PCM Volume 3 - Issue 4: Mobile Wallets by PCN Magazine

Vol 3. Issue 4 | April 2017

YOUR GATEWAY TO THE WORLD OF PAYMENTS

Mobile Wallets The future of customer experience

one additonal Thought Leader Article

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Contents STORIES

Amir Abdin Editor-in-Chief amir@paymentsandcardsnetwork.com https://nl.linkedin.com/in/amir-abdin-21365683

Duc Dang Production Editor & Head of Creative duc@paymentsandcardsnetwork.com https://nl.linkedin.com/in/ducdanghh

The Final Countdown - Breakthrough of Mobile Wallets

Wallets – Past, Present and the Future

Loyalty programs: the key to enticing mobile wallet usage

Where next for digital wallets?

The Portal to enhanced Customer Experience

Start-up Spotlight: Bankable

The Tale of a Merchant: Keys to convenience and loyalty

Hot Jobs

Industry Events Calendar

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Thought Leaders Corner

The Final Countdown Breakthrough of Mobile Wallets by Martin Christl

ow many of all transactions worldwide will move to digital and how quickly, is still anyone’s guess. However, we can be certain that migration towards mobile first usage scenarios in payment is happening. Beginning with Google Wallet years ago, followed by Apple Wallet soon and now the emerging Samsung Wallet, big players pave the way for better clients’ awareness of mobile payments.

question for the majority of them. Whereas, a wallet that follows a consumer and retailer-centric proposition where the payment itself is embedded as part of an frictionless shopping experience that combines offers, loyalty and payment, is more interesting. If customers have to make the choice between a retailer app and a wallet it is likely that the richer functionality of a wallet will be their preference.

Additionally several non-banking institutions offering payment services and many solutions entered the payment space, as well as more and more merchants, brands and loyalty programmes. While some are joining existing wallet engagements in bigger wallet initiatives (like Nectar Card embraced in the Vodafone Wallet), others are trying to build up their own payment wallet approach with integrated closed loop services (like Starbucks, Carrefour,...). Although adoption is more and more increasing, nevertheless there is still a huge unlocked potential for wallet operators, merchants and brands to further increase their perception in various aspects, especially if it comes to open ecosystems for value added services based on an aggregation layer.

Merchants discover the Mobile Wallets space

It is simply a customer’s choice Making mobile payment infrastructure available to customers is not enough. Any large merchant brand that interacts with customers regularly has an opportunity to convert loyal customers to an own payment scheme. But sadly downloading an app of each retailer a customer is buying at is out of the

A merchants interest in payments is purely commercial. But what they are ongoing looking for is a way to reach a high number of potential and loyal customers. Therefore they naturally extend their marketing activities towards not owned communication channels. Given the tight economic model of marketing businesses, merchants will need to partner with wallets in order to lower mobile marketing costs and get access to a large distributions network. In that respect, mobile wallet communication services are the completion of a targeted communication strategy as well as a guarantee to ensure communication beyond the own mobile channel.

What’s the secret of Wallet traction and usage? Successful wallets follow a customer and retailer-centric proposition. Their payment offerings are embed into a welldefined ecosystem of customers and merchants, enabling ubiquitous use of payments. In our understanding, such an ecosystem supports: • Ads, vouchers, loyalty programmes and gift cards.

Thought Leaders Corner This moves the payments ecosystem closer to a “unified commerce” ecosystem. This means using more market relevant services beyond the process of payment itself. •

Transaction processing of different payment sourcing types. This means that there are several possibilities to fund or link payment providers within a wallet.

•

Customer targeting beyond a single mobile wallet application. This means that other ecosystem partners like merchants can distribute their content to the total reach of the ecosystem.

•

The processing of user transaction data to offer relevant deals, offers and coupons based on customers interest.

Customers currently are looking for a set of services in mobile wallets to decide whether they stay analog with leather wallets and cards, or whether they transform their usage behaviour towards digital mobile payment wallets. The main use cases of mobile wallets besides accumulating and maintaining cash, are : (i) collecting and consuming points, claiming personal incentives, receiving digital vouchers, collecting gifts, and further (ii) beneficial communication services. These communication services are marketing news, offers, push notifications, proximity and location based content services, store location finders, detailed shop business hours and merchants contact data, as well as dedicated announcements from the next shop for personalized exclusive offers. Many reports and statistics from Forrester, Cap Gemini, Gartner, Mastercard,… clearly show: Consumers that are served with additional services in mobile wallets are happy to regularly use wallets to pay. The success of integrated communication services and loyalty capabilities is due to their convenience: especially in brick-and-mortar shopping situations, having all offers, loyalty cards and payment at

Martin Christl

Business Development Executive at bluesource – mobile solutions gmbh Martin Christl is Business Development Executive at bluesource – mobile solutions gmbh, with extensive Marketing & CRM, Product Management and Innovation knowledge. He’s been working for 10+ years in the mobile industry space within large entities like Deutsche Telekom or Ericsson addressing large scale programmes and projects.

„Vodafone Wallet“

Thought Leaders Corner hand, creates valuable experiences with long lasting user retention. However, the communication power is not only the main and essential driver to raise active usage, but also to increase transaction frequency and to push the regular amounts spent via mobile wallets.

The European Best-Practice for Wallet Consumer Engagement To make the long story short: it is a simple and rather clear approach to use digital loyalty as strategic key component. Vodafone Group with the mobile-pocket HUB as enabling service shows a remarkable case. The Wallet achieved a best practice, which was honoured with several global awards in the past months. Scoring “Emerging Payments Award for the Best Loyalty Incentive Programme” and two trophies of the “Payments Award with the Engagement & Loyalty Scheme of the Year 2016” clearly sets a global benchmark. The recent success with the first place of Gizmodo’s mobile payment ranking before Apple Pay and Android Pay constitutes a remarkable conclusion, declaring that Vodafone’s Wallet is the actual leading wallet in the markets with appropriate payment functionality and complementing services beyond payments.

