Q3 2020
FINTECH MAGAZINE By payments people. For payments people.
THIS ISSUE: Payments & Politics
CONTEN Contents 6
The Payment Solution For Online Marketplaces & Platforms
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Digital Payments Coming Into Their Own 2 PaymentGenes Q3 2020
NTS
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Payments & Politics
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In the Recruitment Spotlight Melvin Dom from
33 TOP JOBS A Champion for Change: Laurence Cooke
A selection of jobs in payments & FinTech by PaymentGenes.
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PaymentGenes is launching Voices in Payments. A Podcast Series covering The Future of Payments.
COMING SOON
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FOREWORD Dear readers, The past months have proven that due to the high-tech nature of the FinTech industry, the transition to remote work and complete digitalization was fairly frictionless. This “rollercoaster” is far from being over, but being agile and future-oriented is key in working towards a bright future in FinTech. This edition of the FinTech Magazine will focus on the companies that have their eyes focused on the future. To kick-off, our soon to be launched podcast series “Voices In Payments”, in which we cover key-industry experts perspective on the Future of Payments in their specific vertical and how this translates to other industry developments. Payaut with essential information for Marketplaces & Platforms how to be ready for the near-future with PSD2 at scale and active. Read the Interview done with Ernst van Niekerk, CEO & Co-founder, and Pieter De Haas, CCO at Payaut.
If you are curious how the advanced Biometric Face Verification Payment Method has been faring off in their high-growth startup phase, and how they are planning to change the industry for good, have a look at the PayByFace article. That 2020 has been a challenge for many sectors, businesses and consumers is not a secret anymore, how this is going to change the world? Read the article by Jukka Yliuntinen, Head of Digital Solutions, G+D to find out his view on the future of digital payments. Furthermore, this edition covers Payments & Politics, Melvin Dom, Head of Corporate Sales at Buckaroo tells about his experience with PaymentGenes, an article in collaboration with PayTechs of Canada, and the best job opportunities in Payments & FinTech. Jamyl Jonker Marketing Manager & Partnerships
Email: info@paymentgenes.com
Website: www.paymentgenes.com
Address: Generaal Vatterstraat 82 Telephone: +31 20 2444826 1059 BW Amsterdam The Netherlands
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THE PAYMENT SOLUTION FOR ONLINE MARKETPLACES & PLATFORMS
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Online-Marketplaces are booming. This article covers essential information on developments in the Payments industry, that are relevant for every Marketplace in 2020. What should market places focus on? These days marketplaces have a huge share in online business. At the same time marketplaces have challenges keeping up with changing regulations, and scaling up their operations. We believe that they should focus on their core business to be successful over time. Sometimes we notice that there is a lack of focus on what matters. For example, payments can be very important, but they are, in most cases, not part of the core business and more importantly, very time-consuming. How to attract more sellers and buyers to your platform is a key challenge for most of the marketplaces. What we see is that because of regulations and lots of manual processes in payments, the marketplaces spent too much time on that versus core business opportunities.
PSD2 is an important regulation that has a huge impact on marketplaces. The Dutch National Bank -DNBis also enforcing these regulations, chasing marketplaces who are in the money flow, and demand them to apply for a payment license or another solution. We see a lot of the marketplaces ignore these signs and continue doing business as usual but it’s a matter of time before DNB will come to them. It’s time to act. On top of that, platforms should be ready for the future. Automating manual processes is part of this journey and the key to success is how easy they can scale their business. Where is Payaut positioned in the money flow from a Marketplace to a PSP? Payaut is positioned between the PSP and the sellers on the marketplace. Normally the PSP settles funds to the platform (in the money flow), but with Payaut the funds are settled to our Foundation bank account. We receive funds from one or multiple PSP’s depending on the setup of the platform. Based on the instruction we get from the platform we pay out to the seller and the platform itself.
