for the functionality of a payment card to be emulated securely on a mobile device. HCE proved to be the ideal underlying technology, Varde says: “It has no dependence on a SIM card or telecom provider. Instead, you are leveraging the Interac mobile debit applications that use tokenization and management in the cloud. In this model, telecoms don’t have a functional role to play in the payment so you can use any compatible Android mobile device from any telecom provider. That really simplified things for consumers.” “With the announcement of HCE support for Android, the world changed because it enabled financial institutions to maintain control and work with their members,” says David Hooper, vice president strategy and innovation for Everlink. “All of a sudden mobile payments became a reality. It was no longer a toy to play with. It was the next evolution after tap with debit and credit cards. Tapping with a mobile device is simply the latest extension of that technology.” “Although Apple Pay was the first wallet to launch using Interac’s TSP earlier this year, credit unions were quick to follow with Mobile Pay using our HCE/TSP technology, because it allows Interac Flash to be integrated into their own mobile banking apps,” says Grace Jung, director of mobile software and services, Interac. “Tokenization adds another layer of security that protects consumers’ financial information and eliminates the need for customer information to be exchanged between two parties.”
The Interac play The Interac TSP happened to be in the development phases when the Mobile Pay project first started. The Mobile Pay initiative proved to be a natural extension, since credit unions were already in discussions with Interac about debit-based payments services using Interac Flash. In speaking with Interac about supporting HCE, September/October 2016
it became a relatively simple matter to align the credit unions’ goals with theirs, making credit unions the first in the country to integrate their own banking apps on the TSP platform. “It was simply a matter of adding a payment function,” Jung says. The Interac piece was a particularly exciting breakthrough, because it eliminated the need for each credit union to develop an in-house tokenization solution and met the market standard that would address all of the key security concerns. Timing also turned out to be serendipitous on the switching side. Interac already uses Everlink as a vendor, which also happened to be the key transaction switching services partner for the majority of credit unions (over 90 per cent by the end of 2016). Bringing Interac and Everlink to the table was a natural fit for the project teams. Not surprisingly, one of the key principles around these efforts was security. Not only did Mobile Pay need to provide the right functionality and user experience, it also needed to provide the right level of security that credit union members expected. Before moving forward an initial step was bringing in a security consultant to evaluate the Interac platform and provide a full review of the credit unions’ security resources. The project team then worked alongside Interac and Everlink to develop the back-end and to address any unique security considerations that come into play with HCE (e.g. resistance to tamper-proofing the app), as well as to ensure the right performance and functionality benchmarks were achieved (e.g. usability, responsiveness, etc.).
Building a seamless experience From the end user perspective, every effort was made to create a seamless and simple experience. Mobile Pay offers a number of innovative features including a “Pay Now” shortcut and an “Always On” feature for added convenience. It also offers a “Pay with Passcode” option that allows users to configure their individual security settings, such as requiring a passcode to be entered for all Mobile Pay transactions or only for transactions above a certain dollar value. While it’s too early to report definitive numbers on consumer adoption, the participating credit unions report they are adding new users on a daily basis. But the key to all this is understanding that Mobile Pay was never an endpoint for credit unions and their partners. It’s the beginning of a much longer journey that will see the system deliver more functionality integrated with its mobile banking platform in areas such as loyalty, credit and in-app capabilities on merchants’ own websites. Ultimately, it was the collaborative effort that brought Mobile Pay to a successful launch, Hooper says. “The LCUC were the real drivers and visionaries for bringing this to life for credit unions and establishing a good foundation for the project. They needed buy-in from all members, as well as mobile banking providers and Interac. They really all got down to it to make it happen. It was a wonderful project at the LCUC level.” Paul Gordon is senior manager, payments for CCUA.
