Mobile Banking versus the Mobile Wallet

With recent news that Barclays Pin-git (or is it Ping-it) has had 120,000 downloads in 5 days, that Square has 1m merchants on their payments platform (1/8th of all US card merchants/retailers) and Starbucks is doing 25% of it's North American payments via a cardless App - it seems like Mobile Payments are taking off like the H1N1 virus. The interesting thing is that many bankers are looking at all of this activity as if it has little meaning or impact on their business at this point in time. I think part of that may be that there is a fundamental misunderstanding of how the mobile can be utilized in the banking and payments space.

When showing glimpses of Movenbank's Mobile App I often get asked by bankers whether it is a mobile wallet or a mobile banking app? It's as if the two worlds of cards/payments and banking are destined never to meet when it comes to a conventional view of the banking world. In banks today, we even institutionalize this by having cards as a separate division or business unit, separate from the retail banking function. The only time they ever seem to meet is in the form of a debit card or within internet banking. But the cards business, while being a strong revenue earner generally for banks because of credit card fees and interest margin, philosophically is not really considered banking per se by most die-hard bankers.

In fact, I've known banks where if you walk into a branch, the teller needs to call the call centre to find out any information about your credit card, even your balance. With many of the banks I work with, in-branch or in the contact centre, CSRs/Tellers need to navigate between separate screens to see your credit card details and activity versus transactions in your checking account.
For a long time these two worlds have remained largely operationally separate. The popularization of the smartphone is destined to destroy that division of labor.

The world of Two Channels
Today retail banking is emerging out of the hyperconnected, digital transformation age as not much more than a collection of channels and utility. In the past, you had branches which were THE distribution channel, but that has rapidly fragmented. You also had cheques and cards which provided you a mechanism, or utility, for moving your money around. Historically banking was really about two primary things - storing or protecting assets, and helping in the conduct of trade and commerce. Rudimentary cheques (or bills of exchange) were around almost 800 years before physical currency, and prior to bank branches 'assets' were often stored in temples and palaces. At the core of banking was assets that you either kept safe, or moved around to effect trade. In many ways, that's still at the core of the bank value proposition.

As some of you may have noted in BANK 2.0 I call out bankers for calling digital channels 'alternative' or e-channels because of the psychology internally within banks that tends to put these channels in a subordinate role to the branch. Recently I was approached by a recruiter looking at placing a global head of 'E-Channels' into one of the big global brands and asking me for my input into how could take on the role. I told the recruiter that any digital guy worth his salt would immediately stay away from this major banking brand, largely because the decision to classify the role as a head of 'E-Channels' already told me everything I needed to know about the brand - that they still thought of digital as 'E' rather than mainstream, everyday banking. That told me that anyone taking on this role would still be faced with massive inertia around branch networks and would be fighting everyday to justify budget, investment and mindshare in the total channel experience - and that is why I said this brand was not ready.

With Internet Banking being the primary day-to-day channel for banking in the developed world, and branch frequency/visitation off 90% from it's peak in the mid-90s, the branch is really 'alternative' banking today, rather than pride of place at the core of banking behavior. So the pendulum has shifted.

So what are the two emerging channels?
If you characterize banking today from a day-to-day perspective, you've really got two core classes of activity. Payments AND day-to-day banking based on your assets, including applying for new products, wealth management engagement, etc. If you look at either customer engagement, transactional activity or the role of an advisor in respect to your assets, you'd be hard pressed to identify activities that aren't done through either Payments Channels or Delivery Channels (credit to Terence Roche @Gonzobanker for this insight).

Given the way retail banking is structured today, this means that many banks look at a mobile wallet as an instantiation of payments - the ultimate, downloadable payment channel 'function' or utility. However, they look at Mobile Banking as a mobile-enabled version of the Internet banking platform, which is ultimately just channel migration of transaction activity from branch to digital - hence, a delivery utility. Some progressive banks are even looking at onboarding customers entirely electronically through the web, mobile, ATM or call centre - without a signature. More delivery channels. The branch is the premier delivery channel still, and more so as transactions shift out of the branch, and it becomes about high touch sales and service (delivery of revenue and service).

When two worlds collide
The problem philosophically for retail banks is that the mobile device is collapsing this view of the world. Payments and traditional day-to-day banking utility will be packaged into one portable, handheld 'channel'. It doesn't make sense to have one app for 'banking' and one app for 'payments' or the wallet, you must have the utility of both the bank and payments capability in one.
That presents an organizational shift because it merges the two disparate parts of retail banking, but it also presents massive opportunities.

