PCM Volume 3 - Issue 6: Instant Payments by PCN Magazine

Vol 3. Issue 6 | June 2017

YOUR GATEWAY TO THE WORLD OF PAYMENTS

INSTANT PAYMENTS Needs that drive innovation

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Contents STORIES

Amir Abdin Founder & Editor-in-Chief

How to ‘go Dutch’ without cash, instantly

How fast must payments be?

Three advantages of instant payments for banks and why they should modernise as soon as possible

Becoming more efficient with real-time payments

Start-up Spotlight: baningo GmbH

Instant Payments: A Road with many pitfalls?

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Hot Jobs

Industry Events Calendar

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Thought Leaders Corner

How to ‘go Dutch’ without cash, instantly by Gijs Boudewijn

Visit the Netherlands on its national holiday, King’s Day on 27 April, to experience the funniest example of the need for instant payments. On that day the Dutch empty their attics and cellars and sell their stuff in the streets, from junk for 10 euro cents to vintage furniture for 1,000 Euro, all instantly paid in cash. The ATMs simply can’t keep up with the sudden surge in cash withdrawals. However, real-time payments are not a one-day-a-year issue. Purchases paid with debit cards or credit transfers on Friday or over the weekend (and especially the Easter weekend) would not be credited to a merchant’s account until Monday, still complying with the legal requirements of crediting at the latest on the next business working day (“D+1”). This would for instance lead to overdraft situations for merchants when direct debits initiated by their suppliers were debited earlier than their customer payments were credited. And, more generally, banks could no longer explain why payments could not arrive instantly just like emails or Whatsapp messages. The argument that the reason for that was that the banks can not settle their obligations when the European Central Bank is closed did not hold anymore. Instant payments were expected to become the new normal. Not just a simple P2P instant payment solution, but all payments. Consequently, in 2015 the Dutch Payments Association, its members, the private banks, and the Dutch central bank have committed to building a new infrastructure for Instant Payments.

Starting in 2019, the Dutch can split their bar tabs instantly, without the need for cash. With Instant Payments, transfers will be immediately credited to the beneficiary’s bank account, even if the beneficiary is a customer of another bank. This new infrastructure will be continuously available, 24 hours a day, any day of the year, including weekends and public holidays.

Development in full flow The development of the infrastructure for Instant Payments in the Netherlands is well underway. The design of the infrastructure was completed early 2016 and updated following the publication of the EPC SCT Inst Rulebook in late 2016. The infrastructure providers were selected and building is now well underway. Stakeholders were periodically updated on the progress and given the opportunity to provide feedback. Testing will be conducted from early 2018. An Instant Payment trial will be started early 2019 after which Payment Service Providers (PSPs) will be able to offer Instant Payment services from May 2019. All major Dutch banks will offer Instant Payments via mobile and internet banking as of May 2019. Over 90 percent of all payment accounts will be reachable for Instant Payments from the outset, and is expected to become 100%. The infrastructure will be ready for high values and high volumes to cater for all market segment use cases: consumer, business and government.

Thought Leaders Corner Ready for SEPA-wide Instant Payments Instant Payments will be introduced throughout Europe. The European Payments Council (EPC) published the â&#x20AC;&#x2DC;SEPA Instant Credit Transfer Scheme Rulebookâ&#x20AC;&#x2122; in November 2016, with a go-live in November 2017. The Rulebook sets the standard for all instant payments made in euros. The Netherlands will fully adhere to the Rulebook to allow instant payments to and from participants in other SEPA-countries. It must be borne in mind that participation in the new EPC SCT Inst scheme is voluntary for PSPs. For the clearing and settlement of instant payment transactions multiple Clearing & Settlement Mechanisms (CSMs) will be available. PSPs can choose their preferred CSM and each CSM will provide access to instant payments all over SEPA. Our vision is that banks will only need one CSM to have full SEPA coverage, so interoperability is paramount.