Be prepared for the Final Countdown of Wallet Wars If you want to evolve your Wallet into a product that supports all aspects of value transfer in digital commerce like payments, loyalty, offers, coupons, contact us. Industry leaders recognize our mobile-pocket HUB as an enabling solution for rapid mobile wallet growth. It is up to you to join this award-winning ecosystem approach and prepare for the Final Countdown of “Wallet Wars”.

mobile pocket mobile-pocket is an ecosystem for mobile loyalty and reward solutions. It unifies consumers, retailers, brands, wallet operators and content providers on one platform and its features enrich wallet and payment services. mobile-pocket is a product of bluesource mobile solutions gmbh, situated in Hagenberg that is also known as Silicon Valley of Austria. The company is focusing its innovation and expertise on the development of mobile solutions and apps for big brands, merchants, operators and financial institutions. Special attention is given to mobile marketing, mobile payment and mobile commerce sector.

Thought Leaders Corner

Wallets – Past, Present and the Future

by Abhishek Ayyagari

The Great Indian wallet adventure

he last decade has seen different digital solutions working in different markets with various degrees of success. Yet certain commonalities continue to exist; convenience, access to large customer base, progressive regulatory environments and technology remain important factors in adoption and growth of digital payments and that been the case in India as well. In digital payment, Wallets have managed to create a differentiated payment experience for users on the mobile where data connections have mostly been flaky. The last decade has seen a 10x growth in digital payments in India with wallets leading the growth. Technology startups with deep pockets and investor funding have spoilt customers with deals, discounts and cashbacks. Macro factors contributing to the current state of the wallet space in India are:

The role of e-commerce partnerships Growth in e-commerce firms, increase in online bill payments and entry of cab hailing startups such as Uber and Ola have so far played a key role in the growth of wallets. While e-commerce firms had been doling out cash backs and discounts through partnerships with wallets, a significant factor in the growth of Paytm (India’s numero-uno wallet by a significant margin) has been its exclusive integration with Uber. Freecharge, amongst the top 3 wallet players in India drives significant synergies and volumes by being part of Snapdeal, an online marketplace.

Demonetization drive Cash drives most of commerce in India contributing to ~80% of all form of payment instruments. Demonetization announced on 8th November 2016 by the Indian Government

gave a significant push to digital payments and wallets which saw wallets such as Paytm claiming to have grown more than 250%. With the government giving significant push to digital payments by waiving off MDR for debit card payments another significant move came from National Payments Corp. of India (NPCI) who launched BHIM, a UPI app to enable easy way to send and receive money.

The Present - Wallets hit the wall Over the last couple of years, startup funding has taken a hit with investors seeking the profitability question. India has seen several startups closing down especially in food tech space and e-commerce has seen a lot of consolidation driven largely by common investors. This has led to a slowdown in growth of wallets. Other main challenge for wallets is around lack of interoperability. Currently, it isn’t possible to transfer cash from one wallet to the other due to restrictions by banks. Besides this, the charges to withdraw money from your wallet is as high as ~2% and money transferred to your wallets doesn’t earn interest. Also, the current withdrawal restrictions for moving money from wallet to bank is capped at Rs. 25,000 which affects cash flow for merchants. Given the high cost to acquire a customer and afore mentioned roadblocks the road to profitability is very steep for wallet players.

UPI vs. Wallets UPI launched by National Payment Corp. of India (NPCI) in Feb 2015 is the next gen payment system that allows a customer to transfer and make payments eliminating the need to share bank account details for both push and pull based transactions. Touted to fundamentally change the way transactions are done, with UPI a user doesn’t need to remember card details, IFSC codes (similar to SWIFT) and other details and just requires sharing of a Virtual payment address (VPA) which

Thought Leaders Corner Abhishek Ayyagari Product Head at PayU India Abhishek Ayyagari is the Product Head at PayU India, a Naspers company. At PayU, Abhishek is involved in building innovative payment products and new checkout experiences. He loves solving problems that impact the emerging markets. He has a degree in business administration from IE business school, Madrid.

is similar to an e-mail id and requires a mobile phone. This system allows one click, two factor authentication on mobile phones across bank accounts. UPI 2.0 is slated to open up multiple use cases; Aadhaar enabled biometric verification and electronic mandate which will remove the requirement to authorize every transaction. In my opinion, UPI once stabilized will give wallets serious competition and might make wallets redundant in the near future.

Future of wallets USD 600 billion pot of Gold up for grabs

Fungibility and access Interoperability among digital instruments and bank accounts would make digital payments bridge the gap with cash which is completely fungible. Wallets need to solve the interoperability problem to stay relevant. Another gap that needs to be addressed is security. A recent Qualcomm report claims that most e-wallets in India are vulnerable to hacks. With digital payments on the rise, wallets need to plug the gaps to build customer confidence.

Cost of transaction

India has leapfrogged plastic, internet banking era to digital with cost of transactions becoming near zero where players who understand the customer better will be the game changers. From being data poor India is moving to a data rich landscape with creation of â&#x20AC;&#x153;India stackâ&#x20AC;?, an open framework that consists of a payments layer, paperless layer of document storage with e-Sign and an Identity and authentication layer (AADHAAR). India has jumped ahead of the western world in creating an ecosystem for digital transactions.