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Mobile Technology
How socially conscious mobile banking models drive new revenue streams
Leveraging the global digital shift to amplify your market access and customer engagement
By Mark Frey and Phil Valvardi
F
rom the urban streets of New York City to the rural villages of Vietnam, consumer markets around the globe are expressing a demand to access mobile banking services in the same way they access everything else; on their smartphones. Over 85 per cent of Millennials in the United States have a smartphone glued to their hip, with the number continuing to grow as the cost of ownership comes down. Pew Research Center cites 64 per cent of American adults owned a smartphone in 2015, an increase from 58 per cent in 2014. The rising popularity of affordable smartphones has led to a digital disruption in the financial sector among many age groups across both developed and developing countries. EY expects the growth of smartphone shipments to double between 2014 and 2018 in emerging markets such as Indonesia, India and Russia. This digital shift is not only driven by necessity but also by the changing social values reflected in a maturing demographic with its own set of attitudes and behaviors towards the finance industry.
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The case for digitization can be seen already with Canadian banks where, despite weak economic growth, they have reported betterthan-expected quarterly profits due in part to their investment in mobile banking services. To leverage this momentum and mobile banking model, financial institutions must look toward digitization as a channel or face being left behind. Understanding the various customer markets, including Millennials who hold a valued market share, alongside collaborating with partner FinTech solutions can help financial institutions better serve their customers and reach new, underserved markets.
The Millennial factor: Skepticism driving change Millennials, who are sometimes viewed as a connected but skeptical demographic, are the largest generation comprising the workforce in Canada. How they choose to do business is influencing financial institutions to develop financial solutions that resonate with them. September/October 2016
Mobile Technology According to the Millennial Disruption Index, 53 per cent of Millennials do not feel their banks offer anything different than other banks, indicating that they see major banks as a homogenous entity with no discerning differentiators. Is it any wonder then that they believe innovation will come from outside the industry? Compared to the personal computing industry or the discount retail industry, banks are considered to face the highest risk for disruption in the eyes of Generation Y, with 33 per cent of them having the opinion that they won’t actually need a bank in five years’ time. The established reputations of the big banks do not hold much value for this cynical demographic.
According to the Millennial Disruption Index, 53 per cent of Millennials do not feel their banks offer anything different than other banks, indicating that they see major banks as a homogenous entity with no discerning differentiators. However, all is not gloom and doom, because this growing cynicism presents opportunities to better cater solutions to this younger, socially conscious group. Millennials, despite their mistrust of financial institutions, are influenced heavily by the power of their peers. The 2015 Millennial Impact Report on Cause, Influence and the Next Generation Workforce, shows that through their peers, Millennials can be engaged to action. Millennials’ almost innate use of social media means that peer group approval and the viral nature of word-of-mouth can go far further and have far more effect within this demographic than more traditional media channels, making socially conscious banking a real alternative model for hitherto underserved markets. For financial institutions, particularly those that are actively looking for solutions to expand their business in the retail sector, mobile financial services offer expansion opportunities without the bricksand-mortar and associated capital investment. Mobile financial services allow financial institutions to potentially access new markets and new customers without expanding their geographic footprint.
The rise of mobile in rural markets Developing economies, such as India or Vietnam, also show the same consumer appetite for mobile banking applications, albeit from altogether different cultural circumstances. In rural areas of the world, where trips to the city centre would not be a part of the daily routine, a portion of the community may never have had regular access to banking services. For rural families that have family members working as migrant workers, receiving money transfers September/October 2016
from their wages forms an invaluable and stable contribution to the family income. The World Bank reports remittances increased 0.4 per cent from $430 billion in 2014 to $431.6 billion in 2015. There is not only a desire to do things in a mobile fashion in emerging markets but it is also a case of pure necessity. There is a strong pull for mobile financial services in terms of growth from developed and developing markets that will influence how financial institutions think about the global marketplace. One of the issues surrounding mobile opportunities in emerging markets for financial institutions is the high cost of remittance services for migrant workers who send money home. On the individual level, what does receiving an extra $25 as a result of reduced banking fees mean in terms of available income for sustaining a family in an emerging market? It is a good chunk of money that goes a long way for migrant workers. For the individual user, receiving immediate payments through his or her smartphone and getting more of those funds through savings on money transfers is impactful. Financial institutions tapping into emerging markets from the mobile perspective have the ability to be resourceful with traditional fee structures in the digital space and to improve upon the nature of international peer-to-peer (P2P) transfers. Innovative solutions can offer up new opportunities for revenue streams to increase customer engagement with the brand and services of a financial institution.
