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A Thing A Bigger Thing

Friday, October 12, 2018

Apple Pay leads pack with mobile users

A pple Pay is the go-to digital wallet for most debit card users. This is according to new data from Auriemma Consulting Group. An Auriemma study of debit card issuers indicates that Apple Pay makes up 77 percent of mobile wallet transactions, leaving little market share for competitors Samsung Pay and Google Pay, which account for 17 percent and 6 percent of mobile wallet payments respectively.

Anita Solaman, director of Auriemma's Debit Management Roundtable, said high usage rates for Apple Pay may be a matter of demographics. "Apple users skew younger, and younger consumers are more likely to be debit [card] users," she said.

Financial institution support also plays a role, Solaman suggested. While large financial services companies tend to focus on issuing credit cards, debit cards are a core offering of most regional banks and credit unions. Debit-focused issuers see Apple Pay and other mobile wallet apps presenting opportunities to drive more customer engagement. "Regional banks with large debt card portfolios are driving top-of-wallet usage," Solaman said. "That means embracing mobile and digital options, particularly for younger customers."

Mobile wallets also allow these smaller issuers to go toe-to-toe with larger issuers that have developed their own branded wallets, like JPMorgan Chase's Chase Pay app. Evidencing this trend, Solaman noted that many smaller banks and credit unions are encouraging customers to load mobile wallets onto their devices during the account-opening process. "Provisioning a card has become part of the onboarding process," she said.

Samsung wallet users more engaged

Apple Pay's dominance in terms of wallet share doesn't necessarily equate to more transactions per user. Auriemma's study found Samsung Pay users to be more engaged, making an average 7.3 transactions a month compared to 5.5 transactions a month for Apple Pay and Google Pay users.

Solaman believes this may because Samsung has cast a wider technology net. Unlike Apple Pay and Google Pay, which work only with NFC card readers, Samsung Pay also is compatible with the traditional card readers most merchants already have in place.

Even as usage grows, however, mobile payments remain a nascent trend, accounting for just 0.6 percent of all debit card transactions in the second quarter of 2018, Auriemma reported.

However, banks and credit unions remain optimistic that mobile wallet adoption will grow as merchants and their customers seek faster, smoother checkout experiences. "Roadmaps for 2019 are all about digital, friction removal and customer experience," Solaman said. "For many debit card issuers, mobile wallets are a key part of that strategy."

Google finds bug, deletes Google Plus
Thursday, October 11, 2018

G oogle Inc.’s parent company, Alphabet Inc., disclosed on Oct. 8, 2018, that it deactivated the Google+ platform for consumers after detecting a software flaw that can potentially expose private data to software developers. Security analysts said a bug in the Google+ API made it possible for third-party app developers to access data for users and individuals in their Google+ networks. Some have criticized Google for failing to report the vulnerability as soon as it was discovered; keeping the matter private only delayed the inevitable public relations nightmare, they stated.

Pravin Kothari, CEO of CipherCloud observed that nondisclosure of security failures is trending among leading companies. “Google’s failure, if true, to not disclose to users the discovery of a bug that gave outside developers access to private data is a reoccurring theme,” he stated. “We saw recently that Uber was fined for failing to disclose the fact that they had a breach, and instead of disclosing, tried to sweep it under the rug.”

“[Google’s tagline] Don’t be Evil mutated into Don’t be Caught,” added Colin Bastable, CEO of Lucy Security. “Google’s understandable desire to hide their embarrassment from regulators and users is the reason why states and the feds impose disclosure requirements – the knock-on effects of security breaches are immense.”

Google: ‘No data was misused’

Alphabet was careful to contain the messaging about removing the Google+ website, emphasizing that the company was not aware that any data had been misused or accessed. In an Oct. 8, 2018, blog post titled “Project Strobe: Protecting your data, improving our third-party APIs, and sunsetting consumer Google+,” the company stated an internal review found a bug in the “Google+ People APIs,” that enabled third parties to access Profile fields that would normally be limited to the purview of individual users.

“We discovered and immediately patched this bug in March 2018,” wrote Ben Smith, Google fellow and vice president of engineering. “We believe it occurred after launch as a result of the API’s interaction with a subsequent Google+ code change.”

Smith additionally noted that because Google+ was designed with privacy in mind, Google cannot verify which users may have been impacted by the software bug. While Smith found no evidence of foul play or misappropriated personal data, he speculated that as many as 500,000 Google+ accounts may have been affected.

Transparency, accountability

Disclosing security flaws and data breaches can be problematic for companies that rely on user data, Kothari noted. He recommended implementing enhanced government oversight and a unified national data privacy to improve transparency and accountability. These additional security measures will protect data in third-party cloud services, he said.

