Payments On Fire

Ever wonder about EMVCo's role in the development and implementation of its technical specifications? Take a listen to Bastien Latge, EMVCo's director of technology and Glenbrook's George Peabody as they discuss EMVCo's EMV®* QR Code Specification for QR code-based transaction initiation in the card system. While developed card markets are shifting to contactless cards and NFC-using mobile phone wallets to kick off payments, the QR code offers a flexible, very low cost alternative. There's a lot to learn here. Most of us are familiar with QR codes to retrieve product information from websites or print media, or perhaps when authenticating a mobile device to a web page. In payments, many of the caffeine-reliant among us use the Starbucks app with its 2D barcode to initiate the transaction. It makes it so easy to know when we have enough gold stars to ask the barista for a drink on the house. Some merchant apps use a QR code for the consumer to present when initiating a payment transaction that calls on card on

Payments on Fire® usually focuses on a single topic, typically a fintech company and the business or personal challenges it addresses. In this episode, we take another direction by bringing together three fintech leaders to talk about their company offerings, how they connect up to payments, and some of the obstacles they’ve faced. George talks with the leadership of three companies working in very different areas: remittances, small business logistics payments, and healthcare. Mike Gaburo, CEO of Brightwell Payments, a company delivering a mobile payments app to global workers for their payroll distribution, enabling card-based purchasing as well as remittance services Robin Gregg, CEO of RoadSync, a business software provider that enables electronic payments to SMBs in the logistics sector; and Alan Nalle Chief Strategy Officer of Patientco, a payments platform with intuitive, mobile-friendly tools for Health Systems to enable patients to pay their healthcare bills. This conversation illustrates the bread

Five years on from Apple Pay’s release, contactless payment cards are just getting off the ground here in the US but in much of the rest of the card world, contactless payments of both kinds are common practice. In London, half of the card transactions are contactless. The same is true in Canada. While it’s true that the vast majority of these are card-based, not via mobile wallets like Apple Pay and Google Pay, even the mobile wallets are gaining momentum. To expand contactless usage, Mobeewave has developed software tools for financial institutions to integrate into their merchant app that turn the merchant’s smartphone into a contactless acceptance device. No added hardware: software only. We’re talking with Maxime de Nanclas, Mobeewave‘s co-CEO and co-founder. A firm based in Montreal, Mobeewave has worked to turn smartphones into general purpose contactless payment terminals. This is cool tech and, as Maxime tells it, a great journey for the company. Take a listen as he describes what their software does

The UK and the EU take a very different approach to payments industry evolution than here in the States; the former directed by government mandate, the latter by marketplace dynamics and the lighter touch of regulators. But both are responding, at different speeds, to the need of fintechs and enterprises for access to bank-based data and services. The Payment Services Directive 2, PSD2, written in 2015 and in effect since January of 2018, addresses a range of concerns including a ban on surcharging on card payments and limiting consumer fraud liability exposure from 150 to 50 euros. But its major impact is its enablement of Open Banking through the granting of access to payment rails and payment data managed, up until PSD2, only by banks. Banks are required to open up programmatic access, via APIs, to that data. In this Payments on Fire® episode, we dive into the UK and EU experience with the PSD2 a year after it going into effect. We take a look at its impact on Open Banking, the opening up of payment rails

Cross-border B2B payments are frustrating, time consuming, and expensive, especially for small and medium businesses. To dig into why and what's being done to overcome those concerns, join George and Marwan Forzley, CEO of Veem, for an explanation. SMB B2B payments, particularly cross border payments, have always been time consuming to accomplish and expensive to do. They are time consuming because sending an international “wire” payment was historically slow with uncertain delivery timing and with uncertain, and high, costs to both the sender and the receiver. For the sender, the process of initiating a cross-border payment has always taken no little time compared, for example, to writing a check. Cost is a second concern because cross-border payment economics are not always transparent. At least a few times a year, when Glenbrook gets paid by one of our international clients, the funds we receive are less than what we invoiced. While our client sends us the correct amount at the prevailing exchange rate, in

The digital marketplace model brings together buyers and sellers and, frequently, handles the money and payouts to the sellers. As my guest today has determined, digital infrastructure, e-commerce usage, competition, and workforce characteristics influence a country’s ability to establish a flourishing marketplace component to the economy. This marketplace economic model is a useful one enabling, among other use cases, the gig economy. Adopted in countries like China, the US, Canada, the UK, Australia, and other established markets, this episode’s guest, Tomas Likar, Head of Business Development and Strategy at Hyperwallet, has done a lot of thinking about its role in these and other countries. This podcast was prompted by Hyperwallet’s February 2019 release of its Marketplace Expansion Index report, the MEI, that evaluated the marketplace readiness of some 36 countries. A surprise is the early stage of marketplace adoption in a number of otherwise highly developed countries. The application of the marketplac