Collaborate for competitive edge Financial institutions stand to gain from opportunities in mobile financial services with a social component. In terms of connecting users within a community of shared values, social banking models are an attractive strategy to attract and retain new markets. However, the digital ecosystem will be driven by bank collaborations with FinTech companies. Rather than competing, banks and FinTech companies can be potential partners in the financial services market, as well as in the payments space. Financial institutions and FinTech companies are embracing the symbiotic alliance for multiple reasons, as in working together the banks can respond more swiftly to the demands of changing customer expectations and FinTech companies can work within a regulated environment that allows for their solutions to have a high chance of success. Mark Frey is chief operating officer at Cambridge Global Payments. Mark is responsible for leading the company’s operational functions and ensuring the company achieves operational efficiencies to best position Cambridge for scalable business growth in the years ahead. In addition to his role as COO, he leads the organization’s Canadian sales team as the managing director of Canada. Phil Valvardi is chief financial officer and head of client relations for Meed. He is responsible for financial operations and account management across the company’s network of Member Banks and Corporate Members. Previously he served as the GM of the Prepaid Solutions business at Fiserv, CEO of Maverick Network Solutions and president of the MAC Network.
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Mobile Technology
The present and future of digital ID&V By David Poole
I
dentity and verification (ID&V) have taken on an increasingly critical role in consumers’ day-to-day lives. Identification systems use a trusted ledger, process or token to identify a person or entity; whereas verification aims to answer the question “is this person who they say they are?” Both are familiar to all of us in our personal lives. From showing our passports when entering a country to showing proof of address and identity when applying for a financial product, it’s something we all do. All of these methods of identification and verification rely on the presentation of a physical document. And, of course, up until the digital commerce revolution, when the vast majority of transactions were carried out face to face, it was a tried and tested method that worked.
The challenge within the digital economy The internet has transformed the way we shop in ways we couldn’t have foreseen 15 years ago and it is bound to continue changing in years to come. With an estimated 1.61 billion online shoppers globally and £52.25 billion spent via e-commerce in the UK in 2015, the last decade and a half has seen e-commerce grow into a well-established payment channel for business and commerce. Mobile (i.e. unsecured touchscreen devices such as smartphones and tablets) is rapidly winning the race to become the dominant platform. The ability to shop and carry out transactions on the go is now something we almost take for granted. Yet, all this convenience has come at a cost and that cost is the challenge of security and managing ID&V online. Digital transactions all require ID&V to a greater or lesser extent. Online shopping often requires a password and email address; while financial products, bound by a need to comply with knowyour-customer and anti-money laundering legislation, require much greater levels of ID&V. The problem is that ID&V is more challenging for remote transactions due to a lack of face-to-face interaction.
ID&V in the digital age It is true that remote ID&V is nothing new. Consumers have carried out transactions by mail or telephone (MOTO) for decades; however, these all relied on forms of ID&V such as address and date of birth. As such information is now readily available online, they can no longer be considered sufficiently robust to keep personal data (and money) 14
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safe. This has driven a need to develop and accept new methods of ID&V with both customers and businesses having to adapt to the new business realities. The most obvious of these is the password, which comes with its own drawbacks. Having to come up with a secure, eight-character password which includes a capital, a symbol and a number can be a challenge, especially if you can’t use the last five variations. This can contribute to a fundamental problem with digital ID&V— if it is time consuming and challenging then it significantly detracts from the very convenience digital commerce is supposed to provide.