Faster, higher, more The Dutch payment sector aims to process transactions within five seconds - as fast as card payments - and will not impose a common limit on payment amounts. Maximum amounts (if any and of course always above the maximum amount of the EPC scheme) can be set by individual banks. The infrastructure allows for any type of transaction, C2C, C2B, B2C (salaries) and B2B, and an amount limit does not fit in that line of thinking. The European goals are a bit less ambitious, with a processing speed of ten seconds and a maximum amount of 15,000 euro per instant payment. Updates of the EPC Scheme can be expected following the take up of instant payments in Europe. Requirements for uptime and continuity are extremely high: no planned downtime and incidents must be kept to an absolute minimum. Many new use cases and innovative applications for Instant Payments are expected to be identified. Use of the new infrastructure is likely to grow rapidly, to the extent that Instant Payments will eventually become the new norm for the payment system. Think of e-commerce and second hand car sales even during the weekend. One can buy a car at an auction and in an instant world that will not require unsafe cash transactions. Students and flex workers who work in pubs and shops on evenings and weekends, often get paid days later while they would prefer to have access to their money over the weekend, to catch a show or hang out with friends. Another typically Dutch business that could benefit from Instant Payments is its sizable flower auction. This day trade currently requires very complex arrangements for purchased lots to be loaded on lorries immediately against letters of credit or other expensive payment guarantees. This process can be hugely simplified by instant payments, with integrated loading bills and invoices. Last, but not least, together with the concept of access to the payments account mandated by new EU payments regulation (PSD2), instant payments could even become an alternative for card payments at the point of sale.

Gijs Boudewijn

Deputy General Manager at Dutch Payment Association Gijs has extensive experience in domestic as well as international payments issues, governance, competition law and fraud prevention. He started as an in-house lawyer at a large savings bank, and later became Head of Legal Affairs at the central Dutch clearing house, Bankgirocentrale, the predecessor of Equens SE. Currently Mr Boudewijn is Chair of the Legal Support Group of the European Payments Council and Chair of the Payment Systems Committee of the European Banking Federation.

Dutch Payments Association The Dutch Payments Association cooperates with its members and stakeholders to foster the payment system in the Netherlands. Our members are banks and payment service providers. Umbrella organizations for consumers and businesses are actively involved in our work, as stakeholders. Moreover, we represent our members in national and international working groups.

To conclude, instant payments will help foster innovation and competition, leading to better products and services for the end users.

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Thought Leaders Corner

How fast must payments be? Same day, faster or instant? by Oscar Neira

would break the payment methods down in three categories: Cards (Credit and Debit), Mobile Peer to Peer (directly connected with the bank account or with a Card behind) and the electronic payments; Ok, there is cash too, but let us forget this for a moment. Then electronic payments done by consumer or SME’s and electronic payments done by big corporates.

maximum transaction amount is limited to € 15,000 which is not very high and apply to most of the consumer payments but not to SME or corporate payments.

Watch SEPA Instant Credit Transfer scheme video

What is the actual state Let’s start with one which is live for years. The UK Faster Payments is a real success story. For transactions in the UK up to £250,000 payments can be send immediate—24 hours a day, 7 day a week. The funds are normally available within minutes by the receiver but latest two hours after the transaction. This service which became very important in the UK. The next one is SWIFT gpi. This initiative which also went live this year focuses on cross-border payments. Regarding the velocity, the funds should arrive the same day if the time zone and cut off times align. SWIFT gpi offers not just a massive improvement of time efficiency but it also provides a payment tracker where you can track your payments like a postal mail, plus you will finally know the cost of the transaction before you send it. There are also no amount limits. The latest initiative is SEPA Instant payments and instant means within 10 seconds. This initiative should start in November 2017. This is also a 24/ 7/ 365 service. However, the

All that innovations are good and important. And in my opinion, PSD2 combined with SEPA Instant Payments (SCT inst) will be a real game changer or like some people say—the perfect storm. Especially the e-commerce payments and InApp payments will break the credit cards growing curve and get replaced by PSD2 and SCT inst payments. But what if we take the corporate perspective. Do they really need get paid instantly? Do they have reconciliation software which can for instance match the online orders with the bank account statements? Alright, for consumer who want to buy a good online —€15,000 could be enough. But what about normal SMEs or corporate transactions which normally are much higher? And finally, are the banks prepared to deliver—let’s say every 15 minute— a new account statement or credit- / debitnotification so that the merchant can check if the money really arrived and reconcile the position?