Today, customers have to pay significant fee to transfer money from wallets to their bank accounts. Smaller merchants in tier2 or tier-3 cities face issues in even e-wallets, thereby reducing the adoption rate of the wallets. Value added services for merchants through data insights and feature benefits will help customers perceive the value of digital instruments better. Also, with the advent of new age payment banks, wallets could provide interest on wallet balance.

Payment service providers (PSP) and wallets have the opportunity to leverage India stack, smartphone data, digital footprints and integrate data from traditional sources such as utility billers, tax return and create an ecosystem where payments will drive consumption and not the other way round.

A sizable opportunity for payment players is around leveraging consumer and merchant data to provide customized experience and enhanced financial products based on customer usage

In my view, here are a few critical factors that will determine the success of wallets or PSP providers in fighting the battle against cash.

Intuitive user experience The Indian consumer is now used to frictionless experiences and fintech players need to keep innovating towards creating an intuitive and better user experiences. Also, given the diversity of India, we need players to increasingly localize in Indian languages, make onboarding easier through usage of biometric enabled e-KYC. Technologies such as QR codes or modified UPI at offline stores will reduce the dependency on cash.

Personalized customer engagement

Digital payment and wallet players will make deeper inroads into Credit, Expense management and Investments. Access to easy credit is still an underpenetrated segment with vast majority not having a credit score. The next wave of innovations in the wallet, payment space will be around creating credit and investment products for the younger generation of consumers and merchants. Overall, these are very interesting times to be part of a new age tech startup in the payment space where the opportunities are huge, regulatory environment is progressive and digital transactions will only go one way; Skyward!

PayU India PayU India is a leading online payment service provider dedicated to creating a fast, simple and efficient payment process for merchants and buyers. PayU makes up the e-payments division of Naspers Ltd. a broad-based, multinational media group founded in 1915, which provides services in more than 133 countries.

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Thought Leaders Corner

Loyalty programs: the key to enticing mobile wallet usage by Sharath Dorbala

one are the days when making a mobile payment meant punching in a number and sending an SMS – a confusing and clunky experience! With smartphones and biometric authentication, making a mobile payment has evolved into a seamless and even fun engagement with the service provider. With the latest technology, savvy users can even log in to their mobile wallets with a selfie and authenticate payments with ultrasonic sound waves! So why haven’t the masses ditched their physical wallets and replaced them with their mobiles? Part of the answer comes down to old habits. Simply, using cash or credit card to buy a can of soda or to do your weekly shopping is both easy and convenient. So what can service providers do to break this paradigm and entice consumers out of their comfort zone into the exciting new world of mobile wallets? And for those who use them occasionally, how can they be enticed to become more regular users? One obvious answer is to create loyalty: reward your subscribers for consistently using your service.

Who needs loyalty? A recent Amdocs and Ovum study found that over 70% of mobile financial services (MFS) providers do not believe their end users need loyalty services. In contrast however, over 90% of users say they would use their mobile wallet more if they were rewarded for doing so. So clearly, there is much work to be done. Indeed, the benefits of a well-oiled loyalty service are well known: •

Increased spending per customer

•

Easier up-sell and cross-sell opportunities

•

Increased customer lifecycle value

•

Usage creates “free ambassadors” to help build your brand

In reality, successful loyalty programs are few and far between. And while there is clearly a niche that is just waiting to be filled, service providers need to think carefully when it comes to building their loyalty program strategy and ensuring it is integrated into their payment services in the most effective way. It’s not enough to just add loyalty points

and offers into the payments flow – you need to entice users to actually use your wallet. Based on study findings, we believe that by implementing the following four strategies, service providers can greatly increase uptake of their mobile wallet services:

Interoperability Service providers should collaborate by creating a wide and diverse ecosystem where loyalty points can be accumulated and redeemed at any merchant, as part of any service provider’s loyalty program. With greater access to points, an open loyalty service provides more options to consumers, leading to increased wallet usage. I always think of the SMS analogy when I mention interoperability. When SMS first came about, subscribers could only send messages to fellow subscribers within the same network, which led to a limited uptake of the service. As soon the service became interoperable and subscribers could send SMS’s cross-network, the service really took off.

Customer journey Encourage aspirations! A carefully crafted multi-tiered program with increased benefits as you move up the ladder will keep customers engaged for longer. 79% of service providers claim that the different levels of rewards motivate their customers to increase usage of their services. But don’t just link your tiers to how much your customer spends. Loyal low-income customers should not be penalized in favor of occasional-use high-income ones – even if they spend more overall. Take a multi-faceted approach. Look at their social media behavior: Are they championing and influencing your service online? And have they been using your service for a long period of time, even in the face of strong competition? Get to know your customers and then reward them accordingly.

Single wallet experience One of the main survey takeaways was that multiple card management from within a single wallet is a highly-demanded feature. The overwhelming majority of respondents considered it either very important or important to be able to manage different loyalty cards from within a single wallet. Such a feature must be an essential component of any mobile wallet strategy.

Thought Leaders Corner

Sharath Dorbala Head of Sales, Marketing and Products, Mobile Financial Services at Amdocs Sharath Dorbala is the head of Sales, Marketing and Products for Mobile Financial Services at Amdocs. Sharath is a Silicon Valley-based technology veteran with over 17 years of experience. His passion over the last two years has been to work towards enabling affordable financial inclusion for the unbanked and under-banked. Having dedicated a lot of time in the emerging Asian markets, he believes that the solutions seen there are going to have a profound influence on mobile financial services models worldwide.

Educating customers Never under-estimate the power of knowledge. One of the most significant reasons attributed to lack of mobile wallet usage is that customers simply weren’t aware their provider offered a loyalty program. Indeed, about a fifth of respondents said this was the case, while a similar number said that while they were aware of such programs, they didn’t understand how they work. Even the most innovative loyalty programs will fail if they aren’t accompanied by well-planned strategies to educate customers about them and increase their awareness.