Looking into the future There are a number of possibilities for future ID&V, all being currently trialled in some form or other. One of the biggest talking points is biometrics. Biometrics are, quite simply, using one or more human characteristics for ID&V. They are nothing really new in principle. After all, for over 100 years police forces have been using fingerprint ID to solve crimes. DNA profiling for crime fighting and other purposes is around 30 years old. Yet, biometrics are increasingly entering into the world of ID&V for everyday life. Anyone who owns an iPhone, for example, will be used to using a fingerprint to unlock it. And visitors to the U.S. will be familiar with providing fingerprint ID before being allowed to enter the country. A variety of methods of biometric-based authentication are currently being developed and tested although each has its own drawbacks as well as benefits: • Voice recognition: Voice recognition can verify someone in around 15 seconds, quicker than passwords. Yet questions remain about the accuracy of this method. What if someone is in a crowded room or restaurant? Could the technology cancel out the background noise? • Facial recognition: Also known as “selfie” authentication. For this to work, the lighting of the photograph will need to be of sufficient quality which isn’t always guaranteed. • Fingerprint recognition: It’s widely used, it’s trusted, it’s easy but it is not perfect. Fingerprints can be copied by fraudsters using easily obtained chemicals. If a fraudster has your phone and wants access to it, they can get it. One of the principal barriers to biometric adoption is trust. From September/October 2016
Mobile Technology dystopian science fiction to contemporary privacy concerns, willingly handing over biometric information to a company or government is not something that individuals will do lightly. There was positive news around this recently, though, when a survey showed that far more UK consumers (60 per cent) would trust a bank with their biometric data than the government (33 per cent). So, perhaps, this obstacle can be overcome. This still leaves the critical issue that biometrics are not, alone, enough for a completely secure ID&V process. Even returning to the experiences of travellers at U.S. Immigration—they still have to produce their passport along with their fingerprints.
Machine learning Machine learning is a branch of artificial intelligence study that concentrates on induction algorithms and on other algorithms that can be said to “learn.” As a discipline with a wide variety of applications in the digital world, it has considerable possibilities in the world of authentication. Taking the use of mobile as an example, each of us have our own individual quirks in how we use a mobile device. We will hold it in a certain way, we will enter key strokes in a particular way, we will have certain and unique ways in which we interact with specific apps. All of these can be “learned” by a mobile device which can
then tell if the person using the device is the same person who should be using it. Of course, machine learning, like biometrics, is not enough on its own. A password or PIN code still has to be entered for the device to know if it has been entered in the way it has come to recognize.
Passwords and PIN—a collaborative strategy Security works best when it is a combination of something you are (e.g. biometrics or machine learning), something you know (e.g. PIN or password) and something you have (e.g. your mobile device). Despite the undoubted progress being made with machine learning and biometrics they are still insufficient on their own and are unlikely to be in the foreseeable future. This means that there is still a critical role to be played with the password or PIN. The future won’t cease to amaze us. It will undoubtedly bring further possibilities and new developments that will shake the landscape for years to come. Nonetheless, fundamentally, the entry of something that only the user knows will remain at the heart of ID&V until a huge leap forward is seen, either in biometrics, machine learning or new technologies. David Poole is head of growth at MYPINPAD.
Securing Mobile Life. Creating Confidence. Giesecke & Devrient offers a comprehensive range of secure payment products and solutions based on the latest EMV, Mobile and Cloud technologies. The G&D solutions portfolio includes state-of-the-art operating systems for secure elements and payment applications for m-commerce and transit. G&D provides personalization services, system integration, project management and technical consulting from a single trusted source. www.gi-de.ca
September/October 2016
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Feature
Redefining top-ofwallet customers
A better way for issuers to identify their best and most profitable customers to target for marketing investment By Jason Wang
I