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How does this benefit a Marketplace? With Payaut, the marketplace is out of the money flow and compliant under PSD2 regulations. Payaut is also automating the whole seller onboarding and payout process which saves time and costs. On top of that, the platform remains flexible to choose their pay-in structure, now and in the future. Let me explain you a bit more about this flexibility. There are still many payment service providers that are not offering a marketplace payment solution. Platforms that are using the services of one of these PSP’s have two options to become compliant under PSD2: 1) they need to integrate with another PSP with a marketplace product, or 2) request a Payment Institution License (PIL). Moving to a new PSP is a very time consuming and costly exercise and requesting a PIL is for most of the platforms not realistic. For those platforms, Payaut can be a pragmatic solution to become compliant. Flexibility for those platforms means they can keep their payment integration as it is. Then there are also platforms using multiple payment service providers. For those platforms, flexibility means 8 PaymentGenes Q3 2020
they can keep this multi PSP setup as it is. Especially for big successful international platforms, this is very common. As no single PSP has the perfect global solution, they leverage the strengths of a combination of providers to offer the best payment product against the lowest costs. For those platforms, working with Payaut means they can maintain the current PSP setup and remain flexible in the future to continue optimizing their Pay-In structure. What are the most important implications for marketplaces since PSD2? PSD2 means for marketplaces that they can only be IN the money flow of a transaction between a buyer and
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seller, if they have a Payment Institution License. If they choose not to apply for this license, moving out of the money flow is the way to move forward. How do you see the future of Marketplaces develop over the years? Marketplaces are leading global eCommerce growth and this growth will continue over the coming years. It could be that some of the smaller marketplaces will merge and that there might be a place for only a couple of giants, but we also see plenty of room for niche marketplaces who have a very specific focus. Take a look at Barqo, one of our clients who are boat sharing. It’s the community effect driving the long term success of these specialized marketplaces.
With Payaut, the marketplace is out of the money flow and compliant under PSD2 regulations. PaymentGenes Q3 2020 9
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Why is a good KYC & onboarding experience of utmost importance for buyers and sellers on a marketplace? KYC checks and similar processes are always a key barrier for purchases, driving conversion down. If a seller has a bad experience doing the KYC check, it could be that he never completes the onboarding process. Having a good experience and process in place will lead to more sellers on the platform, ultimately driving the success of the platform.
The role of PayAut in Payments
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What is Payaut in brief and how did the Payaut idea get started?
primarily engineers with a strong background in payments.
Payaut is an online payment solution for marketplaces providing 3 services: 1) Onboarding & verification of sellers 2) Split payments 3) Payout to the sellers. Ernst, our CEO, built a similar product for Adyen and decided there was still a huge opportunity to launch a similar product but decoupled from a PSP. So he took the chance, found a co-founder and funding, today we work with 8 colleagues on the product,
How do you envision Payaut services being used in the coming 2-3 years? Our mission is to connect more sellers and buyers at online platforms, we enable growth for platforms, not only in NL. At the end of the year, we will be ready to process across Europe. The plan is that we add at least 10 more platforms in 2020, and then in 2021 we are ready to add some of the larger leading international platforms. â–ˆ
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Partner Feature
ÂŽ A Seamless, Biometric & Secured Face Recognition Payments Ecosystem For A Faster and More Convenient Shopping Experience
Every second of queuing is a lost revenue opportunity, of millions $ for the global retail industry only, while banking industry is shifting into a growing presence of both alternative “digital banks� and personalised financial products from tech companies. The world moves faster and people traveling either short or long distances shape the way the transport & hospitality companies adapt to a simplified, faster and secured reality. COVID-19 pandemic has shaken the established economic world to its core, some businesses were on the verge of bankruptcy, while many are struggling to regain customers loyalty in a safe social distance, particularly during the check-out process. With consumers having even higher expectations, brand strategies are critical post-crisis, in the way businesses start to interact with clients to both re-build trust and address behaviour shifts. 12 PaymentGenes Q3 2020
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eveloped for over two years, PayByFace® strives to enable global movement towards a cashless & cardless society using face as a highly secured virtual card. PayByFace® becomes even more relevant in the Covid-19 context, enabling brick & mortar businesses to offer a more convenient, intuitive and personal in-store digital experience as a significant customer satisfaction and loyalty differentiator for revenue growth.
remains the corporate responsibility towards consumers data privacy, while also differentiating biometric payments to most immediately mental relatable model of mass-surveillance. As the 4th layer to existing payment methods, “touchless” biometrics have to establish as fully end-user centric by providing security, privacy and convenience. Customers owning an eWallet account either in the PayByFace® App or in a branded native integrated white label App can benefit of making purchases with a selfie across the partners network, without cash, card or phone. PayByFace® was designed to make user in full control of the payment process and their personal data; the system converts the selfie into an encrypted biometric face template distributed only to PayByFace® network devices in the near user area (data follows the user and its instructions).