Long live the wallet!

Amdocs Amdocs is a leading software & services provider to the world’s most successful communications and media companies. As our customers reinvent themselves, we enable their digital and network transformation through innovative solutions, delivery expertise and intelligent operations. Amdocs and its 25,000 employees serve customers in over 85 countries. Listed on the NASDAQ Global Select Market, Amdocs had revenue of $3.7 billion in fiscal 2016.

Inevitably, the future of payments will lie in mobile payments. MFS users will reward service providers with both their loyalty and increased usage when offered a carefully crafted loyalty program. It is therefore in the interest of the entire industry to accelerate adoption of new MFS services together with uptake of mobile wallet usage. Incentivizing users to become longterm supporters will be key to this. So let’s work together to create the reward systems that will increase engagement and create this loyalty.

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Thought Leaders Corner

Where next for digital wallets? Daniel Kornitzer looks at how smartphones are supporting the transition from cash to contactless payments by Daniel Kornitzer

he crown is slipping, and cash is losing its kingdom. Thanks to the growth of mobile technology and e-commerce, many people have been writing the obituary for banknotes and hailing the arrival of the cashless society. While there is no final farewell for hard currency in sight – confirmed by a recent Forrester poll in which 53 percent say they still favour traditional coins and banknotes – the future is unquestionably digital and paperless. Smartphones are helping to drive this new economy, providing connectivity and processing power that is widening the market for contactless payments and digital wallets. And it’s a change that is being reinforced by the millennial generation.

Millennial momentum The buying habits of millennials, who are digital natives and the most committed and sophisticated users of smartphones, will certainly accelerate the adoption of digital wallets, a trend underlined by consumer research from Finserv. According to Finserv’s ‘Expectations and Experiences’ report, published in December 2016, 33 percent of ‘late millennials’ and 36 percent of ‘early millennials’ have used digital wallets. While millennials and mobile technology go hand in hand, and smartphones are now the principal method of internet access worldwide, there is some way to go before wallet usage becomes mainstream. So let’s take a closer look at the technology, the advantages and challenges, and where the global wallet industry is heading.

Cash is dead. Long live cash. What is becoming increasingly apparent is that anything that was previously transacted by paper or card can be kept on a smartphone. Not surprisingly, with over 2.1 billion users worldwide, today’s smartphones have become versatile user interfaces and engines for e-commerce. The likes of Apple, Android and Samsung, each with their own ‘Pay’ solution, are prime examples of the growth and opportunity in e-commerce. The digital wallet concept has been around since the early days of online commerce, and can be defined as any payment made through a device at physical point-of-sale or through mobile e-commerce. A distinction is made here between ‘proximity’ wallets and ‘remote’ wallets. The former involves a direct interaction between buyers and sellers while the latter is when buyers and sellers are not in the same physical place. A further distinction can be made between mobile webbrowser payments and in-app payments. Near field technology (NFC) is the main power behind proximity wallets, allowing smartphones to make a wide variety of transactions and to store identity information. Products such as our Paysafe Skrill and NETELLER digital wallets offer additional functionality over and above walletto-wallet payments. This includes easy-to-use options such as frictionless recurring payments, VIP and loyalty programmes, linked virtual and plastic payment cards, and

Thought Leaders Corner Daniel Kornitzer EVP & Chief Product Officer at Paysafe Group PLC. Daniel Kornitzer serves as EVP and Chief Product Officer of Paysafe Group PLC. Prior to re-joining the Group in 2014, he was CEO and Board Member of SiteSell.com. In his 20+ years in technology management, Daniel has pioneered ground breaking initiatives, from one of the world’s first over-the-phone speech recognition systems and the ISO/ITU standards for video coding in use today, to FirePay’s digital wallet and industry-leading risk management processes, which resulted in his subsequent appointment as a member of the NACHA Risk Management Task Force. Daniel holds a B.Eng in electrical engineering from Ecole Polytechnique of Montreal, M. Eng from McGill University and a diploma in network engineering from University of Toronto.

mobile-optimised solutions. We also make it possible for consumers to send money to other wallet users globally using just an email address. What is often overlooked in this space is that cash itself brings another dimension to digital payments. Take for example our product, paysafecard, which allows consumers to convert cash into digital currency to pay for goods and services online, all without having to provide any bank or credit card details to the merchant. Consumers purchase paysafecard vouchers for fixed denominations from distribution partners at physical locations, and then redeem this e-money by entering a 16-digit voucher PIN at the merchant check out. Cash, but not as we traditionally know it!

Convenience versus security So much for simplicity – what about security? Whenever digital technology moves into new areas, there is always the fear that innovation will outpace the security required to keep us safe. Cybercriminals are of course always quick to exploit any weaknesses, so consumers are understandably wary of trusting new payment methods.

Simplify and conquer

The simple truth is that there is no such thing as 100 percent security; just as your wallet can be picked, data can also be stolen from digital wallets. However, wallets that contain credit card numbers loaded via an app are safer than chipenabled cards. This is because the numbers are protected by tokenization, and can’t be written down or pilfered by a skimmer.

There are compelling reasons why digital wallets and prepaid cards are destined for a bigger role in payments. Above all is simplicity. As Henry David Thoreau famously remarked: ‘Our life is frittered away by detail... simplify, simplify’ – a sentiment that could well be the business case for smartphones as the payment method of choice.

While card data is vulnerable to thieves with small NFC readers, smartphones are more secure; but that’s not to say they can’t be hacked, as has been the case with the NFC feature on some Android phones. This happens when a malware-infected app is downloaded and uses the phone’s NFC reader to harvest credit card details and send them to the attacker.

