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Updated: Friday, March 6, 2015

Mobile World Congress 2015 extols innovation, inclusion

M ore than 93,000 attendees and 2,000 exhibitors from 200 countries gathered in Barcelona, Spain, March 2 through 5 for Mobile World Congress 2015. Event host Groupe Speciale Mobile stated this held an attendance record for this coalition of mobile operators established in 1982 and focused on Europe's expanding mobile ecosystem.

Promising advances

Innovations in mobile network connectivity, apps and hardware were showcased during the three-day event. Believing this augurs well for the future, GSM Chief Executive Officer John Hoffman, stated, "The industry has come a long way over the last decade, and we look forward to seeing the changes that will occur over the next 10 years."

Additionally, several technology leaders introduced programs designed to bring mobile technologies to underdeveloped countries. Payments industry analysts expect many of the new products and financial inclusion initiatives will drive mobile payment adoption in both existing and emerging markets worldwide.

Emerging trends

Following are key trends explored at the conference that will impact the emerging payments sphere.

Emerging markets join the mobile bandwagon

A number of strategic initiatives and products designed to bring mobile connectivity to emerging markets were also a focal point of the conference. An array of affordable mobile devices included the $23 Cherry Mobile Ace, $40 Orange Klif mobile phones, and Microsoft Lumia 640 and 640XL smartphones priced at around $200.

Facebook CEO Mark Zuckerberg presented "internet.org," an initiative designed to connect the world. Noting that only one-third of the civilized world has access to the Internet, he said Facebook seeks to collaborate with technology leaders, nonprofits and local communities to improve those numbers.

In his keynote address, which was focused on innovating for inclusion, MasterCard Worldwide CEO Ajay Banga told the audience,"[B]ecause of technology – because of the roles we in this room play, we can help shape the arc of history to bend it towards financial inclusion and greater human progress."


PayPal, Paydiant to build retailer-centric mPOS
Wednesday, March 4, 2015

P ayPal Inc., the payments division of San Jose, Calif.-based eBay Inc., revealed on March 2, 2015, that it is acquiring app developer Paydiant Inc. Established in 2010 and based in Auburndale, Mass., Paydiant is best known for developing CurrentC, a mobile wallet used by retail consortium Merchant Customer Exchange (MCX). PayPal will pay a reported $280 million for the deal, which is expected to close in late March or early April.

PayPal, which is expected to spin off from eBay and go public in 2015, said it will make Paydiant’s open platform available to retailers, banks and reseller distributors. Partners will be able to integrate the technology into mobile, online and brick-and-mortar retail environments.

The customizable platform is designed to support rewards, loyalty and customer relationship management programs, and to work with a variety of payment methods using multiple hardware platforms and operating systems, including iOS, Android, and Windows mobile phones.

Payment analysts stated they expect the PayPal-Paydiant mobile payments scheme to have a similar look and feel to CurrentC, which directly connects merchants and banks with customers, circumventing third-party payments intermediaries.

Inclusive, device-agnostic platform

In an interview with Bloomberg Media at the 2015 Mobile World Congress in Barcelona, PayPal Chief Product Officer Hal Ferguson said Paydiant’s open platform “gives merchants the ability to build custom mobile experiences on top of their own data,” which he expects will help merchants differentiate themselves from competitors.

When asked if the Paydiant acquisition will give PayPal exclusive access to the large group of merchants who formed MCX and the CurrentC mobile wallet, Ferguson stated that Paydiant provides MCX members with a flexible payments experience, which is something that PayPal “has always been about.”

He stressed that PayPal plans to support all forms of mobile payments, including Apple Pay, Samsung Pay and Android Pay, a practice he described as being consistent with the way PayPal operates its core business.

A 'post-POS' commerce play

In a Dec. 16, 2014, article in Mobile Marketing & Technology, Paydiant co-founder Chris Gardner predicted 2015 would mark a new era of “post-POS" commerce, in which payments play a lesser role in the overall consumer experience.

“Payments aren’t the only thing moving to mobile,” Gardner wrote. “The entire purchase experience is being transformed – see Uber, Subway Mobile Ordering, etc. Payment is only part of the transformation as we move into a ‘post-POS’ commerce experience. Consumers will spend less time waiting in line and more time using mobile to interact with their favorite retailers.”