“Trust and the cloud do not go together until responsibility is taken for locking down and securing our own data,” Kothari stated. “Even if your cloud offers the ability to enforce data protection and threat protection, it is not their data that is compromised and potentially used against them, it is the consumers.” Bastable concurred, adding, “The risk of such a security issue is shared by all of the Google users' employers, banks, spouses, colleagues, etc. But I guess we can trust them when we are told there was no problem.”

ETA SRP finds broad support, implementation
Wednesday, October 10, 2018

J ust over a month after the Sept. 4, 2018, launch of the Electronic Transactions Association's Self-Regulation Program (ETA SRP), the global trade association has garnered positive reviews and broad support for the program across multiple payments channels. Designed to provide industry stakeholders with practical tools and guidance, the program sends a clear message to lawmakers that the payments industry adheres to consistently high standards of ethics, security and risk management, said Jason Oxman, CEO of the ETA.

"The ETA Self-Regulation Program affirms the payments industry's commitment to maintaining robust risk management programs and provides a benchmark for the industry," Oxman stated. "The ETA SRP also demonstrates to various federal regulatory bodies that our industry is not only capable of self-regulation but will continue to take concrete steps to mitigate instances of abuse."

Oxman additionally noted the ETA SRP program provides separate tracks for merchant acquirers and payment facilitators engaged in developing risk management policies. Based on the ETA's Risk Guidelines for Merchant and ISO Underwriting and the Risk Guidelines for Payment Facilitators, the programs provide a roadmap to compliance and best practices, he said. ETA members specializing in these areas continually update guidelines according to ever-changing government and payment card industry regulations, he noted.

ISO, acquirer attestation

ETA Guidelines on Merchant and ISO Underwriting and Risk Monitoring provides tools for payment companies to work toward a common goal of self-regulation of the payments industry. Any third-party service provider in the payments ecosystem that underwrites merchants or ISOs can participate in the ETA SRP program, the ETA stated. Enrolled merchant acquirers and ISOs that meet risk management requirements and attest to implementing ETA SRP guidelines become credentialed ETA SRP companies. ETA representatives said participants receive a certificate they can display on their websites and promotional materials. The ETA will also list participating companies on its websites and notify federal regulators of their active ETA SRP status. Additional opportunities to present at ETA events and receive exclusive discounts for ETA programs will also be made available to enrolled participants, the ETA stated.

Global Payments and Worldpay were among the first companies to receive the certificate. Jeff Sloan, CEO at Global Payments, called ETA SRP "a tangible step taken by the payments industry to ensure stakeholders are committed to utilizing best practices."

Payfac attestation

Payment Facilitator Guidelines, developed by ETA working committees, outlines requirements for onboarding sub-merchant accounts while helping payfacs identify anomalous or fraudulent transactions. Deana Rich, CEO of Rich Consulting and Todd Ablowitz, CEO of Double Diamond Group, have been actively involved in the ETA's payment facilitator working group and recently launched a suite of services designed to help companies implement the ETA SRP.

Rich commended the payments industry's support of the program and its early implementers. "While a few industry actors have experienced the impact of government intervention, following a self-regulatory process will go a long way in preventing industry-wide regulatory oversight and will ultimately benefit the industry, merchants and consumers," she stated.

Ablowitz concurred, adding, "The vast majority of the work we do with payment facilitators, banks and acquirers around the world is focused on ensuring they have best in class processes and operations in place to manage risk. This experience is reflected in the guidelines we helped developed on behalf of ETA and is the foundation of our SRP Readiness Program. We want to make sure that payments companies who attest to their compliance with the SRP are 100 percent capable of withstanding the inevitable scrutiny from the regulators that will come."

Getting real about real-time payments
Tuesday, October 9, 2018

T he Federal Reserve Board is considering changes to how the Reserve Banks support bank-to-bank payment services, with an eye toward real-time settlement. It has issued a request for public comment on potential actions to make real-time interbank settlement of payments a reality, but those actions could be several years off.

"Consumers and businesses increasingly expect to be able to send and immediately receive payments at any time of the day, any day of the year," said Lael Brainard, a member of the Fed's Board of Governors. "A 24/7 economy with 24/7 real-time payments needs 24/7 real-time settlement. That is where we believe the Federal Reserve and the private sector together need to make investments in the future."

The Fed has emerged in recent years as a champion of faster payments. In 2015 it published a set of strategies it would undertake with the private sector to identify and pursue faster payments capabilities. It also convened the Faster Payments Task Force comprising representatives from hundreds of banks, nonbank providers of payment services, business and government end users, consumer groups, and government entities. A key recommendation that came out of the task force was the need for the Reserve Banks to support universal real-time clearing and settlement, 24 hours-a-day, 365 days a year.