n many economies, credit cards are a common payment method that consumers use frequently—some even use cards for everyday activities like buying coffee or lunch rather than cash or debit cards. Consumers prefer this payment method for its convenience and security, and many cards also offer insurance protection and rewards programs. In fact, as of June 2016, 59 per cent of Canadian card holders have more than one credit card and, on average, those with more than one card have 3.3 open cards. The card industry is competitive; an important part of a card issuer’s strategy is to build loyalty and to be the consumer’s ‘top-ofwallet’ card—their primary go-to card for spend activity. Increasing the share of their cardholders’ spend, achieving the top-of-wallet position and growing their share of spend among cardholders are key goals for issuers. At the same time, profitability pressures require that issuers must be strategic about which customers they target for increased spend and wallet share in order to ensure a strong ROI on their marketing investment. Compounding the challenges that card issuers face is the incomplete view of a cardholder’s “off-us” activity—activity on cards issued by their competitors, which can obscure a clear view of which consumers are the best targets for higher marketing investment dollars. Traditional card marketing approaches look to identify consumers with significant off-us spend and to target those with the highest available spend to capture for the highest investment levels. These traditional approaches typically look at two metrics: total “on-us” spend on the issuer’s own card and the percentage of spend on the top card in wallet. By using these tools, issuers can estimate the level of available spend to capture and invest marketing dollars accordingly: high marketing investment on consumers with high offus spend, lower investment on cardholders with moderate potential and no investment on low-potential cardholders. 16
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Recently, credit data platforms have been enriched to enable more holistic views about consumers. Consumer credit files are no longer a snapshot view of one single point in time; rather, the files contain trended data that provide a 24-month history, potentially minimizing the seasonality bias in analytics. Furthermore, the files now contain a broader range of data points, including consumer payment amounts, spend amounts and how much of the spend is carried to the next month (‘revolving balance’) and how much is paid in full by the required payment date (‘transacting balance’). With these recent advances in credit bureau data and better insights into a consumers’ activities, the question arises whether there is a better way to identify the best and most profitable customers to target for marketing investment. To answer this question, TransUnion conducted a study of Canadian cardholders using both a traditional marketing approach as well as a redefined approach that leverages advanced consumer credit data. The universe that we analyzed consisted of the depersonalized files of consumers who had more than one card in the 12-month window from July 2014 through
Four segments defined by wallet-share
Percentage of spend on the top card
Number of consumers (in millions)
Average number of cards per consumer
Loyalist
100%
1.9
2.7
Premier
70% – 99%
2.7
3.6
Shopper
50% – 69%
1.0
3.9
Diversifier
49% or less
2.3
4.3
September/October 2016
Feature June 2015. We applied additional criteria to limit the universe to consumers who were not delinquent on any of the cards as of June 2015, who had at least one dollar in spend over that period and whose credit scores were Prime or better. This universe contained approximately eight million consumers. Depending on how much spend they put on their top card, these consumers were segmented into four categories, outlined in the accompanying "Four segments defined by wallet-share" chart.
The traditional approach Traditionally, issuers try to identify consumers with high card spend and target those consumers with significant “off-us” spend for marketing campaigns focused on capturing more spend onto the issuer’s card. These campaigns may include cash-back rewards offers for achieving spend thresholds; spend-and-get offers in certain spend categories; even perks like airport lounges or other benefits. The level of investment may vary as well between “aggressive” higher cost offers and “selective” lower cost offers. If you are a card issuer and if a cardholder is a loyalist to you, then there is no off-us spend to capture; your strategy will be to not invest but instead to retain or potentially cross-sell them. Therefore the wallet-share strategy discussion concerns the other three segments. A traditional top-of-wallet strategy grid might resemble the accompanying chart titled "Traditional marketing strategy is based on spend activity alone."