Gardner cited the need for a fluid mobile wallet that’s adaptable to its environment. He predicted consumers will have one or two mobile payment apps they will use in many places and others they will use at favorite retailers. He also stated shoppers will base their preferences around ease-of-use, loyalty and incentives. “Consumers will want a choice in their mobile wallets – just like they do with credit cards, debit networks, gift cards and loyalty programs,” he wrote.

PayPal platform evolves from online to in-store

Ron Mazursky, Debit Advisory Service Director at Mercator Advisory Group, sees the Paydiant acquisition as a major step forward for PayPal in the brick-and-mortar retail space.

“This partnership provides PayPal an immediate entrée in the retail mobile payments community, where Paydiant is the established standard bearer,” Mazursky said. He went on to say that advances in encryption and tokenization have largely eclipsed PayPal’s original charter of protecting consumers during e-commerce transactions. “This partnership and mobile payments platform will give PayPal the opportunity to stay relevant,” he added.

PayPal’s Ferguson stated the company’s objective in operating a technology-agnostic platform is to provide the right tools for merchants to integrate payments into their environments, while giving consumers a flexible, open digital wallet they can use not only for credit and debit cards, but also for loyalty, points and rewards.

He added that other mobile wallet leaders will have a tremendous advantage when using the PayPal platform and expressed the hope that mobile wallet providers can collaborate in defining common standards for near field communication and other emerging payments technologies.


Visa Checkout used by 3 billion, plans worldwide expansion
Monday, March 2, 2015

V isa Checkout, a Visa Inc. payment scheme designed for speed and security, was and introduced in July 2014 and has gained a steady following in the United States, Canada and Australia as consumers select the one-touch payment method on computers, tablets and mobile phones, according to Visa. The company reported that over 3 billion consumers have used Visa Checkout thus far; of those, 40 percent were new users, and 75 percent were active and repeat users.

Four-part formula

Visa addressed four key areas when devising Visa Checkout: security, speed, simplicity and community, which the company detailed as follows:

  1. Security: Multilayered security architecture uses built-in fraud monitoring systems and encrypted SHA256 hash algorithm tokenization to protect cardholder data.

  2. Speed: Visa stated the payment scheme affords consumers "(i) the ability to store account and other related information such as billing and shipping addresses ('Card Details') for your Visa credit, debit and prepaid cards and other cards or payment methods that Visa has decided are eligible to be used with the Visa Checkout Services ('Eligible Cards') to create a Visa Checkout account ('Account'); and (ii) the ability to use the Visa Checkout Service as a method of checkout at merchants that display the Visa Checkout mark." Once the card credentials have been established, users can press a button to complete online payments.

  3. Simplicity: Visa Checkout simplified user interface is optimized for consumers and software developers. New accounts take minutes to set up. Consumers are prompted to create a username and password, enter payment and shipping information, and receive a credential for their payment card product of choice. After the one-time account set-up, they can use the one-step process wherever Visa checkout buttons are found.

    A developer toolkit with a "sandbox environment that mirrors Visa Inc.'s production environment" facilitates seamless integration of Visa Checkout into an array of mobile and ecommerce payments environments.

  4. Community: Visa Inc. promotes a culture of innovation within its growing community of value-added resellers while actively soliciting new partnerships with issuers, merchants and acquirers.

Issuers, retailers promote Visa checkout

Visa reported that Bank of America Corp., touting the "express line online," is offering a Visa prepaid card to its customers with all new Visa Checkout enrollments through March 31, 2015. PNC Bank described the solution as a "digital payment service that can make checking out online with your PNC cards as fun and easy as online shopping."

In addition, the card brand noted that shoppers can find Visa Checkout in every retail category, including apparel, electronics, entertainment, specialty and travel brands. Nieman Marcus, Sport Chalet, Gymboree, Ticketmaster, Staples, Pizza Hut and Orbitz are a few of the leading brands that process Visa Checkout transactions. Virgin America is offering a discount through March 15 for fares purchased with Visa Checkout. Similar offers are expected to increase consumer adoption.

New market penetrations planned

Sam Shrauger, Senior Vice President of Digital Solutions at Visa, said he was encouraged by public receptivity to Visa Checkout in the United States., Canada, and Australia. He noted that consumers and merchants alike appreciate its simplicity and ease, which is "particularly important as people shop and buy more frequently on smaller devices like phones and tablets."