As July 2020, PayByFace® is an Amsterdam based B2B2C fintech start-up company to create a seamless, faster and secured biometric face recognition low-touch payment, loyalty and advertising ecosystem. PayByFace® platform agnostic software, its plug&play SDK or full white label solution, are designed to “uberise” & “gamify” payments; a more convenient “on-line like” check-out process, extending the interaction beyond the transaction. Click to see how PayByFace® works! Biometric payment is a growing trend, exploding in Asia with over 100 million users today. Nevertheless,
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Paying with your face is not only faster and more convenient, but has enhanced security vs traditional payments. PayByFace® ultra-scalable on-demand decentralized architecture has 3 cross-check points for authentication & transaction security validation: high accuracy for biometric face recognition, user geolocation preset distribution area and extra security optional PIN (additional unique features have been included in the product roadmap). Cloned card, stolen wallet, lost or no battery phone, would no longer frustrate any PayByFace customers. Any business partners can implement a cost-effective / cost-cutting, still frictionless, check-in/check-out process. Biometric KYC PayByFace® unique on-demand decentralizes templates facilitates customer authentification in less than 1 sec (less than 5sec average transaction vs 10 to 15sec of NFC or tap phone). Either in-store or a bank branch, client acknowledgement, payment transactions acceptance, loyalty points attribution at point of sale (including ATMs) can be simply done allowing end-user client to both face authenticate in front of any 2D camera enabled device (iPad, phone, smart mobile POS, etc) and to “touchless” approve the transaction. 14 PaymentGenes Q3 2020
PayByFace® also facilitates a face recognition-based loyalty program enrolment, while customers won’t ever miss out loyalty points attribution (because they forgot the loyalty card at home). Additionally, loyalty programs, represent an extremely valuable tool for quality data so as the retailer – customer interaction becomes more personalized (also, faster check-out, more time to be personal). The intrinsic gamification potential, conjunctively with the described key features, does provide a significant improvement for the in-store experience securing a higher customer engagement and loyalty level.
PayByFace® Mobile POS
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Incorporating proprietary CRM software and out-of-home digital signage content management network at point-of-sale (personalised cross-sell, up-sell and gamification), PayByFace® is able to fast deliver an affordable merchant solution for a robust customer check-out experience and influence re-building long term loyalty through a unique and superior platform. █
Sophie Geertzen Startupbootcamp Amsterdam
PayByFace® at Startupbootcamp End June 2020, PayByFace® graduated Startupbootcamp Amsterdam Commerce Program 2020, the leading global accelerator scale-up in the field of commerce and technology, being one of the leading startups in the eight international startups participating, and almost 400 applications. The four months intensive program “has helped PayByFace® better frame product offering, facilitating the communication of the core values of its unique facial recognition payment system to both potential customers and investors”, says Mike Draghici, CEO & Founder. The learnings and network of investors & businesses from both SBC program and Visa Innovation Program ( joint in March’20), opened pilot project opportunities with large European banks, a major retailer chain in Middle East, a transport company and merchants in the Netherlands and CEE. The team is excited to scale PayByFace® across multi-industry global accounts use-case projects and to work in the post-COVID-19 context with the ten country-based distributor partners, to serve more coffee-shops, pharmacies, gyms, restaurants, hotels & spas, gas-stations, etc. PaymentGenes Q3 2020 15
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Feature by
DIGITAL PAYMENTS COMING INTO THEIR OWN 16 PaymentGenes Q3 2020
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It’s something of an understatement to say that 2020 has been a challenge for many sectors, with businesses and consumers discovering new ways of living, working, socializing and operating. As part of the new normal of physical distancing, and in just a few months, COVID-19 has changed the world as profoundly as any war or environmental disaster. So whenever “normal life” resumes it won’t be the “normal” we remember – and that includes the way we pay for goods and services. In this piece Jukka Yliuntinen, Head of Digital Solutions at Giesecke+Devrient (G+D), gives his view on the future of Digital Payments. Since the outbreak of the pandemic, governments have introduced social distancing measures that favor the use of digital payments and mobile wallets. Millions of people who have never used a mobile payment app before are now doing so. Meanwhile, a tsunami of new customers has flooded onto e-commerce sites. A report recently published by McKinsey states that the growth of online commerce has accelerated and will continue to do so, especially as markets, such as those in Southern Europe, close the gap with more advanced Northern European or Anglo-Saxon economies and China. Some smaller retailers forced to close in the crisis may not reopen physically but seek a digital future instead. The rapid build-out
Jukka Yliuntinen Head of Digital Solutions, G+D
Subscribe to our BrightTALK channel for the latest insights in Payments. On the 29th of July we talk about “ Delegated authentication: simplifying the e-commerce checkout process”. Get your seat here!