Thought Leaders Corner Oscar Neira Correspondent at ISO-20022.ch Oscar is owner of a Business Consultancy firm which helps financial institutions to make the correct decisions in the Swiss ISO 20022 Payment Harmonization and Open Banking topics. He is also author and Correspondent for www.ISO-20022.CH a German speaking competence platform in payments. Happy to receive any comment on oscar.neira@ISO-20022.CH

Conclusion I would argue that if SWIFT gpi would have been issued 5 years ago, SEPA Instant Payments never would be needed—because same day is really good. That not being the case, SCT inst is a good start. But it does not provide the perfect fit & features for all businesses and individuals. Reasons for that are that it’s too slow for POS (10s), for corporate payments the maximum amount to low (€15,000), and the consumer does not really care about the velocity. It only becomes really important when it has to arrive fast. In that case, the consumer would pay an additional fee for this service but the SCT inst rule book does not allow to charge more for an instant than for a normal payment. So, we can just hope that the banks make use of their freedom to augment the maximum transferred amount between two banks. We should also hope that they use provided the freedom & flexibility to reduce the maximum payment transaction time from 10 seconds to 5 or 3 seconds or even less.

But finally combined with PSD2 a TPP (Third Party Provider) could build a service which allows to make a payment in the time of a wink and confirm it to everybody who is involved. Let’s see what the future brings.

ISO-20022.ch ISO-20022.ch - A competence platform with a deep focus on Switzerland but also on the rest of the german speaking countries. We share knowledge in banking especially in e-banking and payments covering actual news from the SEPA and other ISO-20022 payments harmonizations, treasury topics, banking connectivity issues and mobile payments themes as well as upcoming technologies from FinTech companies. Especially the knowledge database build like a dictionary (https://www.iso-20022.ch/lexikon/) is very well known and liked.

Three advantages of instant payments for banks and why they should modernise as soon as possible by Mark Munne

nstant payments have become a reality now that the European Payments Council has released the rulebooks for an instant credit transfer scheme. These rulebooks (approved in November 2016) aim to bring real time money transfers in the SEPA zone by November 2017. Instant payments are the next big change in the payments industry, expected to have even more impact than the transition to SEPA. Mark Munne, Senior Product Marketing Manager at equensWorldline, explains in this article why banks should embrace this evolution in payments. Munne: “The use cases of instant payments are very interesting. Splitting a restaurant bill. Paying for the loaded cargo on a ship waiting in the harbour on Sunday. Buying a used car without carrying an envelope full of cash. Or paying your plumber for an emergency repair in the house late at night.” Being able to transact instantly and on a 24/7 basis is expected today and the ability to execute a payment instantly offers great value to all parties in the value chain. Consumers benefit from the increased convenience, corporates benefit from the increased liquidity and reduced risk and banks are able to position the bank account back in the centre of payments and design new products tailored to the fast moving markets of today and the future. Instant payments offer a perfect fit to the commerce of today.

the instantaneousness of payments. The transition to SEPA made that banks updated their systems to new standards, but the pace of payments didn’t make the next step. Munne: “The step to instant payments is the catch-up effort to modernize the payment industry in line with the rest of the digital world. It is safe to assume significant investments are needed to make instant payments possible, compared to or even higher than the investments needed to migrate to SEPA.” This amount of investment can only be made when banks can profit from it too. The transition to instant payments have three main benefits for banks. 1. Modernisation of the systems Munne: “Even though updating the backend of the banks may be a matter of compliance due to the upcoming EPC rulebooks, banks can take this opportunity to develop new services for customers. The platform to facilitate instant payments has to be made, why not take the next step and develop innovative overlay services? The availability of an instant payments platform offers banks an enticing opportunity to achieve the transaction speed consumers expect of their banking experience and increase the customer satisfaction, while providing the required financial return.” 2. Lower Cost

In order to achieve these benefits however, banks will need to update their systems because the whole chain needs to support

Munne: “With instant payments, more transactions will be

Mark Munne Senior Product Marketing Manager equensWorldline With over a decade of experience in payments, Mark Munne, Senior Product Marketing Manager at equensWorldline, is responsible for Clearing and Settlement for both batch payments as well as instant payments. He represents equensWorldline in Europe in the EACHA Innovation Group and several ECB led Task Forces on Instant Payments and TARGET2.