Faster payments today rarely in real-time

While faster payments initiatives have emerged in the United States, only one actually is a real-time payment network: the RTP system launched in 2017 by The Clearing House. RTP supports real-time clearing and settlement between TCH member banks. Although only a handful of banks currently participate, TCH has said it expects RTP to be used by banks holding half of all U.S. bank deposits by the end of this year.

All other systems built in recent years to support faster payments (like Zelle, the bank-owned person-to-person payment network) settle funds between banks on a deferred basis. This can be cumbersome, however, if the bank used by the individual/business initiating a payment and the bank serving the recipient are not both on the network. These situations typically require initiating payments across a secondary network (such as the ACH) and settlement through the Fed.

For real-time payments to become universally available to all banks and end-users the Fed has to get in the game. As the nation's central bank, the Fed, among other tasks, must make available clearing and net-settlement services to all federally insured banks and credit unions. At present, the Fed supports clearing and settlement of inter-bank ACH items, checks and wire transfers. But those services are only available 7:30 a.m. to 5:30 .pm. Eastern, Mondays through Fridays, and not on national holidays. Interbank transactions submitted to the Reserve Banks after 5:30 p.m. Eastern go into queues for clearing and settlement on the next business day.

"To fully deliver on the promise of faster payments into the future, we need an infrastructure that can support continued growth and innovation, with a goal of settlement on a 24/7 basis in real time," Governor Brainard said in a speech earlier this month at a Chicago Fed payments forum. "To ensure the robustness of the payment system into the future, banks and other providers acting as their agents should have access to a settlement system that operates 24/7 and settles each payment as soon as an individual sends it."

Brainard added that moving to real-time payments could be a boon to consumers as well as merchants and other small businesses that closely manage cash. "If a small business could count on its customers' payments being immediately accessible to its bank account, it could reduce its need for short-term financing to cover the costs of ordering materials and goods well in advance," she said.

Comments due in December

The Fed Board's request for comment offers up several actions that would support faster interbank settlement of payments, with an eye toward real-time settlement. Potential actions include developing a new Reserve Bank service that supports 24/7/365 real-time interbank settlement of payments and a liquidity management tool that supports real-time interbank settlement. The Fed said it "is not committing to any specific actions" and posed dozens of questions it hopes will help shape its thinking and planning. Responses are due by Dec. 14.

A summary of those responses will be published next year, and new proposed new service offerings will follow. The Fed's rulemaking process, however, is often protracted. It's not uncommon for two or three years to pass between initial proposals and final decisions, and in this case, any final decisions would need to be followed by technology investments and implementation.

Brand Innovators honors top women in retail, banking, payments
Friday, October 5, 2018

B rand Innovators held its Top 100 Women in Brand Marketing and Women to Watch Awards and Gala celebration on Oct. 3, 2018, in New York City. Hosted by Viacom at the Viacom White Box venue, the day-long event featured keynote presentations and fireside-style chats with leading women marketers and digital transformation specialists.

In opening comments, Lydia Daly, senior vice president for Viacom Velocity, said that while women make 85 percent of all brand purchases, they have begun to have more clout in the executive suite over the last decade. "From leading companies in fashion and beauty to America's automotive and financial services franchises, there are more influential women than ever before working in brand marketing at Fortune 500 companies and other leading brands," she stated.

David Teicher, chief content officer at Brand Innovators, added, "The Brand Innovators editorial team has been busy over the last several months curating this list of over-achievers, who have contributed both to the companies they work for and the industries they serve." Teicher planned the event as part of an Advertising Week series, which included separate conferences focused on Marketing Innovation, Future of Consumer Experience and Retail and Consumer Engagement.

Diversified honor roll

Viacom's newly designed White Box, located on the 31st floor of company headquarters, provided the day's presentations with a backdrop of midtown Manhattan. Diversified honorees hailed from leading retail, hospitality, consumer and card brand sectors.

Brand Innovators Top 100 Women in Brand Marketing's Class of 2018 included the following female executives from banking, financial services and payments who were recognized for brand marketing excellence:

The following banking, financial services and payments executives were recognized as Brand Innovators Women to Watch in Brand Marketing', Class of 2018:

Diversity matters

Stephanie Buscemi, chief marketing officer, Salesforce, moderated the day's final panel, titled Top 100 Women Roundtable: Leadership, Innovation and Trends, with the following panelists:

"Everyone has responsibility for diversity, at every level of an organization," said Buscemi, who challenged the audience to step outside of their comfort zones. "Show up and listen and learn about something that may not be relatable to you."

The Green Sheet will be closed through Mon. Oct. 8, 2018, in celebration of Columbus Day.

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Spotlight Innovators:

USAePay | Impact Paysystems | Electronic Merchant Systems | Inovio