What is possible is that my day-to-day connection with my money is far tighter than it is in a traditional banking relationship. Whether it is simply the fact that I can see my balance before and after I make a payment (not possible with plastic, cheques or cash) or whether you can start to advise me day-to-day on how to utilize my money better - the opportunity for mobile is not the wallet, and not mobile banking. It is re-imagining the utility of banking from a mobile perspective.

Visa shows off Olympics NFC m-payments app

Visa and Samsung will next week unveil their Olympic and Paralympic Games contactless mobile payments app.

 

The two companies, both official London 2012 sponsors, first outlined plans for a special Games NFC payments handset last March and have since brought Lloyds TSB on board.

With the Olympics opening ceremony now just five months away, the pair will show off the technology at Mobile World Congress in Barcelona next week.

The app, based on Visa's payWave technology, enables users to make payments of up to £15 by holding their phone in front of a contactless reader at the point of purchase. Customers can also check their transaction history and view their up to date account balance.



Sandra Alzetta, head, innovation, Visa Europe, says: "London 2012 is a unique opportunity to show the future of payments coming to life and leave a lasting legacy post-2012. The new mobile payment application is central to this showcase. We are also working with a number of partners to put live mobile payment technology into consumer hands."

There has been unconfirmed speculation that Google will also use the Olympics as a springboard to launch its contactless mobile payments system in the UK.

The rise of the machine

Mobile web devices will outnumber puny humans this year!

February 14, 2012 9:44 AM

The rise of the machines is upon us. A new report from Cisco predicts that mobile Internet devices will outnumber people on Earth for the first time by the end of 2012 - a sign of ever growing love and dependence on technology that always keeps us connected.

“By the end of 2012, the number of mobile-connected devices will exceed the number of people on earth, and by 2016 there will be 1.4 mobile devices per capita,” Cisco stated in its latest Global Mobile Data Traffic Forecast Update. “There will be over 10 billion mobile-connected devices in 2016, including machine-to-machine (M2M) modules-exceeding the world’s population at that time (7.3 billion).”

Cisco’s new study also indicates that mobile data traffic grew more than two-fold in 2011, which is the fourth year in a row such traffic has doubled. 2011′s mobile data traffic was actually eight times the size of the entire global Internet in 2000, which shows just how rapidly the mobile web has been utilized across the world.

The study also presented some interesting tidbits about the state of 4G networks like Verizon’s LTE and Sprint’s WiMax offerings. Users with a 4G connection generated a staggering 28 times more traffic than a non-4G connection. At this point, 4G connections only represent 0.2 percent of mobile connections, but are already accounting for 6 percent of all mobile data traffic.

While it might be a little premature to say the machines are taking over a la Terminator (see the pretty guy above), having more connected web devices than humans as well as more ubiquitous web connections is a step in that direction.

In the Terminator films, the machines are able to rise up against humans because they are diverse in capabilities and connected through the Skynet artificial intelligence system. Maybe we’re heading toward our own Skynet with our connected phones, tablets, and TVs that know an awful lot about us?

Terminator image: Terminator 3: Rise of the Machines/Warner Brothers

European Parliament: 2014 voted legally-binding deadline for SEPA migration

The European Parliament has passed legislation that establishes 1 February 2014 as the legally-binding deadline for banks to migrate to the new SEPA system.

The single European payments area (SEPA) regulation was passed by the European Parliament on 14th February 2012 and lays down EU-wide rules aiming to ensure that banks compete fairly, eliminate hidden national charges and accelerate transfers, potentially saving up to EUR 123 billion within six year, according to official estimates.

To this end, the rules will ensure that euro credit transfers or direct debits that are possible within SEPA countries are also possible across frontiers between them.

By eliminating multilateral interchange fees on cross-border direct debits as of 2012, the regulation enables businesses to establish their payment centres in any EU Member State.

Businesses could also organise all cross-border euro payments from a single euro account in a country of their choice in order to improve money management and speed up cash flows at lower cost.

The new legislation was adopted in the first reading with 635 votes in favour, 17 against and 31 abstentions.

Barclays unveils cash-free payment app in bid to poach bank customers

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BARCLAYS has launched a mobile app that could see the bank poach thousands of customers from rivals by giving them the ability to pay without cash.