When all the digital information needed for transactions is stored in one place, buyers and sellers have the prospect of frictionless one-click purchasing.

When digital wallets incorporate multiple levels of authentication, they are among the most secure payment methods available today. With all technology, no matter how complex, the basic principle of effective security is the same: something you know, something you have, something you are. In other words, a password-token-biometric combination.

Gone is the need for consumers to enter a wealth of tedious details, while retailers benefit because fast, contactless transactions encourage greater volumes of business. The result is a seamless checkout experience. In addition to convenience, transaction costs are reduced through straightthrough processing, because tapping or scanning a mobile device removes the need for intermediaries.

If developed rigorously and consistently, and in parallel with digital wallet solutions, particularly for smartphones, this three-step approach provides a highly secure environment for payments and should be enough to allay security fears.

Thought Leaders Corner

Integration and compatibility Convenience and simplicity are more likely to be compromised by poor levels of interoperability and by market fragmentation rather than security. Digital wallets can only function with compatible systems, so widespread adoption and acceptance will depend on successful integration across different processors and merchant and customer hardware. The marketplace today is highly fragmented, with numerous providers pushing proprietary offerings, and there is no single infrastructure or wallet environment that ensures systems can talk to each other. What consumers need is a unified mobile commerce experience.

The way forward for wallets With the growth of e-commerce and the ubiquity of mobile devices, digital wallets have an assured future. But greater integration and better awareness and education are needed before consumers and merchants fully understand the potential and feel comfortable about security. As digital enablers such as Paysafe continue to push the boundaries of digital wallets and prepaid cards, we can expect

advances in functionality beyond wallet-to-wallet payments. This includes easy-to-use options such as frictionless recurring payments, VIP and loyalty programmes, linked virtual and plastic payment cards, and mobile-optimised solutions. Consumers can also send money to other wallet users worldwide using just an email address. At Paysafe, we believe simplicity, security and compatibility are the foundations for the greater confidence and participation of both consumers and businesses in mobile payments. In an industry undergoing unprecedented change, we look forward

Paysafe Paysafe provides digital payments and transaction-related solutions to businesses and consumers around the world. We are redefining payments by enabling fast, convenient and secure ways to pay before, pay now and pay later through its payment processing, digital wallets, prepaid solutions and card issuing, and acquiring products and services. With two decades of experience, Paysafe is trusted by businesses and consumers to move and manage money through more than 100 payment types and 40 currencies. Our brand portfolio includes NETELLER速 and Skrill速, MeritCard, paysafecard速, payolution速, Income Access and FANS Entertainment.

expert interview

The Portal to enhanced Customer Experience Roney Castro is a Principal Consultant at UL’s Transaction Security division. He is responsible for knowledge development within the banking and payments domain and has extensive experience in Payments (EMV, Mobile and Cloud-Based) and Authentication and Identification related technologies such as Biometrics and secure documents.

by Roney Castro

s merchants continue to finetune their mobile experience for costumers – the role of mobile wallets has become an essential aspect of the entire shopping experience. We invited Roney Castro, Principle Consultant at UL’s Transaction Security division to update us on recent developments in the mobile wallet space.

PCM: How important are Mobile Wallets in an ever connected world? Roney: It is undeniable that mobile wallets are key in establishing innovative and secure payments, while providing proper mechanisms to support the identification, verification and authentication of the user. This is caused mainly by the nature of mobile devices which, with the constant increase of processing power and connectivity capabilities, can be securely applied as payment instruments for both instore and remote payments. Eventually this reduces the barrier between these two worlds. It allows such devices to empower wallet providers to establish innovative payment use cases across devices and channels. This positions the mobile wallet at the center of the payment experience and customer engagement in the commerce chain.

PCM: What are the pros and cons for merchants in implementing a Mobile Wallet strategy? Roney: For merchants it is important to not have only a clear mobile wallet strategy, but actually a mobile strategy. The reason behind this is that the mobile device can be used for much more than only payment and checkout solutions. It is also a key factor in customer engagement throughout the full commerce chain. The interaction with the consumer through mobile channels can be leveraged by merchants in a lot of different ways. Here we can think about in-store engagement, expedite checkouts or even to have better information about how the consumer interacts with your business, services and products.

to have a flexible IT infrastructure. This so they can quickly adapt to the (either positive or negative) response from consumers to the new features introduced by the wallet solution, especially when it comes to checkout. Unfortunately, that’s not always the case and as a result, restrictions in this domain discourage some merchants to move forward with innovation that could really bring disruptive use cases.

PCM: What are the biggest challenges in the Mobile wallets space?

Mobile devices provide merchants with a whole new set of tools to create innovative solutions for existing business problems, to promote service differentiation or even achieving omnichannel integration in case the merchant is present in both electronic and physical domains.

Roney: The term “Mobile wallets” incorporates quite a lot of different solutions that can be subject to different challenges. In an over-simplifying view, we can divide mobile wallets in two categories of solutions; NFC-based wallets and remote payment wallets. In their own domains, both groups face the same challenges, which is widespread acceptance and growing number of competitors in their space. Obviously this challenge presents itself differently depending on the country.

Nevertheless, the implementation of a mobile strategy to creating new services and customer engagement, especially in physical stores, may require merchants

However, when it comes to the challenges faced by the NFC-based wallets, the competition with the

expert interview traditional payment cards of the consumer may be actually the biggest one. This happens mostly because, although the mobile devices are growing in processing power and functionalities, chip cards allow not only very convenient contactless payments, but also acceptance in domains in which the mobile device cannot always be used, for instance contact-only terminals and ATMs. Needless to say that contactless cards don’t have the risk of running out of battery and preventing the consumer to perform payments.