made digitally instead of in cash, which means that payments will become less expensive and more user friendly. It is important that, when we move to instant payments as an industry, we do so while maintaining the high security, low risk and low fraud that we have today and keep earning the trust that we have from the customer. It is also important that the instant payments system is able to grow, both in scale – as we have seen massive growth in the communities already operating a real-time system, as well as in scope, to reap the cost benefits of an up to date and state of the art system.” 3. New Services Munne: “In recent years, we have seen a spur of innovation coming from non-traditional players. The challenge for the banks now lies in keeping the bank account in the centre of payments and building on the harmonized payments landscape created by SEPA. I believe Instant will become the new normal. Not right away, not from the start, but once the benefits become visible, we will see a full migration from the existing systems onto Instant. Banks are well positioned to benefit from this migration by expanding and combining their instant capabilities with their solutions in e- and m-commerce and identity into an innovative portfolio of services.” Several countries are already underway with their instant payments projects, such as the Netherlands, France, Spain, Finland, Italy and Belgium. This raises the issue of interoperability because the scheme needs to facilitate instant payments between the various consumers/merchants, banks and countries. Banking customers should be allowed to transfer money to a bank in another country in seconds. Munne: “Can banks achieve this technically? The answer is yes, because it happens with (debit) card transactions every day. The EACHA innovation Group has written the EACHA Instant Payments Interoperability Framework, which adds the elements necessary to connect the various processors across SEPA, allowing for pan-EU reach in Instant Payments with the ease of one ACH connection. Thomas Feiler has explained this very well in his recent blog.”

being developed for Instant Payments on a global scale, makes sure we all speak the same language. And the EPC EU-wide rulebooks make sure the user experience is harmonized, while still leaving enough room to innovate and implement local requirements on top,” says Munne. The next steps are being taken, but this does not mean that the move to instant payments will be realised easily. Munne warns that the operation is really intrusive, because many banks in Europe need to modernise their infrastructure. “My advice is that they work together on a shared solution, rather than reinventing the wheel themselves. By sharing the development and running of a payment engine, banks can have the benefits of increased scale and lower TCO. It is a waste of money and effort if they proceed with their own solution. Those resources are spent more wisely to invent services that are really new and add value.” Read the original article + more blog posts here: https://blog.equensworldline.com/eu/2017/06/ three-advantages-instant-payments-banks-modernise-soon-possible-2/

equensWorldline equensWorldline is the pan-European leader in payment services. Being part of the Worldline Group, we combine long-standing proven expertise in traditional mass payment systems (issuing, acquiring, intra- and interbank payment processing) and innovative e-commerce and mobile payment solutions. Building on more than 50 years of experience we service a broad, international client base in numerous countries across Europe.

“We need to make smart choices on the basic infrastructure level to make sure interoperability can be achieved. Choosing a standard message definition, like ISO20022 which is now

expert interview

Becoming more efficient with real-time payments Travis Dulaney is CEO and Co-Founder of Push Payments. He is responsible for directing and building Push Payments’ Real-Time Payments capabilities, as well as establishing Push Payments’ South Florida office. He has over 25 years of Financial Services experience, specializing in Payments, Processing, and Banking across vertical markets. photo credit: April McKay

by Travis Dulaney

he mass adoption of immediate or real-time payments systems and infrastructures worldwide is shaping the financial business environment and everything in it. As a result, customers, merchants, and financial institutions expect to be able to pay friends, settle bills and transfer money without any delay. We had the chance to interview Travis Dulaney, CEO & co-founder of Push Payments who’s sharing the ins and outs of instant payments with us.

PCM: What are Instant Payments and what is the idea behind it? Travis: Instant Payments is the ability to move funds from one bank account to another account at a completely different bank in only seconds. The funds are available immediately for purchases and withdraws, not only providing customer pleasing instant gratification, but also maximizing efficiency ratios and lowering cost. Efficiency is the idea behind the movement, as it has evolved over the years, and the process has been known as Faster, Push Credits, Real-time and Instant payments.

PCM: Why are Instant Payment needed? Travis: The question makes me wonder, is that what they asked about when the

telephone first went mainstream? What about cell phones, email, or the internet? Putting aside the evolution of the digital age response, there are benefits for our entire financial, business and governmental ecosystems both domestic and globally. Everyone knows the financial service industry was built on legacy architecture; plus replacing banking core systems, rewiring connections or licensing big iron software are both costly and inefficient to implement.

clarification we will eliminate all closed looped networks or company ecosystems. Modifying the balance of an account within your technical control is easy. Companies such as Venmo, digital wallets and others “you only get the benefit if you are a customer” closed environments are not interoperable. Instant Payments benefits include: funds transfer in seconds, immediate funds availability, and the consumer doesn’t need to sign up. No more delays and long settlement processes.

Instant Payments provide a bank system update without all the cost and infrastructure changes. It also provides both a platform and payment rail, which allows the banking industry and fintechs to work together to build a stronger and more efficient monetary system.

The systems and processors provide open interoperable systems, additional validation and risk management checks, while complying to regulatory standards and transparency for audit traceability.