The app, called Pingit, is aimed at boosting Barclays’ brand by linking the lender to a convenient service. It lets users link their mobile number to their bank account – with Barclays or a rival – and then send cash to any other registered user using a five-digit PIN code.

Barclays head of retail Antony Jenkins told City A.M.: “It lets us build relationships with new customers as well as strengthen relationship with our own customers.”

That gives the bank a chance to peel off customers from its rivals one service at a time – effectively un-packaging bank products so that account-holders more commonly use different banks for different financial services.

Jenkins said: “We will hope this forms a favourable impression in the minds of non-customers so when they’re thinking about a savings or mortgage product, they will come to us... We expect the benefit from that to be powerful.”

He would not detail how much Barclays has invested in the app beyond saying it is “significant”.
Jenkins is not sure what uptake is expected or where the returns will come from, but said: “Once you have engaged customers using the product you then have the opportunity to talk to them about other things.”

He added that the aim is not to use the app to flood users with marketing material, however.
The app is aimed at a mass market for those who need to quickly send small amounts to one another, for example when splitting a bill in a restaurant or, in the case of small business owners like plumbers, collecting a fee after a job.

It will be rolled out first in the UK and Italy.

HOW TO PAY WITHOUT CASH

• The ubiquitous Oyster card is a cashless payment method for London’s transport system and many National Rail services.

• McDonalds, Pret and Boots are among the UK shops where you don’t have to fumble for spare change. You can pay by tapping your Visa or Barclaycard on a reader.

• Orange Quick Tap lets you spend up to £15 by holding your phone over a contactless reader. This function, which links to your Barclays account, is currently available on Samsung’s Tocco and Wave 578 phones.

• O2 is working on similar technology after running a trial in Sitges, Spain. O2’s Mobile Wallet will double as an Oyster card, host several bank and loyalty cards and allow you to text cash to other phones.

• The Google Wallet mobile app also works by letting you tap your phone on a reader. It is currently only available in the US, but rumour suggests Google Wallet could land in London before the Olympics.

• Dwolla is another app, on iOS and Android, which facilitates money exchange in store and with other users, much like Square. Both apps are only available in the US.

Will Apple take a bite out of mobile payments?

Year after year, Apple fans have expected the company to make a splash with an iPhone-based mobile payment system. And year after year, Apple has let them down — but a lot has been going on under the surface.

Many mobile payment systems, including Google's, use near-field communication technology as the starting point. To use Google Wallet at the point of sale, a consumer must have one of the few NFC-equipped smartphones running its Android software. Similarly, a merchant must have a terminal with the proper hardware to read the chip.

For Apple, however, NFC is not the key ingredient. If it comes, NFC will simply be the icing on a cake that Apple has been baking — and will still be baking — for a very long time.
"Right now, Apple devices are not NFC-equipped, but they are a more flexible environment from a software perspective than traditional" point of sale terminals, says Rick Oglesby, a senior analyst at Aite Group LLC.
Google's Android is the leader in smartphones, according to Gartner Inc., but the Android product line is too fragmented to sustain the sort of payment ecosystem Apple is building. Android devices come in hundreds of different shapes and sizes along with operating systems that are often tweaked according to carriers' whims.

Apple's i-devices, by contrast, are not customized for different carriers and have fewer hardware variations (Apple typically removes older iterations of its hardware from stores whenever a new version is launched). This allows for a uniform experience across the entire product line — and a more practical foundation for a payment system, experts say. (Representatives from Apple did not respond to inquiries made by phone and email.)

Apple retail stores in Paris and London are currently using a device from Ingenico SA that slips over iPhone and iPod Touch devices, for chip-and-PIN transactions as well as for full access to the iTunes app store, says Svy Nekrasas, vice president of marketing for the French terminal maker.

"Apple is definitely a market leader, and we have nothing in the pipeline in terms of integrating other devices to this form of payment," Nekrasas says. Ingenico is also the hardware provider for a test of PayPal's wallet in Home Depot stores using traditional point of sale devices.

Most payment systems built around Apple's devices still rely on plastic cards. Square Inc. set the tone for mobile payment acceptance with a freely distributed reader that lets small merchants accept transactions through the iPad and iPhone.

Square's reader was designed for small merchants such as flea market vendors, but other hardware makers are bringing Apple's devices into established retailers.