PCM: Many Merchants find it challenging to have people actively use mobile wallets, what are few ways to increase modest uptake and usage? Roney: The answer to this question may change significantly depending on the business of merchant, but usually the reason that merchants run into this challenge is that such solutions focus too much on the checkout or the payment process, instead of bringing value to the consumer in different directions. If too much focus is placed only on the payment aspect of the solution, it enters in direct competition with other payment instruments of the consumer. As a result, the consumer may not see an immediate benefit for adopting the mobile wallet. In this case, some alternatives for increasing adoption and usage are usually related to searching for areas where the competing payment mechanisms cannot add value, providing an immediate benefit adopting a mobile wallet. These areas can change from one merchant to another, but in general, some alternatives focus on the offer of facilitated services and improved in-store experience through

mobile engagement. Other alternatives could include, for example, financial incentives through promotions, coupons for discounts, up or cross sell or offering exclusive benefits that can only be achieved through the usage of the mobile channel.

PCM: How important is mobile becoming? Why? Roney: Mobile devices are already the main portal of our digital lives. Every day we are relying more and more on these devices to execute sensitive tasks in our lives. From banking, internet browsing, email, social and professional networks, messaging apps, payments, travels and event tickets and even secure documents such as drivers’ licenses and identification documents. It is undeniably convenient to have access to all of this through a single device and the perception of security and control that is provided to the user as the bearer of this device brings a significant change in the chain of trust. Consumers perceive their mobile devices as a trusted and safe domain as it is completely under their control. Therefore, if you combine the capabilities of offering a single entry point for multiple online services, with the feeling of empowerment perceived by the consumer, the conclusion is that this is a trend has passed a long time ago the “no return point” and mobile devices will very likely only get more space in the consumer life

PCM: What are proven strategies for a successful Mobile Wallet launch?

some successful mobile wallets in the market share some key aspects. These products were the ones that managed to find a very good value proposition beyond the checkout, bringing an instant solution that facilitates consumers’ life, generating an immediate incentive for the consumer to make the change from his traditional payment mechanism to the mobile wallet. Although this may seem obvious, it is not easy to find a solution for that. That’s why it is really important to challenge the assumptions and the strategy of your mobile wallet product with regards to how this solution will make the customers’ life easier. What is the problem this mobile wallet should solve and how will this wallet allow the consumer to experience your services, business or products in a facilitated way? As mobile devices and mobile consumer behavior are extremely dynamic domains, such challenges should be raised continuously. This process can be eased if at the center of this decision making process, you prioritize the needs of your key stakeholder for the success of your mobile wallet; your customer.

UL Transaction Security UL guides companies within the mobile, finance, retail, transit, ehealth, and data security domains through the complex world of electronic transactions. UL is the global leader in safeguarding digital assets and ensuring compliance with standards, global interoperability between products and systems and security for all components in the ecosystem.

John: For mobile wallets there’s no silver bullets or a “one size fits all” strategy that is guaranteed to work. Nevertheless,

Spotlight You think you have what it takes to start a business in a super-hot market? PCM takes a close look at some of the most innovative and promising startup companies in the payment industry.

startup Spotlight

“BANKABLE IS A GLOBAL ARCHITECT OF INNOVATIVE PAYMENT SOLUTIONS PROVIDING “BANKING AS A SERVICE”.” Eric Mouilleron, Bankable’s Founder & CEO

he pace of Fintech innovation is challenging for a great number of traditional banks. To meet business needs of large financial institutions, disruptive Fintech players that can offer innovative platforms and payment solutions have become particularly interesting to work with. We sat down with Eric Mouilleron, Founder & CEO at Bankable who shares his startup story with us.

PCM: Tell us about Bankable. How did this idea come to be? I started Bankable with the vision of displacing payment inefficiencies by real-time, affordable, scalable electronic solutions. When I founded Bankable (formerly Cards Prepaid), no one knew what “fintech” stood for. I realised the power of prepaid while attending the first MasterCard Prepaid Conference in May 2007 in Prague. The prepaid industry promised high growth and I envisioned powering payments with globally scalable technological innovation. There was an opportunity in the market. Traditional banks have extremely opaque fees while consumers demand transparency. Many people only need basic banking services simply to receive money and make payments without any hidden fees. A prepaid based light bank account enables such services and empowers consumers who do not have bank accounts and are outside the credit rating system.

However, the regulatory environment did not allow non-banks to offer payment services before November 2009 when the Payment Services Directive was implemented by EU member states. It was the first step to revolutionising financial services and stimulating competition in the marketplace to provide consumers with transparent and efficient services. I completed a EUR 1.5 million equity injection into Bankable in December 2009 from professional investors looking to invest directly and privately in early-stage companies. Today, along with Bankable, financial technology (FinTech) has emerged as a dynamic industry disrupting financial services through innovation.