From the business perspective, Instant Payments satisfies the on-demand nature of our instant gratification minded world, while providing an excellent tool to differentiate a company’s product or service.

Most importantly, it provides a connector almost like an “on ramp” or “exit ramp” for the closed network and ecosystems noted above that acts as a unifying transfer agent between the two worlds.

PCM: How do Instant Payments differ from other electronic payments available?

PCM: What are the pros and cons of Instant Payments?

Travis: The category of electronic payments is basically the entire industry, so for the purpose of

Travis: As in the early stages of any industry there are gaps in standardsand best practices.

expert interview In addition, the transaction behavior will change over time requiring evolutional platforms that grow with the business, versus the business conforming to legacy technology. There is a risk of poor performing industry standards in the areas of Security, KYC & AML and other effective customer screening. Demand that processors perform strict due diligence on Originating entities. Security should be of utmost importance, we are basically providing “a machine gun that shoots money”. So obviously, it is important that we are diligent with understanding everything about the entity, the people, their policies and controls while performing regular audits and validation checks. Once utilizing a secure environment, the benefits are endless. Increasing profits, providing competitive advantages, reducing manual processes and their related errors and most important the ability to build new business models. Business models that solve problems and create new user experiences as technology continues to progress.

PCM: How do Instant Payments impact the various players in the industry? (Banks, PSPs and Merchants alike) Travis: It is important to understand that this new payment rail is the systemic automation of the current Automated Clearing House (ACH) payment type. While Instant Payments does have a larger impact, it isn’t necessarily a replacement for retail “purchase” transactions. However, this could be an evolutionary point in the future. Banks, Processors, Mobile Providers are perfectly positioned to take advantage of the new payment rail opportunity, by offering new products and services to their Merchants.

“

Real-Time Payments in the U.S. is a reality. The time for talk is over, we’re doing it right now!

Travis Dulaney, CEO & Co-founder, Push Payments

Merchants, consumers and society as a whole can benefit by enabling better cash management and helping businesses manage day-to-day operations by improving liquidity.

PCM: What can we expect in the future in terms of the development of Instant Payments and providing opportunities for Merchants and other players in the industry?

PCM: What role does PSD2 play when it comes to Instant Payments and what will the impact of it be?

Travis:

Travis: PSD2 has a rippling effect across the globe starting from the regulatory policy to the banking digitalization and the API economy. Unlike ever before, we have disruption in all sectors of the financial services industry at the same time combined with the globalization of the world’s economy. Interoperability, transparency and open directory services are PSD2 requirements and will become the new capabilities of payment platforms going forward. There will be different impacts based on the local regulatory environment and growth of banking and fintech collaboration. As a member of the United States’ Federal Reserve Faster & Secure Task Forces, many innovations are underway both at the federal level and by commercial market leaders.

1. We are just at the beginning of understanding all of the use cases that will be able to take advantage of real-time payments. Every day we learn about new business models and companies that are excited about how real-time payments will change their revenue models or provide a competitive advantage. 2. The majority of the goods and services that we buy or use today are shifting towards on demand fulfillment, and the instant movement of funds will be an integral part of that user experience. 3. Whether it’s paying a vendor for supplies, sending emergency cash to traveling employee, or providing immediate payment to contracted workers that have just finished their shift, or just moving money from one account to another, realtime payments will become a standardized way of transferring value.

Push Payments Push Payments provides payment processors, banks, and mobile providers the ability to move money in real-time between bank accounts. Having built a revolutionary switching platform, customers gain the infrastructure necessary to achieve an unprecedented advantage over competitors with simple, secure, and smart API interfaces and best in class market solutions.

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

“WE SERVE OUR CUSTOMERS WITH A SIMPLE AND CONSISTENT ONLINE ACCESS TO BANKS AND THEIR ADVISORS.”

Harald Meinl, baningo GmbH Co-Founder & CEO

photo credit: Markus Thums

inding the right financial advisor can be a very daunting task, with a sea of titles and acronyms out there and many advisors clouding the water with clever marketing. Not only that, financial advice is some of the most important advice that we receive, as it’s often crucial to the planning of our future. This month, we sat down with Harald Meinl, Founder & CEO of baningo GmbH, a company that helps you to navigate the waters and connects you to the right advisor or expert online.