For example, when customers go to the women's clothier C. Wonder in New York's SoHo district, salespeople greet them with Apple's iPod Touch devices equipped with a card reader from VeriFone Inc.

The reader turns Apple devices into mobile point of sale machines that tap into the store's enterprise resource planning system.

"The Apple devices provide a more dependable platform," Paul Hoffman, vice president of business development and strategy for J. Christopher Capital, the management firm for C. Wonder, wrote in an email. Vendors offer more products that work with Apple devices than with other mobile hardware, he said.

And "there is the inherent coolness factor with Apple products," he wrote.
Perhaps even cooler: the platform cost less than $500,000 and took about four months to implement.
Hoffman claims it would have taken more time and cost millions of dollars to do a terminal and system upgrade and to manage Payment Card Industry data security standard compliance for all of its stores. (VeriFone's sleeve, like Ingenico's, encrypts transaction information.)

VeriFone recently announced a bluetooth version of its hardware to work with other mobile devices, but its current version works only with the iPad.

If Apple chooses to turn its iPhone into a payment device, it will not have to deal with the hassle of enrolling consumers into a new payment system.

Apple already has the payment details of countless consumers enrolled in its iTunes digital media store. As some of Apple's patents have shown, the company has explored adapting this system for other payment settings.

And the iPhone's status as a consumer-friendly handset that can handle business functions positions the device well to serve small-business clients — a group that banks and payment companies are largely ignoring in their mobile payment deployments with big-name retailers like Duane Reade and Home Depot.

"There is a big set of merchants that traditional bank merchant acquirers have ignored" and that Apple and its partners "could bring into the electronic payment ecosystem by making the process simple and not requiring the purchase of point of sale" equipment, says Gil Luria, senior vice president of Wedbush Securities.

Another advantage to Apple's approach is that people typically update their phones a lot more frequently than merchants update traditional point of sale systems, says Larry Berlin, a vice president and research analyst for First Analysis.

"The market is ripe for some fierce competition," says Sandeep Bhanote, vice president and general manager of mobile retail for VeriFone.

But, Bhanote adds, "The only way to compete on par with Apple is for someone to come up with some standardization across the [Android] OS and form factors."

I have glimpsed the future - and it looks a lot like free hot chocolate.

James Temple

Square Card Case can broadcast a user's mug shot to the merchant.

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Late last month, I ordered the beverage at Sightglass Coffee in SoMa, grabbed it from the counter and walked out without cracking my wallet.

Nobody chased me down because, when I first approached the cafe, the Card Case app on my iPhone detected the store's perimeter and automatically switched on. It broadcast my picture to the barista, who could then tap my pre-entered credit card number to cover the bill. The phone never had to leave my pocket.

It felt a lot like buying in the one-click environments of iTunes or Amazon, which is to say it didn't feel like buying at all. Square, the San Francisco startup behind the app, has come close to replicating the frictionless online buying experience in the brick-and-mortar world.

"What we wanted to focus on was removing the mechanics of the transaction and building the relationship between the merchant and customer," said Megan Quinn, director of products at Square, which occupies space at the Chronicle building at Fifth and Mission streets.

But, of course, Square isn't the only company working hard to crack the nut of mobile payments - and they all face considerable challenges.

Google, Visa, MasterCard, VeriFone, eBay's PayPal division and a joint venture among AT&T, Verizon and T-Mobile are attacking the problem in various ways. In most cases, those businesses are going a different direction than Square, employing near field communications (NFC) technology that allows people to tap their phone near a terminal to make a payment.

Done right, mobile payments can accelerate the monetary exchange, while streamlining the issuance, acceptance and storage of receipts, coupons and loyalty cards. Down the road - once consumer and retail use reaches critical mass - the hope is that people will be able to leave their wallets at home altogether.

But there's a chicken and egg paradox: Customers won't start using mobile payments in great numbers until they're accepted in great numbers, and retailers don't have a huge incentive to roll these systems out until customers are clamoring to pay this way.

There are only about 150,000 retailers nationwide that accept payments over MasterCard's NFC-based Paypass readers. Google's Wallet payment app works with this system, and industry rumors suggest the next iPhone might as well.

Square, which has so far focused on small merchants has about 20,000 that accept Card Case.
Another big challenge is human inertia. To get people to download apps, key in credit card numbers and transform a habit they're very comfortable with, mobile payments will have to represent more than a little improvement over what they do today.