PCM: Why is it called Bankable? We initially established ourselves as Cards Prepaid Ltd. We rebranded in August 2014 to Bankable to shift focus from prepaid cards as a means of payment to the company’s mission to enable “Banking as a Service”. Banks, telcos, FinTech entrepreneurs and governments can launch financial services quickly, while corporates can streamline their payment processes through Bankable’s proprietary platform as a service. The name positions the company as an established partner with reliable technology for its clients. Bankable’s logo symbolises a gear mechanism that emphasises the idea of uninterrupted performance and continuous innovation provided by Bankable to its clients and partners.

startup spotlight

PCM: Why is Bankable needed? Bankable is here to displace payment inefficiencies and to promote outsourced innovation in financial services. We are here to serve business needs with time to market in mind. We are a global architect of innovative payment solutions providing “Banking as a Service”. Our core virtual account management platform is available in white-label or via APIs enabling anyone to deploy payment solutions – including virtual account services, e-ledgers, virtual & plastic card programmes, and e-wallet & light banking solutions. For example, banks can offer an innovative solution (the Virtual Ledger Manager) to their large global corporate clients allowing them to reduce the number of bank accounts operated and automate reconciliation using virtual accounts and virtual IBANs. Additionally, banks and entities with a large consumer base can also launch corporate and consumer card solutions to target varied categories of clients. For corporates, our platform can power a fully whitelabelled self-service private cloud-based platform for SMEs and corporates to issue Visa/MasterCard prepaid cards to employees for expenses, purchasing, payroll, incentives, etc. On the other hand for consumers, our platform can enable a “light” banking solution offering essential financial services to digitally native consumers. Consumers are not required to have a bank account to access this solution which makes it an ideal payment and financial management tool for young people, the unbanked population and migrant workers.

All these solutions provide full control and transparency for clients and consumers alike.

PCM: What makes Bankable different? Bankable provides end-to-end payment solutions. We enable regulated and non-regulated entities to deploy payment solutions. They key benefit of our core platform is the ability to allow clients to develop payment solutions via a single point of contact. Our interoperable proprietary platform is integrated with various key partners in the payments ecosystem. This infrastructure allows clients to quickly deploy payment solutions via a single partnership with Bankable, in turn also accelerating time to market. We encourage our clients to focus on their brand and distribution, while we operate the back-end system (processing, connectivity to card schemes, etc.).

PCM: What were some of your biggest challenges for launching this business? The biggest challenge even today is to attract and retain relevant clients, exceptional talent, and prestigious shareholders.

PCM: Tell us about your expansion plans and how you go about choosing the next region to expand into. We are currently focused on distributing our solutions across Europe. Currently, we serve corporate clients with a legal entity in Europe globally. For consumer projects, we can launch in all 30+ European countries.

startup Spotlight

The Bankable Team

We definitely want to expand our global footprint as well. We are currently in discussion with regulators, Central Banks, and corporate clients in Australia, Middle East and North America. We are also looking to expand our services to Africa to build robust and modern payment solutions to slowly displace cash and promote financial inclusion.

PCM: What are the 3 things you want people to know about your platform? 1. Time to market is of raison d’être. 2. We are relevant and compliant to global organisations 3. We are friendly and punctual!

PCM: Any exciting news / announcement you would like to share with our community?about your platform? We work under strict confidentiality agreements and only communicate successes when they’re alive. We have signed major projects in 2016 which will go live in the second half of 2017. We experienced an exponential year-on-year growth of revenue and gross profit – gross profit grew by 178% on the past year, six times faster than overheads growth of 29%, realising the benefits of investment in the platform. We are bringing on board very senior talent to help us industrialise our processes, and to deploy our solutions globally.

Payment Collective To get a more complete view on the all businesses in the payments ecosystem, in this rubric PCM showcases how merchants deal with payments and fintech challenges.

PAYMENT COLLECTIVE

The Tale of a Merchant: Keys to convenience and loyalty

n this month’s Payment Collective we got hold of Eric William Pitts, who is heading up the new Payments Department at Sixt SE. He shares his opinions and experiences on the importance of mobile payments and which developments you should pay more attention to.

PCM: What are the most important questions that come to mind when selecting a payment partner/vendor? Eric: Do the offered products serve our purpose and needs to their full extent? Is the offered solution scalable in various ways, such as: •

Range of functions and features, pricing options and payment method acceptance for CP and CNP environments

•

Regulatory requirements such as e.g. EMV-Levels, PCI-PA/ PTS, PSD2 etc.

•

Sustainability regarding the changing landscape of payments when it comes to e.g. Omnichannel-commerce and -payment

•

And 3rd pty services, provisioning services – instantly – via the utilization of APIs, thus enabling us to deliver instant interaction and robust solutions our customers have come to expect.

PCM: How do you ensure, as a merchant, customers get the best payment experience possible Eric: Here at Sixt, we are constantly striving to improve our

business processes and align them with the relating payment processes and features in order to offer what is required by our various markets and benefits our target groups.

PCM: In your opinion, how important is mobile now compared to the past three years? Eric: This really depends on what “mobile” (e.g. commerce, payment etc.) stands for and which business you are in. Take Sixt for example, where we are continuously serving an increasing amount of customers via our mobile apps for car-rental and –sharing services. The use of state-of-the-art technology goes along with this without saying. Apps started out mainly with their sales pitch based on mobile payment. However, mobile is nowadays more an integral part of the customer journey for many consumers in regards to convenience and loyalty. Mobile Payment is certainly becoming more and more common (in differing development stages) through the expansion on the acceptance side, yet still differ in the various regions/markets and technology (e.g. NFC, QR, BLE). It seems that - for now NFC is in the lead.

PCM: What role do mobile wallets play nowadays in the customer payment experience? Eric: This depends heavily on which payment method the mobile wallet offers and if the necessary infrastructure is available on the broader merchant side. Mobile Wallets today

Payment collective

Eric William Pitts Executive Manager, Payments at Sixt SE Eric currently heads the newly established Payments Department at Sixt and is primarily responsible for their global payment infrastructure and processes; including point-of-sale-, online- and alternative paymentplatforms. Experienced within the digital payment sphere, Eric has a strong history of working internationally with payment networks and professionals. Maintaining a knowledge base and having the latest information available on digital payment solutions is integral to the success and operational efficiency; something. Eric has devoted his career to since his transition into the payments field in 2009.

– I believe – are many times still too proprietary (merchantspecific) and limited in features.