PCM: Tell us about baningo. How did this idea come to be? Harald: Baningo GmbH is a FinTech Startup based in the beautiful city of Vienna. My Co-Founder Max Nedjelik and I met at Erste Bank where we both worked for several years. After we quit our jobs we decided to found our own business. We came up with the idea of baningo after a lot of conversations with friends and family. Many people asked us if we knew good financial advisors who could help them with their financial needs. We also observed that finding a mortgage loan took many of our friends quite a long time, running from bank to bank as well as calling hotlines or filling in forms. Based on those experiences, we finally had the idea of developing a financial advice platform where people can choose and contact financial advisors from banks directly online without going to a bank branch. We finally launched our platform baningo.com for the Austrian market in September 2015. One of the biggest advantages of baningo.com is that customers can find many experts from various banks in one

place. We started with 33 advisors from 4 banks. Currently we are listing over 250 advisors from 30 Austrian banks online on our platform. This year we also launched a white label solution for the financial service sector. This product is called baningo-select (www.baningo-select.com). It’s a SaaS solution which enables banks, insurance companies and other financial institutions as well as independent financial advisors to provide online advice to customers. baningo-select includes advisor profiles, advisor search, live chat, video-call function, online appointments and comprehensive statistics for internal sales control.

PCM: Why is it called baningo? Harald: IOur idea was to find a name that is not related to the old fashioned financial sector. We were looking for something fresh which is also working in other languages and not associated with anything else. baningo stands for banking-insurance-go-online.

PCM: Why is baningo needed? Harald: On baningo.com we make financial advisors from different banks visible and accessible online. For the first time customers can choose and contact their preferred advisors directly on their own at baningo.com. This allows baningo users to receive the best financial advice and compare different offers at the same time.

startup Spotlight

A direct access to financial advice is–although there are many new automated financial solutions on the market trying to make advice obsolete–still important for many people. Studies show that 89% research online for financial topics (GfK, „Customer Journey Banking“, 2016), however 70 % want and need personal advice, especially for complex topics (baningo white paper, Digitalisierung im Bankgeschäft: Wie persönlich soll Beratung heute noch sein?). baningo’s USP is to provide a seamless process from online research to personal advice. The Financial Conduct Authority (FCA), which is the financial regulatory body in the United Kingdom, already warned about the so-called advice gap in the UK. A platform like baningo. com can solve this problem for customers and increases the transparency. But we are also focusing on the needs of the financial service sector. Many banks, insuranc-es and other finance-related companies struggle with the digitalization of their businesses. This is why we invented baningo-select. baningo-select is a multi-channel solution for companies which rely on personal advice. baningo-select acts as a virtual branch which allows them to offer their customers all the benefits from a branch but online. Customers can find the most suitable experts for specific topics online. They can advise their customers via live chat or video calls. If a customer wants to meet in person, an online appointment feature helps them to schedule a meeting with an advisor. There are no integrations into the core banking system needed which makes baningo-select easy and very fast to implement. We see this as a crucial advantage as many software implementation projects take several years to get started.

PCM: What makes baningo different? Harald: We are building solutions for personal advice in finance. This is a big difference to many other FinTech Startups which are working on solutions that make personal advice obsolete. Many studies show clearly that financial advice is still very important to customers, especially for complex financial products like loans or investments.

A Roland Berger study (digital revolution in retail banking 2015) shows that although 24% of all customers become interested in financial products online, 65% still want to be advised on complex products at the branch or at home. Even our own study – see above - shows that over 70% are looking for sound financial advice for complex products. In the financial industry the so-called ROPO effect (Research Online, Purchase Offline) is predominant. Our solutions address exactly these customers as baningo.com, baningoselect however allows them to search for solutions online and in addition they can contact an advisor without a media breach directly afterwards. Our products combine the advantages of online (transparent, fast and direct processes) and offline (personal advice, trust in a person) services. As a result, our customers have a bene-ficial opportunity to become more innovative whilst still relying on their strongest ad-vantages–trust, branches and advisors.

PCM: What were some of your biggest challenges for launching this business? Harald: When we launched baningo.com our biggest challenge was the classic chicken-and-egg problem. A double-sided platform needs customers who are demanding services and an offer for these customers – in our case banks and their advisors. It was hard for us to sell our vision to banks without having any kind of traction. But in the end we succeeded and went online with 4 banks and 33 advisors. Today we are working together with 30 banks and 250 advisors all over Austria. With baningo-select – our new product which was launched this year – we are now facing the challenge that banks want to have references. Right now we are working on the task of selling baningo-select to a big customer who could function as a kind of role model for other banks.