The additional 13 markets the company expects to reach in 2015 are Argentina, Brazil, Chile, China, Colombia, Hong Kong, Peru, Malaysia, Mexico, New Zealand, Singapore, South Africa, and the United Arab Emirates.


Google, Softcard open doors, close Windows
Friday, February 27, 2015

G oogle Inc.’s acquisition of Softcard, announced Feb. 23, 2015, ended four years of competition between the two companies’ mobile wallet divisions. Payments analysts expect Softcard’s intellectual properties to add value to Google Wallet and level the mobile wallet playing field.

Softcard, formed in 2010 by mobile networks AT&T Mobility, T-Mobile USA, and Verizon Wireless under the name Isis, marked a strategic shift for the competing cellular networks. Chief Executive Officer Michael Abbott described the venture as a four-sided market that included consumers, merchants, parent companies and mobile network carriers. The coalition of arch competitors was formed to compete against Google Wallet, an Android app initially launched on the Sprint network using Nexus 6 phones.

Consumers can use the multifunctional Google Wallet app to make in-app and in-store purchases and money transfers. Google Wallet is compatible with near field communication (NFC)-enabled and older POS devices. For years, Google Wallet was only available on the Sprint network while being effectively blocked by the coalition of carriers that supported Softcard. Today, Google Wallet is available on any carrier network and NFC-enabled Android device running 4.4 KitKat or higher.

After competing for five years, the merger of former rivals Google and Softcard opens a new chapter in the mobile wallet wars. Google stated its plans to deploy a new version of Android Pay in its new phones beginning in May 2015. The improved mobile payment scheme and preloaded phone app is expected to strengthen competition with Apple Pay, CurrentC, PayPal, and other leading mobile payments schemes.

Softcard’s auspicious beginnings

Jim Stapleton, Chief Sales Officer at Softcard, presented a video at the 2011 Smart Card Alliance Mobile and Transit Payments Summit that showed a consumer tapping a mobile wallet in a coffee shop, store and subway turnstile. Stapleton gave five reasons why consumers were ready to use mobile wallets: convenience, freedom from carrying cash, use of mobile coupons, choice of coupons/points/ redemption, and improved loyalty rewards.

Citing statistics from a Forrester Research, MarketResearch.com and Oliver Wyman joint survey, Stapleton said that 58 percent of all consumers polled said they would use a mobile wallet in mass transit. He went on to predict that mobile payments would grow from $5.2 billion in 2009 to $56.7 billion in 2015. Allowing for delays in deployment and adoption, this forecast is consistent with projections from digital marketing agency eMarketer, which expects mobile wallet commerce to top $60 billion in 2017.

Softcard deployment challenges

In September 2014, shortly after renaming the company Softcard to distance itself from the terrorist group ISIS, the company was dealt another blow when Apple Pay entered the market, effectively locking Softcard out of Apple iPhones. Unlike Softcard, Apple Pay’s launch was a marketing triumph, as the app was widely available throughout the United States on the day it was released. Apple Pay’s ease of use, unlike Softcard and other mobile wallets, requires fewer strokes to activate the app and make payments.

Payment analysts noted continuing delays at Softcard followed by the January 2015 work force reduction that affected 60 employees and led to speculation that Softcard would either be acquired or have to close its doors.

Google, Softcard identify path forward

In conjunction with consolidating their mobile app and footprint, Google and Softcard stated the Softcard app would no longer be available on Windows phones. This news may have little impact on consumers, since the app was only released in November 2014. Additionally, Microsoft plans to launch its own branded mobile payments solution, Wallet Hub, in the near future. In the FAQ section of its website, Softcard advised current users to continue using their Softcard apps at the 275,000 locations across the United States where it is accepted. “Google has acquired some technology and intellectual property from Softcard and we encourage our Android users to download Google wallet,” Softcard stated. “In the near future, the Softcard app will shut down and all wallets will be terminated. A specific termination date will be provided soon.”