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Partner Feature
of omnichannel capabilities – which will bridge payments in any environment, physical or digital – will become an essential requirement for all payment players in most geographies.
IN OTHER WORDS, THE FUTURE OF PAYMENTS MAY FINALLY HAVE ARRIVED – ALBEIT NOT
raised in many countries, which means customers can do bigger shops or buy higher value items without having to resort to PIN authentication.
In June we launched a solution for utilizing EMV cards for Secure Customer Authentication, Convego®tap. How its done? Check this out!
IN THE WAY MOST OF US WOULD WANT OR EXPECT. On the e-commerce side, we should see greater adoption of the kind of “one-click” payment solutions pioneered by Amazon. For example, American Express, Discover, Mastercard and Visa Implement recently launched a “Click to Pay” solution for US merchants, which allows consumers to make purchases without having to create or log in to an account. When customers make in-store purchases, health and safety concerns mean more of them are using contactless technologies, which allow them to avoid touching a keypad or terminal screen. Maximum spending limits have been 18 PaymentGenes Q3 2020
Furthermore, customers that pay with their smartphone or wearable device can authorize purchases that exceed security limits from within their mobile payment app rather than on the merchant’s keypad – an appealing prospect in these social-distancing times. Although mobile payment apps are popular in China and other Southeast Asian countries ( just under half of in-store purchases in China are now made with one), European and US consumers have proved somewhat reluctant to use their mobile devices for payment – something that may change as more customers seek to alternatives to physical payment methods due to COVID-19. In fact, Dan Schulman, CEO of PayPal, recently stated that there has been a
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“tremendous surge” in demand for his company’s digital payment services – including its US-based Venmo digital payment app. “Based on the industry intel we get at the moment, we see great opportunities in Banks capitalizing on this trend”, says Jukka. “With our Convego CloudPay Hub we facilitate the easy implementation, management and integration of devices agnostic digital payment solutions.” Jukka continues, “But the Banks will need to move fast though, as Big Tech already has a head start in this space.”
Get the facts, download our case study on how we do it!
These firms are in a strong position because they get to say how their devices and services are designed to make and protect a payment. They can impact the user experience much better than anyone else. Jukka continues, “Adding that they also have access to a vast amount of data on their customers’ devices, preferences and spending habits, giving them further opportunity to deliver finely-tuned customer experiences.” Of course, regardless platform or vendor, all these payment solutions will need to demonstrate they are secure and reliable to win over consumers in a post-COVID-19 world.
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At the same time, they also need to be as frictionless as possible to deliver the kind of speed and convenience that consumers now expect. So how can businesses strike the right balance? “Well, firstly it’s worth saying that frictionless and secure aren’t mutually exclusive terms. With the right technologies in place, retailers, banks and other firms that receive or provide payments can protect people (and themselves) from fraud while offering their customers a quick and efficient payment journey.”
The solution?
to initiate or authorize a payment, are arguably the endpoint of many of these payment trends”, says Jukka. “Amazon Go stores, for instance, allow customers to walk in, choose their items, and walk out again without ever having to physically make a payment. It’s all down to beacons and computer vision that detect when items are removed from the shelves; when the customer exits the store, the items are automatically charged to their Amazon account.”
At G+D we enable OEMs, banks and Merchants secure payment. Check out what we are doing in the e-commerce space!
Tokenization, which safeguards sensitive data by replacing it with a non-sensitive equivalent (i.e. a unique string of numbers), is one means of achieving this.
This kind of secured frictionless payment tap into the fact that customer experience is one of the key differentiators when it comes to payments innovation. “Invisible payments, which completely remove the need for the consumer 20 PaymentGenes Q3 2020
Invisible payments might be scaring by the sound and creates skepticism over consumer adoption. But it’s certainly true that many people are currently trying new forms of digital payment, which they may well continue to use once the crisis is over. Indeed, despite the current financial uncertainty, the McKinsey report notes that “the [payment] industry’s stability will play an invaluable role in rebooting the global economy, and the potential for innovation can support functioning economies as a “new normal” emerges.”