Marketing expenses using the traditional strategy
Marketing treatment
Marketing expense assumption (per consumer)
Number of consumers addressed (in millions)
Aggressive offers
$200
0.7
Selective offers
$125
4.5
No treatment
$0
0.8
Total
$117 (weighted average)
6.0
of three primary streams: fees, interchange and interest. Because fees are usually a very small component of overall revenue and are difficult to predict, we chose to leave fees out of the analysis. Interchange is the percentage of the transaction value that the merchant pays the issuer. Assuming an interchange rate of 1.5 per cent, the interchange revenue on $1,000 of spend is calculated as Interchange revenue = Spend × Interchange rate = $1,000 × 1.5 per cent = $15. Interest is incurred when a customer does not Traditional marketing strategy is based on spend activity alone pay the total balance in full by the required payment date. The balance that the customer carries to the Annual spend Diversifier Shopper Premier next billing cycle is called “revolving balance.” Although issuers vary in the revolving rate of their > $10,000 Aggressive offers Aggressive offers Selective offers own portfolios, the Canadian card industry has an average revolving rate of 34 per cent of total $1,001 – $10,000 Selective offers Selective offers Selective offers balances. Today, the majority of cards have an interest rate of 19.9 per cent, so the interest revenue ≤ $1,000 No treatment No treatment No treatment is calculated as Interest revenue = Spend × Revolving rate × Interest rate = $1,000 × 34 per cent × 19.9 per cent = $67.66. Assuming a card issuer is willing to offer $200 in enticements with As you can see, interest revenue has a direct relationship, not with an aggressive offer and $125 in enticements with a selective offer, the spend activity, but with the amount of that spend that revolves. the total marketable universe—after taking out the loyalists—will Therefore, the traditional approach overstates the importance be slightly more than six million and the average marketing expense of spend and does not consider the total revenue potential of a is $117 per cardholder (illustrated in the "Marketing expenses using consumer. Specifically, there is a significant difference in revenue the traditional strategy" chart). between consumers who carry a balance on their cards (“revolvers”) compared to those who pay their balance in full each month What is missing from the traditional approach (“transactors”). The traditional approach assumes that all card spend is equally The redefined approach attractive and that issuers should focus on those consumers with the This limitation of the traditional approach could be fixed by highest spend levels; however, consumers use and pay on their cards including revenue generated from revolving balances, as well as by very differently and these differences can cause the profitability of measuring rather than estimating total card spend. We constructed cardholders to vary widely. A redefined approach to capturing wallet a redefined cardholder segmentation approach based on gross share focuses on the profitability potential of cardholders and not just revenue potential that takes a more holistic view of a consumer’s spend levels. To do this, we need to first look at the economic model card usage—measuring not just total card spend, but also the level of cards. How do card issuers make money? Their revenue consists September/October 2016
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17
Feature of consumer card balances that are subject to finance changes. Therefore, the strategy grid replaces total annual spend with gross revenue generated from off-us spend AND revolving balances (as illustrated in the "Redefined marketing strategy is based on gross revenue opportunity" chart).
Redefined marketing strategy is based on gross revenue opportunity Gross revenue
Diversifier
> $225
Aggressive offers
Shopper
offer” or the “no treatment” segments. Our results indicate that issuers would be able to be far more efficient in how they allocate marketing dollars: spending aggressively on cardholders with high revenue potential, while minimizing or eliminating spend on cardholders with low incremental revenue potential. The same marketable universe now requires only $71 in average marketing expense, a 38 per cent improvement over the traditional approach (as illustrated in the "The redefined approach allocates marketing expenses more efficiently" chart).
Premier
The redefined approach allocates marketing expenses more efficiently Aggressive offers
Selective offers
$151 – $225
Selective offers
Selective offers
Selective offers
≤ $150
No treatment
No treatment
No treatment
If we had segmented the same universe of eight million anonymized consumers with this new grid, would we have achieved the revenue we were hoping for? Tracking these consumers’ actual activity over the subsequent 12 month period from July 2015 to June 2016—with regard to both spending and revolving—indicated that the redefined approach better aligns the marketing strategy with the potential revenue opportunity of the consumers (as illustrated in the "Observed cardholder revenue opportunity from July 2015 to June 2016" chart).
Marketing expense assumption (per consumer)
Number of consumers addressed under the traditional approach (in millions)
Number of consumers addressed under the redefined approach (in millions)
Aggressive offers
$200
0.7
1.7
Selective offers
$125
4.5
0.7
No treatment
$0
0.8
3.6
6.0
6.0
$117
$71
Marketing treatment
Total
Observed cardholder revenue opportunity from July 2015–June 2016
Traditional Strategy
Redefined Strategy Aggressive offers
Selective offers
No treatment
Aggressive offers
$408
$263
$203
Selective offers
$350
$229
$98
No treatment
$326
$169
$79
What this means to card issuers
Not only does the redefined strategy target consumers with an offer that is more appropriate based on revenue opportunities, but the new approach also brings efficiency into campaigns. Under the redefined strategy, far fewer consumers would receive selective offers, with these consumers moving into either the “aggressive 18
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Weighted average marketing expense
The redefined approach could bring forth a significant and measurable impact on profits. The new segmentation allows card issuers to more consistently align offers with true revenue potential and at the same time enables marketing expense savings. This should be especially compelling for issuers who feel their margins are being suppressed by the fierce competition for spend activity. For fullservice banks or financial institutions with multiple lines of business, the new approach could also provide insights into identifying crossselling opportunities. Jason Wang is the director of research and consulting for TransUnion, where he is responsible for leading research projects and industry analysis in Canada. Prior to joining TransUnion, Wang held management roles at American Express, CIBC and Citigroup. Jason received his MBA from New York University and his Bachelor degree in Physics from Peking University. He is a CFA charter holder.