The business of merchant services continues to undergo two forms of transformation. First, the merchant services businesses, either as acquiring banks or via non-bank acquirers, has undergone massive consolidation over the last five years and more. Fiserv’s takeover of First Data, announced on January 16, is just the latest example. The second sea change is the expansion of products and services these entities deliver. What was a fairly innovation-averse industry has become, under the competitive pressure of companies like PayPal and Square, far more committed to delivering value that helps customers run their business, not just accept card payments. At the POS, Square changed the merchant services game by delivering a great deal more business value to the small merchant than the traditional ISO or agent focused on placing stand-beside terminals next to dumb cash registers. For the price of payment processing, Square has given those merchants inventory, time and attendance, sales and marketing focused reporti

This Stuff is Hard As the remote payments domain (think in-app and browser-based payment transactions) continues to grow at around 15% a year, that growing number means the size and scale of fraud losses are going to increase. And they have - in both absolute terms and as a percentage of overall transaction volume. That also means rising chargeback rates for many merchants. Rising fraud in the online world is also a result of better security technology in the physical world. While EMV chip cards have dropped counterfeit losses way down, the fraudsters still have their own bills to pay. They’ve just shifted more aggressively to the card not present channel. A Delicate Balance All e-tailers face a delicate balance in managing fraud. If they err too far on the side of fraud minimization by tightening approval standards too far, they leave good sales on the table and insult customers with unnecessary declines (the “insult rate”). Of course, those customers promptly go to another site to make their purchase. The e

Ecommerce fraud rates are rising and that means more cardholders are seeing unauthorized charges on their accounts. The cardholder remedy is to call either the merchant or the issuer to flag the problem. If the cardholder turns to the issuer to resolve the problem, the remedy is often an expensive chargeback for the merchant and a generally lousy experience for everyone. Ecommerce Merchant Pain Ecommerce merchants have invested heavily in fraud detection tools because in the remote payment domain liability rules make them responsible for fraud losses. Ecommerce merchants employ sophisticated fraud management processes and tools to detect fraud in realtime to stop authorization (best in class fraud rates are 25 bps - 35 bps). On top of that, they must eat the direct costs associated with stolen goods and services. These include a chargeback processing fee from the acquirer as well as the merchant’s internal costs to manage the chargeback process. If the merchant fights the chargeback, the merchant has to gathe

Fraud prevention today is about how quickly we can separate good customers from questionable ones and, for those doubtful transactions, use the right set of tools and data sources to optimize speed, costs, and fraud losses. When it comes to fraud prevention, it turns out that data is key. No revelation there, but how we manipulate it, gather it, and assure its provenance is undergoing major change. What would be a revelation to fraud managers of a decade ago is the unbelievable amount of data and the wide variety of sources that we have today. It’s a flood. The only means we have to make sense of this data deluge is through algorithmic examination. Rules engines and neural networks are staple approaches. In recent years, application of artificial intelligence and the newer incarnation of machine learning (“let the computer figure it out based on all the data it sees”) has become a hot, and effective, area for fraud prevention. Only machines can find correlations among all that data in order to identify potent

Payment Innovation Moves to the Core When we conduct our Glenbrook Payments Boot Camp, our first graphic illustrates the three essential steps in every transaction - initiation, funding, and completion. When looked at through the lens of of the past decade most innovation has been in initiation. Consider: Apple Pay, Google Pay, Venmo, QR codes. The list is long of ways to kick off a transaction. Funding is all about where the money comes from. Usually a bank account, often a wallet holding money. Some innovation there but not a great deal. There are only so many ways to store funds. Completion, the last step, is the most important to many participants as it’s when the transaction completes with the final movement of money. Five years ago, in those boot camps, I said that completion, also called settlement, is the innovation-resistant phase of a transaction. Today, everything has changed. In the U.S., we have new services such as Zelle and Venmo that appear to the end parties to deliver instant settlement. The

Restaurant payments is a complex area especially for those companies serving the mid-sized and large restaurant operator. They have different needs that extend well beyond payment acceptance but even that is a highly variable concern. Ever notice that we pay differently depending upon the type of restaurant we’re in? It’s always been walk up and pay the central server at McDonalds. Applebees uses Presto table top devices to speed table turns, upset desserts (“that lava cake sure looks good”) and take payments. At most sit-down establishments, especially those in the fine dining segment, we still hand over our cards and the server walks away to authorize the transaction (later that night, the manual tip adjustment process determine the final clearing amount.) For certain segments, order ahead is a priority. Order ahead dominates how pizza shop operate. Initially, that capability took market share from mom and pop pizza shops because only the largest operators in the “Big Pizza” segment could afford the necessa

For those of you who didn't make it to Money20/20 and want to hear the latest on The Clearing House's Real Time Payments Network (RTP), take a listen to this update conversation with Steve Ledford, SVP at The Clearing House for the RTP Network.    A year ago, The Clearing House got out of the gate with its Real Time Payments Network, a wholly new payments system based on the push payment model.    A lot has changed - more banks have integrated into the system and many more are in process. By the end of June 2019, over 3,000 FIs are expected to connect to RTP, most via their bank processor. B2B payments are taking place over RTP between known parties.   RTP Characteristics   Not All Things   TCH is not attempting to provide everything necessary for a ubiquitous push payment system. It relies on its FI participants and their processors to expose RTP capabilities to their customers. RTP hopesto have bank-friendly fintech partners use its rails through the traditional model that gives the new provider access to b