PCM: Tell us about your expansion plans and how you go about choosing the next region you expand into? Harald: Within the next few months we are planning to expand and offer our white label product baningo-select to several European countries. Currently we are in advanced negotiations

startup spotlight The baningo GmbH team

photo credit: Markus Thums

with four German banks. Besides, screening other Western European markets, we are also looking at Eastern European countries with a developed banking sector. For example, Poland seems to be an interesting market for baningo-select, as the availability and usage of internet is quite high and the banking sector is very diverse and developed. Recently we even received a request by a Vietnamese bank, so maybe even Asia will be a potential market in future as well. That being said, currently we are focusing our efforts on Europe.

PCM: What are the 3 things you want people to know about your company? 1. baningo GmbH is an Austrian FinTech Startup which is always looking for talents who want to build products with the goal of providing people the best financial advice in the most convenient and easiest way possible. 2. In general, baningo provides excellent and user-centric turn-key solutions and innovative approaches for the financial industry. • •

baningo.com serves customers in Austria with simple and consistent online access to banks and their advisors. baningo-select is a white label SaaS solution of the baningo.com platform which enables banks, insurance companies and other financial institutions to provide our customers direct access to their advisors. baningo-select

includes advisor profiles, advisor search, chat, video chat and online appointments. 3. baningo is a company which is open for new ideas and collaborations. It doesn’t matter if you are an investor, possible sales partner, representative of a corporation or a person that is eager to start a platform like baningo. com. We are always happy to communicate and discuss crazy ideas.

PCM: Any exciting news / announcements you would like to share with our community? We understand that not only financial service companies struggle with digitalization and with regulations like MIFID II. Self-employed independent financial advisors, insurance brokers or small businesses in general are facing very big challenges as well. That’s why baningo-select has expanded their services to also aid these potential customers. We are planning to make baningo-select accessible to them for a reasonable price without any implementation effort. We will soon create the possibility for customers to start with baningoselect fully automated like many other SaaS products e.g. Slack or Salesforce. Customers will be able to customize baningoselect to their needs and run it under their own domain. This will be quite exciting as it will allow us to scale worldwide and small businesses will have the same technological knowhow possibilities that in the past were only available to big corporations.

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.

Oskar Strandh Head of Payments and Operations at SuprNation Oskar is Head of Payments and Operations at SuprNation and has an extensive background in online gambling (igaming), financial services (money remittance), travel, and commerce. With over six years of online payments and fraud prevention experience, Oskar joined SuprNation in April 2016.

PAYMENT COLLECTIVE

Instant Payments: A road with many pitfalls?

n this month’s Payment Collective we sat down with Oskar Strandh, who is heading up the new Payments & Operations Department at SuprNation. He discusses which challenges and opportunities of instant payments can bring from a merchant perspective.

PCM: What is the most undervalued part of Payments by payment providers that you see and should be covered more or would be great to outsource?

PCM: What are you looking for when selecting a payment vendor?

PSPs sit on a tremendous amounts of valuable data. It can be useful for everything from KYC/AML checks to enhancing customers’ shopping experience to helping merchants assess the potential value of a paying customer. Acquirers, e-wallets and bank transfer payment providers could do a lot more to share data about account owners and card holders with their merchants, without necessarily disclosing any sensitive financial information; Of course provided that the merchants are capable of handling the data in a secure, responsible manner and in line with regulations such as the GDPR.

Oskar: As an online gambling operator, we have to consider money out (withdrawals) as well as taking payments (deposits). A key determining factor is whether there is a demand for the specific payment method and what type of customers use these payment methods. Anonymous payment methods or unregulated payment methods may be disproportionately popular with undesired customers such as promotion abusers. This may sound obvious but especially in the igaming industry, there is a belief that the more payment methods you offer, the more customers you reach. While there is an element of truth to that, if you also consider the financial and operational costs of setting up and maintaining dozens upon dozens of PSPs, e-wallets, and payment methods, the net benefit isn’t as clear anymore. Other important factors are reputability of the vendor, coverage (countries covered, banks covered in each country), complexity of technical integration, quality of back office, speed of settlement, experience and understanding of my industry, and of course also pricing.