September/October 2016
2016 Industry Events
April April 5-7 Smart Card Alliance 9th Annual Payments Summit Orlando, FL www.smartcardalliance.org April 6-7 9th Annual Prepaid & Payments Retreat Toronto, ON www.paymentseXchange.ca April 6-7 Payments Awards 2016 Toronto, ON www.paymentseXchange.ca April 11-14 NAPCP Commercial Card and Payment Conference Orlando, FL www.napcp.org April 17-19 NACHA, The Electronic Payments Association, Payments 2016 Columbus, OH www.nacha.org April 19-21 Electronic Transactions Association 2016 ETA Annual Meeting & Expo Las Vegas, NV www.electran.org April 27-29 NBPCA Annual Congress-The Power of Prepaid 2016 Washington, DC www.nbpca.com April 28-30 Central 1 Credit Union Central Conference Toronto, ON www.central1.com
MAY
May 12-13 FC Business Intelligence Analytics for Insurance Canada Summit Toronto, ON www.analytics-for-insurance. com/canada/ May 16-17 WB Research eTail Canada 2016 Toronto, ON www.wbresearch.com May 17-20 IFO Fusion 2016 Forum & Expo Reno, NV www.financialops.org May 31 - June 2 Credit Scoring & Risk Strategy Association 22nd Annual Conference Muskoka, ON (TBD) www.csrsa.org
June June 7-10 Internet Retailer IRC&Exhibition 2016 Chicago, IL www.internetretailer.com June 8-10 FEI Canada Annual Conference Montreal, QC www.feicanada.org June 14-15 ACT Canada Cardware 2016 Niagara Falls, ON www.actcda.com June 15-17 Canadian Payments Association Payments Panorama Calgary, AB www.paymentspanorama.com
May 5-7 Cartes North America 2016 Washington, DC www.cartes-america.com
June 17-18 ATMIA Canada Annual Canadian Conference 2016 Toronto, ON www.atmiaconferences.com
May 10-11 Finovate Spring Conference San Jose, CA www.finovate.com
June (TBD) NBPCA Annual Congress-The Power of Prepaid 2016
National Harbor, MD (TBD) www.nbpca.com June (TBD) EMV User Meeting 2016 EMVCo Kuala Lumpur, ML (TBD) www.emvco.com
July July 31 - August 3 Retail Solutions Providers Association RetailNOW 2016 Orlando, FL www.gorspa.org
August August 9-10 The Prepaid Press Expo Las Vegas, NV www.prepaidpressexpo.com August 29-31 Mobile Payments Conference Chicago, IL mobilepaymentconference.com
September
PAYMENTSBUSINESS
October 4-6 Smart Card Alliance Members Meeting Phoenix, AZ www.smartcardalliance.org October 13 Smart Card Alliance NFC Solutions Summit 2016 Phoenix, AZ www.smartcardalliance.org October 15-17 Canadian Automatic Merchandising Association CAMA Expo 2016 Victoria, B.C. www.vending-cama.com October 13-15 BAI BAI Retail Delivery Conference 2016 Las Vegas, NV www.BAI.org October 17 NAC Conference & Expo Orlando, FL www.natmc.org
September 14-15 WSAA Annual Conference Scottsdale, AZ www.westernstatesacquirers.com
October 19-21 ETA Strategic Leadership Forum Palm Beach, FL www.natmc.org
September 20 Women in Payments™ Symposium & Women in Payments™ Awards Toronto, ON www.womeninpayments.ca
October 23-26 Association of Financial Professionals AFP Annual Conference 2016 Orlando, FL www.afponline.org
September 25-27 American Bankers Association Marketing & Retail Conference Nashville, TN www.aba.com/HiX
October 23-26 Money20/20 Las Vegas, NV www.money2020.com
September 26-29 Sibos Annual Conference 2016 Geneva, Switzerland www.sibos.com September 29 Tomorrow‘s Transactions Unconference Toronto, ON www.chyp.com/thought-leaders/ unconferences
Visit us online www.paymentsbusiness.ca 20
October
September/October 2016
November November 29 - December 1 Trustech CARTES & Identification Exhibition 2016 Cannes, FR www.cartes.com
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September/October 2016
PAYMENTSBUSINESS
21
REsolutions
Never miss out on a sale Cathy Vigrass is head of Canada at Square.