PCM: What do you look for in a Mobile Wallet partner? Eric: Sixt has a clear focus on forward-thinking, innovation and sustainability, therefore integration options (i.e.“API-store”) and scalability are very relevant to us in order to accomplish an environment offering optimal results and groundbreaking products.

PCM: For all merchants out there, can you please give us a piece of advice as to how you can stay ahead of the game in merchant payments? Eric: •

Set up a dedicated in-house Payments Department today.

•

Don’t believe the hype! Balance pros and cons when talking to payment providers.

•

Train your staff continuously on payment acceptance! This will ease the adaption of new payment methods on the customer side.

Coming from extensive experience in our business segment and using our multi-facetted in-house know-how, we at Sixt believe that the above mentioned will greatly improve our customer’s “payment experience” and can help lower our payment cost.

Sixt SE Sixt SE is a leading international provider of high-quality mobility services for business and corporate customers as well as private travelers. With representations in over 100 countries worldwide Sixt is continually expanding its presence. The Company’s strengths lie in the high proportion of premium cars in the vehicle fleet, its employees’ consistent service orientation and a good price-performance ratio.

Hot jobs

Hot Jobs SALES MANAGER

VP / DIRECTOR OF BUSINESS

PAYMENT & RISK

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London Area | UK

PRODUCT MANAGER

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SENIOR ACCOUNT MANAGER -

CARDS

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Amsterdam | Netherlands

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BUSINESS DEVELOPMENT

DIRECTOR OF KEY ACCOUNT

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Mexico City | Mexico

Curitiba â&#x20AC;&#x201C; PR | Brazil

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These are the latest job opportunities we have on offer! For more information please visit www.paymentsandcardsnetwork.com or check out our international Job Board at www.payment.jobs 25

â&#x20AC;&#x153;

Time-to-market and ambition are of essence to us to build successful partnerships

â&#x20AC;?

enabling Banking as a Service via white-label and API-based payment solutions hello@bnkbl.com www.bnkbl.com @wearebankable

events

Events Singapore Over two days Financial Inclusion Summit Asia will bring together the people who, really, can drive the change needed to bring financial inclusion to Asia.Fintech startups are a very important part of the solution. We will be inviting the very best of these to present their ideas throughout the event. The conference will cover areas like Financial inclusion to discuss critical challenges, opportunities, pilot programmes and future roadmaps.

18-19

Moscow, Russia

On April 19, the most well-known global specialists in the sphere of blockchain technologies will come to Moscow. Together with Russian bankers and entrepreneurs they will discuss Russian and foreign blockchain projects in financial and non-financial spheres. The meeting will be driven by the annual Blockchain & Bitcoin Conference Russia that features presentations from the representatives of IBM, Microsoft, Sberbank, NRU HSE and State Duma.

Singapore Seamless is the key meeting place for this brave new world of commerce. It is a new event built on 20 years of experience â&#x20AC;&#x201C; a seamless continuity from Asiaâ&#x20AC;&#x2122;s largest and longest running conference focused on cards and payments, to a dynamic summit and large scale exhibition bringing together the converging worlds of ecommerce, retail and payments. We recognize that your customers are changing. That your business is changing. And so we are changing.Â Welcome to Seamless Asia 2017.

19-20

events

Brussels, Belgium

The Instant Payments Summit will be presented by some of the industryâ&#x20AC;&#x2122;s best thought leaders and domain experts who will share vital advice on actual implementations. It will help you with practical insights to drive your own Instant payments initiative, SEPA Instant Credit Transfer (SCT Inst), Regulations, Deadlines, Investment challenges, harnessing Blockchain technology with instant payments and also obtain most up-to-date insights on PSD2 and its impact on

Utrecht, Netherlands The Uber of the banking sector has not yet emerged, but this is only a matter of time. Stay ahead of the game and witness the future of finance. Join the Dutch FinTech Awards and Conference where innovative and disruptive FinTech companies are awarded. Meet 400 entrepreneurs, bankers, investors and advisors, extend your network and develop business.

24-26

London, UK Focused on the most relevant merchant fraud and payments issues, MRC London facilitates meaningful information sharing, offering access to a multitude of breakout sessions, panel discussions, small group discussions and networking opportunities with an attendance of over 500 leading eCommerce experts. Topics include Brexit, machine learning, digital wallets and tokenization, false positives and many more.

events

Orlando, US Invoicing, one of the most fundamental processes of business, is transforming rapidly these days. Todays chance and challenge is to utilize E-Invoicing to drive excellence into your accounts payable process by not only lowering costs but to continuously increase value. Bringing over 12 years of providing THE E-Invoicing platform to the table, we proudly present the next edition of the Exchange Summit Americas.

25-26

Sofia, Bulgaria

25-26

Webit.Festival is the European edition of the Webit Series of events, which will take place in Sofia, Bulgaria, from the 25th to the 27th of April, 2017. The festival consists of several parallel conferences and events, workshops, roundtables and exhibitions. The event is under the patronage of the Mayor of Sofia Mrs Yordanka Fandakova and the European Commission. The agenda includes Tech Summit, Marketing and Innovation Summit, Developers Summit and Smart Cities Summit. Separate area of the festival will be dedicated to startups from Bulgaria and other countries in the world.

Payments & Cards Network Driving Innovation through knowledge

Get involved now!

We value your feedback and ideas! If youâ&#x20AC;&#x2122;d like to discuss a specific topic, donâ&#x20AC;&#x2122;t hesitate to contact us. Get in touch today and be featured in the next edition: Amsterdam Office Herengracht 576 1017 CJ Amsterdam The Netherlands Email: info@ paymentsandcardsnetwork.com Tel: +31 20 3030 257 Fax: +31 20 8208 295