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So after years of promise the payments industry may finally be on the fast-track to the future of digital payments. “Here G+D is working proactively with the industry to set standards and secure transparency in the entire payment value chain, so that payments not only are secure, they are securing the customer too”, says Jukka. “To round it up, we are offering options and enabling new ways to pay. █
About Jukka Yliuntinen Jukka Yliuntinen, Head of Digital Solutions at Giesecke+Devrient, is well versed in identifying and delivering high performing, innovative, and business generating payment solutions for the industry, leveraging on his over 20 years’ experience in payment and identity technologies. Jukka is also driving industry initiatives within the Mobey Forum, where he is co-chairing their Digital Identity Expert Group. And as an expert in his field, he is continuously contributing to papers as well as giving keynotes on numerous conferences world-wide on digital payment and identification topics.
About Giesecke+Devrient: G+D technology is unconsciously used by billions of people every day! With more than 700 global Banks putting their trust in G+D and our offerings, we enable secure and convenient transactions for everyday usage. Our safe payments technology, elegantly combined with smooth customer experiences throughout the whole customer journey, secures the daily life use of financial services. And also creates customer obsession for our clients!
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Report
PAYMENTS & POLITICS Payments have always been of significant importance, but recent moves seem to have put an additional emphasis on how payments are being “used”.
BRAZIL Only a few days after WhatsApp announced WhatsApp Pay in Brazil, the government suspended the rollout to “preserve an adequate competitive environment.” This decision is fuelled with underlaying political agendas, as the exclusion of WhatsApp will mean a monopoly for Brazil’s local P2P payment method, PIX.
INDIA India and China have had rising tension along the disputed Himalayan border in June 2020, this eventually led to India banning 59 Chinese apps including WeChat Pay. The accusations against China include “stealing and surreptitiously transmitting users’ data in an unauthorised manner to servers which have locations outside India.” India’s Ministry of Electronics and Information Technology said in a statement.
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HUAWEI Huawei Pay is set to launch in Europe later this year. However, currently Huawei is caught up in a heavy turmoil of international political allegations surrounding data security concerns and alleged theft of intellectual property. Out of the earlier mentioned examples, Huawei is attempting to navigate through the most clear political “heavy weather”, limiting their abilities to set foot in Europe. Consequently meaning that their Payment Method will not remain unharmed in Europe.
These three seemingly separate moves in Payments are part of a bigger picture that one way or the other leads to the politicization of payments. Going back to what effects this ‘political battle’ has on Payments & FinTech, we see this going two-ways: 1. Further escalation resulting in a “segregated” payments market with only regional players. 2. A de-escalation as a result of increased transparency with no further negative effects on payments.
In our video series “All About Payments” we provide our perspective on the most interesting Payments News and connect the dots between the latest moves in the Payments Industry. Check out our LinkedIn & Youtube every Monday for a new “All About Payments” news video. █
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Interview
MELVIN DOM Head of Corporate Sales, Buckaroo
In brief, what did your career look like before PaymentGenes approached you? Before PaymentGenes approached me, I was working in the banking/ insurance industry heading several teams. I used to focus on coaching, (financial) targets, and building (new) sales-driven teams. How did PaymentGenes (Michael & Jan Joost) originally approach you? I was approached by PaymentGenes via a former team-member (Ryan In ‘t Veld). I was working for SNS Reaal when he contacted me and told me PaymentGenes was looking for a manager. I then met Jan Joost Kallf and Michael Tailleur at the PaymentGenes office in Amsterdam where they introduced me to the payments 24 PaymentGenes Q3 2020
industry and explained the role of Head of Sales Business clients at EMS. This eventually resulted in the introduction to a role at EMS, can you give some more insights from initial contact to being hired (and after)? Two words immediately come to mind: fast pace! It took less than 1,5 weeks from the first contact to a signed contract with favorable conditions. Both Michael and EMS did their utmost best to close the deal. This meant several phone calls per day, even late in the evening. What I truly appreciate was the genuine interest in me. Michael called me several times to make sure that the match was indeed a match. When I left EMS, I always remained in touch with PaymentGenes. When I was in need for good people, I always contact them.