The payment industry’s responses to ongoing payment security are many. We have procedural approaches and technical ones. For example, we are requiring merchants to attest to their compliance with PCI security standards that themselves include procedural requirements. Technical solutions are also called out by PCI and are, of course, being applied across the ecosystem. Encryption of payment data in flight is one approach. In the physical POS world, semi-integrated POS terminals connect directly to the acquirer’s front end instead of passing card transaction data back through the merchant’s workstation and enterprise system. An important technique, and the topic of this discussion, is tokenization. Tokenization is an ancient security technique. In the broadest sense, a token is just a dummy representation of something of higher value. In cards, that means the replacement of a PAN with a number or even an alphanumeric value that represents the underlying PAN. The mapping between the two is stored in a vault with

In the US, there’s the automatic assumption that payment cards and perhaps PayPal are the way to pay online. But if you’re an ecommerce merchant trying to sell in the Netherlands, you’d better support the domestic system known as iDeal. Connectivity into domestic payment systems is an important and complex issue. There are over 150 such systems across dozens of countries around the world. While not all are important to a given merchant, most are important to the acquirers and payment service providers serving ecommerce merchants. Join George and Steve Villegas, VP Partner Management and Head of US Office, of London-based PPRO Group, a company that provides white label connectivity to these domestic systems by serving acquirers and PSPs alike.

Knowing who you’re dealing with online is critical if you’re taking transaction risk. Digital identity is tough. To address that challenge - and it is a challenge - relying parties, those who take on risk, employ two broad categories of technology: active tools that require user interaction and passive network-based approaches. When the user is required to explicitly provide identifying information, we use the interactive approach. The merchant or lender or website owner asks for user IDs, passwords, perhaps data generated by multi-factor authentication techniques such as biometrics, or one time passwords generated by an app or a hardware key. If you’re an ecommerce merchant or an entity trying to sell something online - lenders included - you don’t want to ask the customer to do more than absolutely necessary to complete a good sale. Transactional friction is deadly to revenues and a main cause of shopping cart abandonment. So, you use passive approaches that examine whatever data the customer’s device can p

Alexa. Siri. Cortana. We’re talking to or at our machines. I walk into my office and say “Hey Google, what’s the weather?” or “Hey Google, when’s my first appointment?” When I’m driving in a strange town, it’s “hey Google, navigate to the [fill in the blank] hotel.” This kind of hands-free access to information is hugely helpful and hugely popular. But there’s a long way to go toward a general purpose voice interface for every task we want to accomplish. That said, we’re getting there. In this conversation with Central 1’s Alex Chan, we discuss the process of voice-enabling access to the high volume queries that credit union members make, i.e. balance inquiries, balance transfers, etc. We cover what it takes to build an Alexa skill, the code that links Alexa’s natural language processing to the underlying application that executes the action. Voice design, the process of imagining and codifying how the user interaction proceeds, is at the heart of a successful voice-enablement project. Alex takes us through t

During the Glenbrook Payment Book Camp we make clear that national payments systems are domestic by definition. Each country has its own set of systems to effect payments. We point out that national payment systems differ in many of their details. Regulation, operating rules, governance, ownership, technology, and more are highly variable. At the same time, we also point out that major components are generally similar. An overnight, batch-based system for low-cost, low-value retail payments and an instant, irrevocable wire system for high-value transfers are typical of most countries. Across the planet, countries are planning, designing, trialing or enjoying fully deployed immediate funds transfer systems, new ones that instantly transfer lower value payments. The UK's Faster Payments system and The Clearing House's Real Time Payments (RTP) are two examples of this system type. Beside increased speed of payment, a second push for changes to national payment systems is the need for a richer representation of t

In this second discussion with First Data execs, George and Scott MacKay, Vice President, Strategic Solutions talk digital commerce in the automative space, both at the fuel pump and in the Connected Car. The importance of full stack security, whether it's sole sourced or the result of an integration effort, to successful deployment of mobile commerce is a theme here. Enabling the mobile experience at the fuel pump is complex. Petro sellers have a lot of legacy gear and the cost of upgrading that equipment is very high, a fact that has, at least, inhibited the pace of the EMV upgrade. The richness of the mobile device's data such as device fingerprinting and back end intelligence makes it conceivable that a fuel retailer could skip EMV altogether. Maybe. Scott also shares a look at payments and the Connected Car through the company's discussions with automobile manufacturers.

In this, the first of a two-part podcast series with First Data executives, Ajay Guru, VP of Merchant Fraud Solutions at First Data and George discuss the impact of fraud on the merchant, what the merchant has to do to manage it, and the classes of tools and techniques available to mitigate fraud. Ajay addresses machine learning technology's remarkable ability to identify anomalies and makes candid remarks on the necessity of human analysis to determine whether these anomalies are indeed fraud. Other topics discussed include behavioral analysis (how we enter our user ID and password into the browser) as well as the sophistication of today's manual and automated attacks. There is still a lot of CNP fraud taking place over the phone. There's good detail on the technology and what fraudsters are up to. Take a listen.