B
usinesses large and small never want to miss out on a sale. In 2009, Jim McKelvey was operating a glass-blowing business and lost out on a sale because he was unable to accept credit cards. You may know the story: out of that experience McKelvey and Jack Dorsey founded Square, in many ways launching mobile payments to the mainstream. Seven years later, mobile payments and point-ofsale (mPOS) are popular with millions of businesses of all sizes. Businesses take mPOS seriously, precisely because they never want to miss out on a sale. While small and large businesses can each relate to that sentiment, how they benefit from mPOS differs. Let’s consider both ends of the business spectrum to understand this more clearly. Historically, many small businesses struggled to accept card payments because the process to do so was too costly and too difficult. With their lengthy contracts, expensive fees and complicated set-ups, point-of-sale (POS) tools were traditionally suited for large businesses. mPOS like Square appeal to small businesses because they make it easy to accept card payments. With an affordable card reader, quick app download and the smartphone or tablet they already own, businesses can be up and running in five minutes, accepting cards at a low, transparent rate with fast access to funds. Small businesses benefit just by accepting card payments. Sales increase as customers spend more when they are not constrained 22
PAYMENTSBUSINESS
by cash on hand. Card payments are frequently incremental transactions that would not have taken place without a mPOS. Customers also appreciate a business that allows them the flexibility to pay in the manner they want. Happier customers are more loyal customers. Small businesses also benefit from access to value-added features, like real-time analytics, available for the first time with mPOS like Square. Analytics give sellers access to sales trends, buyer insights, helpful charts and personalized data to help run operations efficiently and make important business decisions. For example, sellers can surface key insights such as “Which items have been selling the best over the last month?” or “How many of my customers are new versus returning?” without requiring spreadsheets or complicated tools. With mPOS, small businesses finally get access to tools that allow them to compete as efficiently and intelligently as their larger counterparts. Large sellers also use mPOS to transform their customer experience in unique ways. On the sales floor, mPOS improves oneon-one customer interaction: an associate with an mPOS device can focus on helping the customer and then accept payment anywhere the customer happens to be in the store. mPOS also transforms the checkout process by making it easy for stores to linebust. Having mPOS devices available reduces checking-out queues and cart abandonment
significantly. Speed is key for both the seller and the customer: customers want to pay for their items quickly and get on with their day, while for sellers, line-busting increases the number of customers served, improving operational efficiency and driving revenue. This is especially important during peak store hours and seasonal shopping dates that see major spikes in footfall. Large sellers can also leverage mPOS to great effect to enable innovative retail formats such as pop-up locations. Traditionally, taking card payments outside their brick and mortar stores was a headache for retailers, especially in locations without electricity or a fixed internet connection; the only option was to transport a heavy, cumbersome register or to go cash only. Now mPOS offers a lightweight, easy (but powerful) way to take payments. Smartphones and tablets using mPOS can be used unplugged and can even accept payments in offline mode as needed to overcome WiFi issues. Pop-up locations provide an exceptional customer experience that mPOS helps to deliver. mPOS ultimately offers large and small businesses greater flexibility, efficiency and value. Just as mPOS has leveled the playing field for small businesses, the line between mPOS and POS is beginning to blur for large sellers. The ability to make a sale anytime, anywhere with anyone is becoming a reality.
September/October 2016
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