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How did your career path look like within EMS? Head of Sales Business Clients | Being new in the industry, it was a challenge to both built a sales-driven team and gain knowledge about the market and products. Luckily, I had a lot of helpful colleagues and management that gave me time to adjust and to build a successful team, and their trust paid out! Sales Business Clients became a balanced and top team, and personally resulted in a promotion to Head of the Relationship Management team. Head of Corporate Relationship Management | I was responsible for
the sales strategy and commercial results such as, churn and increasing the share of wallet of existing Corporate Merchants, supporting the account management of the larger accounts, optimizing processes within the teams/other departments, and dealing with DMU’s. Head of Corporate Sales | I was responsible for developing, coaching, and managing the international corporate sales team, coordinating and leading the sales/marketing campaigns and implementation of new products into the market, supporting the sales management of corporate merchants, responsible for the sales strategy and commercial results.
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Interview
“Because of the pandemic, the job description and reality differ substantially.”
After the Head of Corporate Sales, you pursued a new opportunity as Sales Director, walk us through the differences in position between EMS and Pay.nl. The former CEO of EMS offered me the role of sales director and I felt that it was my time to leave EMS, leaving a great team and colleagues behind. The biggest difference was that EMS was more internationally focused and more divided into departments. As a manager, you were predominantly managing, delegating, and controlling. I was able to focus more on the main tasks, namely coaching, building the team, and achieving (financial) results. On the other hand, in my new job, I could get things done faster because I was responsible for the whole process. And because the role was new, I could also fill it the way I wanted it to be, which is an exceptional position. Currently, you’re the Head of Corporate Sales for Buckaroo. In short, what does Buckaroo do? Buckaroo is a leading full service payment service provider (PSP) specializing in offering next-generation payment gateways, omni-channel solutions, subscription services,
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and credit management for online webshops and corporations. Buckaroo is supported by its owner BlackFin Capital Partners, a leading private equity firm focused on financial services and technology in continental Europe. Our customers recognize us for our thought-through solutions, dedicated relationship management, and good technical support. Because of the vertical approach of our organization, we have full insight into the sales process and the role of payments in your sector. Our team of payment experts will be happy to get in touch with you and talk about your payments strategy and market insights. What do you specifically do as Head of Corporate Sales? 3 months after I started, the pandemic broke out. And because of the pandemic, the job description and reality differ substantially. Especially during the lockdown, the corporate New Business Merchants were not or not very open to discussing their payment strategy. This was a challenging period, luckily, times are slowly going back to “normal” and the agendas are filled with meetings (live or via Zoom or Teams, etc.).
My responsibilities are: • Further building the corporate sales team, • Reinforcing and further building our position in the (international) corporate market through consultative selling, • Responsible for Corporate Commercial results, • Accompanying the team members, • Building an own portfolio. What would be your advice for professionals looking to take steps in the payments industry? For sales professionals: • Built a network, built a network, built a network! • Invest in your network. • Gain industry knowledge and/or know where you can find people with knowledge/ answers as the payment ecosystem is complex. • Be creative (next to the old school sales channels use social selling etc.). • Find out what your added value is and turn satisfied-clients into returning-clients. • Finally, never forget to enjoy the steps you make! █
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Interview
In Collaboration with
A Champion for Change: Laurence Cooke, CEO nanopay Corporation
by Doug Kreviazuk Executive Director, PayTechs of Canada
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On June 15, 2020, I had the opportunity to sit with Laurence Cooke, founder and CEO of nanopay Corporation and Chair for PayTechs of Canada to gain his perspective about the importance of the national payments system, its evolution and contribution to the Canadian economy.
When you think about the payments system and the role of PayTech firms, what keeps you up at night? When I think about payments in Canada, there is a real lack of innovation resulting from insufficient competition. By nature, PayTech firms have the potential to offer more choices, at reduced cost, and help accelerate growth, but require direct access to the payments system. Consequently, the pace of innovation is much slower than what we are seeing globally. The implications far exceed our financial systems, and extend to global trade, business expansion, cost to consumers, and attracting investment. There is a real risk that Canada will be left behind, as the rest of the world progresses.
As CEO nanopay Corporation, Laurence drives the vision and leads the strategic direction for nanopay in the delivery of payment and liquidity solutions for banks and businesses. Prior to nanopay, Laurence has extensive experience in the Telecom industry and worked with WIND Canada, Shaw Communications Inc. and was the Chief Operating Officer of Bell Mobility and Bell Distribution Inc, where he was responsible for all of Bell Mobility’s operations and all retail for Bell Canada. Laurence remains very active in the payments community, as the Chair for PayTechs of Canada, and a member of the Payments Canada Stakeholder Advisory Committee and FinPay.
