PayX International recently was involved in the Innovation Project 2016 held at the Memorial Hall, Harvard University, in association with PYMNTS.com. The surroundings and architecture were magnificent and one marvels at the history and discussions and debates that must have taken place within those hallowed halls. The opulence reminds us of the significant investment to this bastion of higher learning, and so an ideal location to focus on the investments going towards modernising and re-inventing the payments processing world. The event was attended by top executives from banks, government, regulators, retailers, entrepreneurs and the investment community, including organisations like NSA, White House, NACHA and UK Payments Regulator, PayPal, Visa, First Data and Google.
Much of the intensive two days with several of the world’s top Payments ‘mover and shakers’ focused on the Edge of Payments i.e. the customer experience and in particular the absorption and blurring of payments into the wider world of commerce, the best example being Uber who completely redefined the payments experience. Read our session reviews during the days:
‘DAY 1 Innovation Project: Who’s enabling Payments Innovation?’
‘DAY 2 Innovation Project: Who’s powering the New Payment Rails?’
In summary, the conference provided some key insights to the PayX team and highlighted obvious nuances between the US and EMEA payments environments. Notable callouts from the conference included:
• Adoption of EMV in the US appears to have been a painful experience from all quarters. Few conference sessions escaped the opportunity to batter Chip & PIN and the negative Merchant & Consumer experiences encountered. Retailers such as Walmart are effectively looking to provide solutions that circumvent the need for the card and hence the EMV experience and are moving to NFC or QR or Barcode or Beacons. A good point was made by a panellist whereby the feeling is that the solution should be agnostic and the consumer should be free to be a customer of anyone anywhere rather than the closed loop locked in approach proposed by the likes of Chase Pay, Walmart, PayPal etc. Samsung is taking this open approach but the US vendors seem to be focussed on lock-in on customers
• Where EMEA is actively looking to partner with Fintechs and start-ups even at the Tier 1 bank level, the US would appear very customer centric with regards to their payments solutions and would opt more for closed loop rather than open framework solutions
• The Internet of Things (IoT) was a hot topic throughout the conference and I for one would love to own a driverless car, not for the back set loafing opportunities but for all cars to be able to ‘sense’ each other and react accordingly and thereby prevent collisions that cost so many lives and fuel an entire insurance industry. An extensive discussion was held around the pro’s and con’s of an internet enabled Toaster, yep, what we use for our daily bread. To be fair, the ‘Toaster’ was more of a metaphor for potential use cases for enabling IoT devices in the home. On a sobering note, the data breach at Target was orchestrated by accessing the Refrigeration and HVAC system deployed onsite. Once the hackers logged on to the air conditioner, they were able to ‘hop’ on to the company network so a good discussion regarding security, privacy and ‘creepiness’ was debated at the conference with emphasis on the need to ensure the requisite level of control to avoid the attack of the killer blenders. One great initiative demo’d by Amazon was their Alexa product which is a voice recognition solution that could revolutionise the way your home functions with regards to appliances. From the brief introduction, it appeared to be a cross between Siri and J.A.R.V.I.S and Amazon have teamed up with Innovation Project to provide a capability for 12 lucky companies to utilise the Alexsa technology. Also see the following article: Capital One integrates with Amazon’s Alexa
• We hear regularly in the press that so-and-so are re-inventing themselves and moving to modernise and adjust their business model to remain competitive in an ever increasing competitive payments space but to hear this from Dan Shulman CEO of PayPal was a little surprising, although very refreshing. They seemed to have taken a turn with their philosophy and decided It’s all about consumer choice now and not merchant driven. It’s a new PayPal which is more friendly to merchants and want to partner rather than supply to. Their desire is to become an unbranded platform supporting the Merchant’s own Application and offer rewards modules and provide the plumbing to cater for all payments types including those of their own opposition such as Apple Pay, Android Pay et al
• Invisible payments were a key theme across the sessions at the conference. The ones winning are the ones with the payment as part of the product such as Uber and Amazon, not those that have a product and then a hand off to a separate payments process. For the customers, the Merchant onboarding experience often becomes the deciding factor and significant focus and attention in this area would enable significant uplift in customer base
• Quite surprising was the statistics quoted on the usage and adoption of Apple/Android/Samsung Pay. As an Apple Pay user myself, I can relate with the results that the number one reason consumers didn’t use it at checkout was that they forgot (21%) and secondly, they didn’t know if the store accepted it (16%). Mobile payments, across all the devices, account for only 3% of eligible transactions (in the US) and repeat usage is dropping so the massive hype of these payment types has not yet hit home to the consumer markets although those surveyed that do regularly use the product, love the experience
I would urge you to review the article ‘NFC UK’s Lessons For US Mobile Payments Adoption’ by Karen Webster of Pymnts.com, host of the conference, for a clear articulation of the challenges faced by the US and the lessons perhaps not being learnt from across the pond.
According to the world’s top Financial Services Executives, FinTechs are re-shaping the FS world and putting 20% of their traditional revenues at risk of disintermediation.
The PwC Global FinTech report, “Blurred lines: How FinTech is shaping Financial Services” re-enforces the view that Banks and payments processors have little choice but to re-tool their business models:
• Firstly, to recognise and capitalize on their core trust and customer relationship strengths, and
• Secondly, to nurture their partnership skills with new players who can integrate banking products seamlessly within the new FinTech ecosystem (e.g. APIs, developer community, etc.)
The journey requires vision and leadership at executive level but with the right building blocks in place, our experience confirms that huge leaps can be achieved in the end using manageable, incremental steps.
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