PCM: What do you think the future of Payments will look like? Oskar: Payments are a significant reputation-builder in igaming. Given that, I’m hoping that we will start seeing 24/7 real-time bank transfers rolled out across more countries and being adopted by more banks. Thanks to some of the PSPs we work with and banks they have integrated (mostly in Scandinavia), many of our players receive their withdrawals into their bank accounts within seconds after we approve, which is usually within 10 minutes. That’s a fantastic customer experience. With the EU eIDAS Regulations, I’m also hoping to see PSPs get more and more involved in customer identity verification. Many payment methods require players to verify themselves against a bank. Why not leverage that more? For now, only a handful of PSPs have reached this level of maturity and it’s definitely a value-added service of the future for PSPs. It helps regulated merchants fulfill their AML/KYC obligations.

Oskar: Sharing data.

PCM: How important are Instant Payments to your organisation and how do you utilise this to ensure a seamless customer experience? Oskar: Taking deposits and paying out withdrawals is absolutely critical to igaming. It doesn’t matter if you have the coolest front-end, latest and greatest games, and eye-catching marketing material. If your players are unable to deposit funds through their preferred method and receive their winnings quickly, they will go somewhere they can. If you are able to offer your players fast payouts, where their payout requests not only are approved quickly manually or entirely automatically but also reach their bank accounts within seconds or minutes, players are able to trust your brand much more.

PCM: What effect does Instant Payments have on your business in terms of payments and customer experience? Oskar: I think this question is best answered in two parts. First, we decided to not offer several payment methods that tend to clutter a lot of igaming operators’ lists of payment options. Many igaming operators are keen to offer every payment method under the sun. We only offer payment methods for countries where they make up a significant and valuable part of the market instead. Players that come to us see a cleaner, simpler cashier with only the payment methods that are relevant to them. It has enabled us as a company to have a much more streamlined payments setup internally, which reduces workload for customer service, payments team, finance, tech, and pretty much everyone. A definite net benefit for us.

Payment collective Secondly, VoodooDreams has earned a reputation for fast payouts. This is possible in part because of our more streamlined setup and also because the payment methods we do offer are absolute top-tier. Data sharing is also a hugely impactful element.

Secure, card payments are not subject to.

PCM: Finally, what are a few words of advice you would like to tell merchants looking into implementing such system or technology?

A typical Swedish player can deposit money straight from their bank account, play, win, withdraw, and have the money on their bank account within 10 minutes in most cases. Service levels like that have certainly helped us build trust with our players and enabled us to grow.

Oskar: Instant is great, but beware that there can be risks. These payment methods may come with practically zero chargeback risk, but be careful not to confuse this with guaranteed funds.

PCM: From your experience, what can be better when it comes to Instant Payments in terms of technology and processing rates?

If you are looking to offer instant payments, for example via bank transfer, make sure you understand whether the payment is 100% guaranteed at the moment of payment or if there is a settlement delay.

Oskar: Merchants, customers, and even PSPs have a lot to gain from instant payments where authorisation, clearing, and settlement are all instant. Steps hve already been taken for this, especially within the SEPA region. Improving error messaging would also benefit merchants and customers. If we know exactly why a payment failed, we can better guide the customer on how to complete their deposit or their purchase.

PCM: In your opinion, what are some of the biggest challenges working with Instant Payments? Oskar: In the case of an igaming operator, it’s usually down to balancing players’ expectations of quick payouts with regulatory requirements. We want to ensure our players get their funds as quickly as possible but we also have compliance requirements to meet and risks to mitigate. For e-commerce and travel, where customers are less accustomed to alternative payment methods, customers might not see any advantage of an instant payment method as opposed to just typing in their card digits. Instant bank payment methods introduce a number of additional steps such as authentication to log in to your bank, which, short of 3D

This risk may vary between payment methods and between countries and banks. It essentially boils down to whether the bank account holder, that payment was initiated, can cancel or cause the transaction to be cancelled. Suppose a customer is buying a 500 EUR computer monitor online on Friday evening. With some instant bank payment methods on the market today, the customer can set up a transfer of 500 EUR and you would get an OK from your PSP. The payment may not execute until Monday and many banks don’t reserve funds for pending transfers, so the customer might spend those 500 EUR at the bar on Saturday. When Monday comes, there are no funds available and the actual bank payment is cancelled. As a merchant, you wouldn’t know until probably a few days later at which point you have probably shipped the item already.

SuprNation SuprNation is an online gambling operator and technology company founded in 2015. The company is based in Malta and holds several licenses. In August 2016, the company launched its first online casino, VoodooDreams. VoodooDreams has quickly earned a reputation for fast payouts.

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