EMV, interchange concern ATM deployers
Friday, February 27, 2015

W ith EMV (Europay, MasterCard and Visa) implementation deadlines looming in the United States, efforts to facilitate the transition from mag-stripe to EMV technology have intensified among all affected parties, including ATM deployers, which have a longer time to become EMV-compliant than most merchant sectors. And how to enhance the consumer self-service ATM experience while also addressing EMV and interchange issues was a major focus at the annual ATM Industry Association convention held Feb. 17 through 19 in Las Vegas.

While generally receptive to implementing EMV, independent ATM deployers (IADs) who attended the ATMIA conference expressed growing frustration with “shrinking” interchange pricing that has negatively affected their bottom lines. George Sarantopoulos, Director of Marketing at Brooklyn-based Access One ATM Inc., even described the relationship between card brands and IADs as dysfunctional.

"The card brands are asking [IADs] to invest even more in our ATMs while they want to pay us less," he said. "The IADs have built up this incredible network of ATMs throughout the country where everybody has easy access to cash 24/7/365. And now that the job is done and the card brands no longer need us, we’re being subjected to a double threat of decreasing interchange margins and increased costs if we don't upgrade to EMV." He predicted current economic trends could push many IADs out of the ATM industry unless they can organize as an industry and innovate their way “out of this quandary.”

Providing a different perspective, MasterCard Worldwide Group Head Leland S. Englebardt, who spoke at the conference, said he expects EMV deployment by the U.S. ATM channel to dramatically reduce counterfeit fraud rates. Englebardt leads MasterCard’s global switching platforms for credit, debit, and prepaid products, which account for 34 billion transactions annually in 150 currencies and 210 countries and territories that use MasterCard, Maestro and Cirrus-branded cards.

Survey shows mixed bag for EMV adoption

On Jan. 15, 2015, Kahuna ATM Solutions stated in a blog post that the “number one, single largest legislative-regulatory item that poses a threat to IADs is the cost to upgrade terminals to EMV, according to the 2015 US IAD Survey, co-sponsored by ATMIA and Kahuna ATM Solutions. The number one competitive threat is declining transactions. Other issues that topped the list include shrinking interchange, the implications of EMV liability shifts, ATM saturation, account closures due to Operation Choke Point and ways to increase revenue.”

In all, 109 IADs participated in the ATM channel EMV readiness survey conducted in late 2014. "This survey made it clear that IADs are still unclear on the true impact of the liability shift for ATMs that are not EMV-ready by October 2016," said Bryan Bauer, Kahuna Vice President and General Manager. "We have an enormous task as an industry to figure out exactly what that impact is through real, meaningful data, and then educating IADs on those implications of not upgrading."

Survey results also revealed that only 50 percent of ATM operators expect to be EMV-ready by the October 2016 liability shift deadline set forth for the ATM sector by MasterCard; Visa Inc. set October 2017 as its deadline for the ATM sphere. Following are further highlights from the survey (percentages are rounded off):

According to ATMIA, disparity between IADs and larger financial institutions was evident in certain portions of the survey. Only 49 percent of IADs said they were confident they had the necessary software from processors and other transaction partners to upgrade to EMV, whereas about 80 percent of FIs with more than 1,000 ATMs in deployment expressed confidence they had the requisite tools to become EMV-ready.

Pushing forward with technology

"Much of the current discussion surrounding the new 'omnichannel' banking and payment environments is tied very closely to customer experience – giving the customer the ability to seamlessly interact with multiple channels in the process of completing a single transaction," stated Daved Tente, Executive Director at ATMIA USA.

Total System Services Inc. Senior Director of Payment Solutions Sarah Hartman stated in a recent interview with the Smart Card Alliance that factors like global interoperability of EMV-enabled cards, the ability to verify and authenticate EMV-card users, and other applications, such as mass transit and data management capabilities linked to card usage, will drive EMV implementation in the United States and create measurable benefits for IADs and others vested in the technology.

In the meantime, education could prove pivotal for buy-in from all parties. "One of the most critical aspects for a smooth migration to EMV technology is education of the consumer," Tente said. "The consumer experience at an EMV-capable ATM is going to be radically different for most, and there may be some quirky situations that crop up during the transition period."

While working to resolve the near-term challenges of EMV adoption and changing interchange pricing structures, IADs appear to be guardedly optimistic they will be able to build sustainable relationships with card brands that justify their investments in the hardware platforms needed to enhance and protect the consumer self-service experience.


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