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Interview
Where are the major gaps in Canada’s current payment offerings? As I see it, there are four major gaps: • Real-time payments, which would offer improved visibility, enabling better cash and liquidity management; • Access to the payment systems for regulated non-financial institutions, that will improve the payment options for consumers, businesses, and governments by encouraging innovation and competition; • Open banking infrastructure, which gives consumers control of who can access and leverage their data in order to provide better financial solutions; and • The use of a consistent data standard, like ISO 20022, which will remove the friction from cross-border payments, as transactions become seamless and ubiquitous regardless of country. What are the priority steps for creating positive and sustainable change for the payments system? Canada tends to lead with policy and regulation, which means that the first step for change requires a senior sponsor within the government. Once 30 PaymentGenes Q3 2020
sponsorship is received, the second step is to assign a regulator with a clear mandate to push the change forward. Thirdly, it’s important that the entity responsible for a new era of modern payments, such as Payments Canada, has an independent board of directors. Today, the board maintains significant representation from incumbent financial institutions, which are unlikely to have the same goals as the broader public interest. Why is it important that we act now? We are already at least 10 years behind. There is a sense of urgency as the world of commerce becomes smaller and smaller. Increasingly, markets are globally interoperable as domestic products, and services become increasingly substitutable around the world. There are large non-bank technology platforms that prioritize innovation, such as Apple, Google, Amazon, and Facebook. These tech giants already have the infrastructure to offer the same, if not better, payment and processing services than a bank. Canada must act now, so that it can continue to compete on the global stage.
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Why are you so passionate about these changes? I come from a third-world country. A common scenario is migrant workers sending money home to their families and receiving the worst exchange rates, while corporations and the high-income individuals get favourable rates. What we are seeing, is that the poorest people pay the most [as a percentage of their income] for payments and financial services–it’s absurd. To compete at a global level, Canada must have a robust and ubiquitous telecom system, and a modern and accessible payments ecosystem. We only have the first. Payments in Canada are by comparison, slow, expensive, and dataless. For a first-world country, this shouldn’t be the case.
With so many other countries leading payments system change (e.g., Australia, UK, Sweden, South Africa) what can or should Canada take from their experiences? We achieved success in the telecom industry with global standards; this is why your mobile phone can receive service in any country with roaming. Today, in the payments industry, Visa and Mastercard are the closest thing to a globally accepted payment method, but they are extremely expensive, particularly for merchants. If we assume global standards are the way forward, we should be able to adopt the framework from these countries. In a global payment’s ecosystem, “made in Canada” solutions tend to introduce limitations and implications. Today’s Canadian financial industry has significant barriers to entry, which results in high friction costs and reduced utility. If we want to innovate and compete on a global scale, we must lower
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Interview
the barriers to participation, while maintaining the safety and soundness of our system.
In five years from now, what should we expect from our payments system?
What do you believe is the single greatest impediment to the changes as seen in other jurisdictions?
We are at a fork in the road...and unfortunately, have been at this junction for the past five years. I believe we have two options: a) We can wait for the government to come up with a solution, or b) We focus on the core issues and move to eliminate some $20B in friction costs (i.e., inefficiencies) from the payment’s ecosystem. Reducing the barriers and allowing competition to flourish, the industry can start to really innovate.
I think there are two factors that come into play here. Firstly, we are relying on our government to lead the innovation. The result is putting regulation before the needs of the people. For us to catch up to the changes we have seen in other jurisdictions, we need the government to better enable competition and the market to work properly and let entrepreneurs do the innovating. With this, I believe Canada will flourish as we’ve seen in areas that do not require the same level of government oversight, such as artificial intelligence. Secondly, Canada as a nation is extremely risk averse. It’s in our DNA. True entrepreneurs tend to stand out here, but this really shouldn’t be the case. Ideally, we find a way to foster innovation within our tolerance for risk, in order to help facilitate an environment that encourages entrepreneurship.
32 PaymentGenes Q3 2020
If we choose option a), then we can expect little to change except an increased level of risk from foreign entities ‘eating our lunch’ in the payment’s ecosystem. If we choose option b), we have an opportunity to save consumers and businesses a considerable amount of time and money and stimulate economic growth and foreign investment in Canada. The choice is ours to make; we must choose wisely in support of continued innovation. █
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