"You have to offer them a compelling reason to do it," said David Mangini, an IBM executive focused on mobile payments. "At a very, very minimum ... it has to be just as convenient, just as broadly accepted and just as safe."

One of the big knocks on basic NFC payments is that tapping a phone near a reader doesn't represent a whopping improvement over swiping a card. In addition, merchants have little to gain by replacing one expensive payment infrastructure with another, some observers say.

"It doesn't upset the status quo," said Nick Holland, senior analyst at Yankee Group. "It doesn't really change the original business model and it all goes through the same rails."

Receipts, deals

Google argues that its NFC-based Wallet app is a big step forward for a few reasons. A single tap replaces not just the payment, but also the exchange of receipts, coupons and loyalty points.
On top of that, Google believes it's tying together the on- and off-line retail worlds, by allowing consumers to move the deals they spot on the Web into the Wallet app, where they can redeem them in the real world. Google Wallet also advertises nearby deals when users open up the app.

"For the consumer, it's really about tap, pay and save," said Osama Bedier, vice president of payments at Google. "On the merchant side, it's about closing the loop on that advertising."
This is a critical goal for Google, too, as it experiences slowing growth in online advertising - 93 percent of commerce still occurs offline, according to Forrester Research.

Swedish startups leaders in m-payments race

With increasing amounts of people choosing to make payments via their smartphones, a number of Stockholm based tech startups are aiming to take the lead in the global race to head the booming m-payment market.

In June, iZettle launched a card reader that allows users to take credit card payments from chip-enabled credit and debit cards. The free device simply plugs into the port of an iPhone.

The Stockholm-based company and its device have been praised by the international media. Forbes wrote: "iZettle offers huge advantages over other systems that let businesses accept chip-card payments". Wired, Cnet, Financial Times and others have given the Swedish startup extensive coverage.

Jacob de Geer, CEO and co-founder of iZettle, believes that the considerable attention is explained by the fact that the service fills a burning need among both consumers and entrepreneurs.

"Businesses and individuals shy away from dealing with cash and the card is the natural alternative, given the spread," he told The Swedish Wire.

It's an innovation that ticks a lot of boxes. For example, tradesmen can save time, money and paper by taking an instant payment, instead of mailing invoices and waiting for payment as in the past.

A few months ago, the company raised 11.2 million dollars of funding, led by Index Ventures, Creandum and Charles Dunstone, co-founder of The Carphone Warehouse. The service has already been launched in Sweden and the company plans to take iZettle to other European countries, including the UK, Spain, Italy, France and Germany.

The concept of iZettle is similar to that of US mobile payment service Square, which was created by Twitter's founder Jack Dorsey. But while Square works when bank cards are swiped, iZettle works with chip-enabled cards, which are popular in Europe.

The competition for m-payment solutions raises an important question: which technology is the most likely to be world de facto standard? A Huffington Post article predicted that "there's a brutal, bloodbath-type clash looming" over mobile payment standards.

"I think I like the odds of a 30-employee Swedish startup with $11 million more than I like a great, big, over-hyped U.S. tech company with $100 million and an absurdly otherworldly valuation," wrote the Huff Post's Bill Robinson.

IZettle owner de Geer said he believes that Swedish tech-companies have the possibility to be frontrunners in developing m-payment services.

"Sweden is a natural test market for Swedish startups. Fortunately, the Swedes are very technology savvy and interested in new technology. We also have a very good internet and mobile penetration, which is helpful," he said.
"Given this, we have much better chances to come out with innovative mobile technologies before others."

In Sweden alone there are approximately 17 million debit cards. In combination with about 1.5 million iPhones, iZettle has a critical mass of potential users from day one, de Geer added.

But it is far from the only mobile payment firm in Stockholm. Growing demand for mobile services has led to a number of ICT companies chasing customers, with many taking advantage of the surging quick response (QR) code technology.

Some of the companies include:
• Payair, which uses the QR code: Mobile phone cameras are pointed at a bar code for automated product identification and approve the purchase with a personal code. The company recently launched its service in the US

• Seamless is a software innovation company which specialises in solutions for money transfers between mobile phones. In its mobile payment platform consumers scan a fixed QR code.

• Payex Mobile, created by debt collector PayEx, is a mobile payment service allowing users to make transfers between mobile phones and to make online payments.

• PayGround is a company independent of card companies, mobile operators and banks. Instead, it has developed partnerships with credit market companies. After registering a mobile phone number to PayGround's service, a person's credit card number is never revealed online.

• Accumulate ME enables a mobile to be used in all payment situations. It allows fast and easy deployment of new and future mobile payment methods using one platform.

According to Cap Gemini's World Payment report 2011, mobile payments are expected to grow from 5 billion euro in 2010 to 15 billion euro in 2013. InStat said some 400 million people will use mobile devices to make payments by 2015, up from 100 million today.

Mobile operator Telia predicts that at least half of all Swedes will use mobile phones to make payments within two years. The report Telia Trends also predicted that 30 percent of those polled would make mobile payments today if possible.

And Telia has now formed an alliance with its fellow mobile operators, Tele2, Telenoe and 3. 4TSverige, to offer cross network mobile payment services. It will be launched this summer.

French consumers prefer fingerprints to NFC

A survey has found that French consumers are more interested in the idea of using their fingerprint to identify themselves when making a payment than in using a mobile phone for the purpose.

69% of the 1,008 people surveyed by Ifop for Wincor-Nixdorf said they were either very or quite in favour of replacing PIN codes with fingerprint biometrics at the point-of-sale, and only 36% were either very or quite in favour of using an NFC phone to make a purchase. 39% were quite opposed to the idea and 25% were very opposed.

Only 6% of those surveyed said they were definitely ready to change their mobile phone to one that allowed them to make NFC payments. A further 22% said they probably would change their phone for an NFC device while 31% said they definitely would not and 41% said they probably would not.

The survey findings indicate that French consumers are now less willing to adopt NFC payments than they were a year ago. A similar survey conducted by the same organisations last year found that 8% of consumers were strongly in favour of the idea, compared to 6% this year, and 19% were strongly opposed, compared to 25% this year.

Germans warm to NFC

German consumers are increasingly positive about the idea of making payments with contactless cards and NFC phones, a new survey conducted for Euro Kartensysteme has found.

Overall, 43% of respondents to the survey of 1,040 Germans aged 18-59 said they could well imagine making contactless payments in the future. Acceptance levels vary between different contactless payments technologies, however, with 58% saying they would make a payment with a contactless debit card, 50% would use an NFC phone and 41% would use a contactless credit card.

The most popular types of contactless purchase envisaged by respondents were parking (58%), public transportation (55%), petrol stations (54%), shopping in general (42%) and grocery stores (37%).

"Until now, the Germans have been more cautious compared with other nations when it comes to cashless payments," the survey findings conclude. "Now there are signs of a turnaround."

Wireless carrier T-Mobile USA announced it will offer Square's credit card readers in select retail stores.

"The success of our small business customers is important to us," said Matt Millen, vice president of small and medium business sales at T-Mobile, in the announcment. "Formerly 'cash only' small businesses can now simply and cost-effectively accept credit cards with their smartphone using Square, giving them an easy path to growth."

T-Mobile said it's the first wireless carrier to offer Square credit card readers in stores. The reader has been available at retailers like Walmart and Best Buy since last year.

Square's mobile POS is aimed at giving small merchants who work in the field the ability to accept credit cards using their smartphones. The app, when coupled with the credit card reading dongle, turns iOS and Android devices into credit card terminals. The company recently announced it had signed 1 million small business customers.

MasterCard reveals roadmap for our electronic payment future

MasterCard Introduces U.S. Roadmap to Enable Next Generation of Electronic Payments

MasterCard today introduced a comprehensive roadmap focused on advancing the U.S. electronic payments system.   

The roadmap, which includes the path for migration from magnetic stripe to EMV technology currently available on “chip” cards, will serve as the foundation for the next generation of products and services developed to enhance the way consumers pay.   
As payments continue to evolve to include new devices and new channels, such as mobile and eCommerce, the roadmap takes steps to address how consumers really shop, providing them greater security and control in their payment choices and the potential to seamlessly integrate loyalty programs and offers into the purchasing experience.   
“We’re moving toward a world beyond plastic, where consumers will shop and pay in a way that best fits their needs and lifestyles with a simple tap, click or touch in-store, online or on a mobile device,” said Chris McWilton, President, U.S. Markets, MasterCard. “Our roadmap represents a transformational shift in the approach to payments and is not simply about EMV, chip and PIN. We’re focused on readying the ecosystem to drive future innovation and provide new consumer experiences to enhance the value of electronic payments. ”   
Defining the Framework
Elements of the MasterCard roadmap include:

• EMV – Solidifying EMV as the foundation of the next generation of payments
• Immediate focus on acquirer infrastructure – Working with acquirers to ensure infrastructure readiness by April 2013
• Encouraging greater security and cardholder verification – Providing consumers with greater control and to reduce fraudulent transactions
• Provide benefits for merchant terminalization – Providing true financial benefits for merchants as they implement EMV-compatible terminals
• Cover all channels – Addressing all touch points where consumers will interact with MasterCard, including ATMs, the physical point-of-sale, online and mobile commerce
• Commitment to leadership and collaboration – Fostering industry collaboration to deliver the next generation of payments into the U.S. marketplace

In implementing the roadmap, MasterCard will maximize the technology advancements and investments the company has made over 45 years to benefit the payments ecosystem.
“Customers from across the payments ecosystem have been asking for a roadmap,” said McWilton. “We believe we’ve provided issuers and merchants with a vision to ‘future proof’ their businesses and the flexibility to manage their technology decisions to best meet their goals and priorities.”   
Foundation for Growth and Enhanced Security

In the increasingly digital world, transactions will get smarter. At the heart of this is dynamic authentication, where each transaction incorporates unique information, making it virtually impossible to replicate and reducing the risk of fraudulent transactions.
As issuers evolve their offering and merchants upgrade their terminals, the payments system will become more secure as this dynamic data is introduced into the payment transaction. MasterCard’s roadmap strongly encourages the adoption of the most secure technologies available.
“Consumers deserve a great experience any time they use MasterCard products,” said Ed McLaughlin, Chief Emerging Payments Officer, MasterCard. “As the industry invests in the upgrade to EMV in the U.S., we now have the ability to enhance the consumer experience and the security of a payment, regardless of the device – contactless card, mobile, eCommerce and technologies still to come.”   
Alignment, Collaboration and Leadership for the Road Forward
In its roadmap, MasterCard supports the need for the payments ecosystem to be aligned regarding the implementation of EMV standards in the U.S. The company has indicated it will support current industry timelines in an effort to minimize disruption and to maximize investments across the payments ecosystem.   

MasterCard was part of the original group that created the EMV standard and has supported the successful migration to EMV-based payments in nearly every major market globally. The company’s continued investment in advancing these infrastructure standards has provided insights and expertise to guide the industry in advancing payments security and convenience.   
“The shift to dynamic data in the transaction process will help ensure greater consistency, security and functionality between the U.S. region and the rest of the globe,” said George Peabody, director, Emerging Technologies Advisory Service, Mercator Advisory Group. “Merchants and issuers need a clear and consistent roadmap for payment card security and innovation. MasterCard’s approach, starting with EMV, will benefit consumers and the industry.”   
Additional detail on the roadmap and implementation activities will be provided to MasterCard customers in the coming weeks and months. In the meantime, initial resources can be obtained at www.mastercard.us/mchip-emv.html.

It pays to innovate

What next after Sepa? A comprehensive study of payments innovation in the European Union, the United States, Australia, and Canada.   This Working Paper from the European Savings Bank Group presents a comparative picture of what policy makers and regulators in markets at comparable stages of evolution have to say about payments innovation, what models academics could formulate and what conclusions they draw, what aspirations are expressed and what solutions are introduced and adopted by the supply and demand sides of the market.

Download now - 1.5 mb (PDF File)

Austria's RBI preps mobile NFC roll out

Austria's Raiffeisen Bank International (RBI) is preparing to introduce a contactless mobile payments service.

Working with Visa Europe and Cardis, RBI says its CardMobile service will be introduced in an unnamed Austrian city during the second quarter. The bank is also set to start issuing V Pay contactless cards.

CardMobile will see customers download an app and install a microSD card in their handset - initially just iPhones - to enable them to make low value contactless payments at the point-of-sale.

RBI says payment credentials are stored in the phone in the chip, which it provides and has the same security level as a bank card.

Gerald Kubu, head, card service, RBI, says: "CardMobile provides an attractive alternative to cash, as it does not require customers to manage any cash or electronic wallet balance, or to look for terminals to reload their card. At the same time, merchants will find the low costs attractive."