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MAr/Apr 2019

The Merchant’s Guide to Transactions, Cards & e-Commerce

Evolving Canada’s iconic loyalty programme ❱ How to drive mobile wallet adoption ❱ Why daily pay for gig workers ❱ Securing payments in a connected world

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TableKey of Contents theme

Editor-in-Chief Steve Lloyd Editor Brendan Read Publisher Mark Henry Contributors Ryan Ahern; Gord Jamieson; Anurag Kar; Daniel Kornitzer; Susan O’Brien; Allen Pettis; Mikko Rieger; Gary Schwartz; Chris Seip Creative Direction Jennifer O’Neill Photographer Gary Tannyan President Steve Lloyd

Mobile Payments 4 2019: Another landmark

7 Developing a digital



year for mobile payments How to drive mobile wallet adoption

for gig workers

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Open Banking 14 Why open banking

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payments infrastructure The digital payments opportunity

Alternative PAyments 11 Why daily pay 12 Survey: Canadians turning

Industry News 20 Industry news

Cover Story

March/April 2019 Volume 10 Number 2


Evolving Canada’s iconic loyalty programme

19 A rewarding card strategy

21 Industry events

Payments Modernization 22 Securing payments in a connected world Next issue…

May/June International Payments • Blockchain & Cryptocurrencies • Travel & Hospitality • Wire/EFT March/April 2019



Mobile Payments

2019: Another landmark year for mobile payments By Daniel Kornitzer


ncreased mobile penetration and a growing level of consumer comfort with making payments through a smartphone or tablet continues to impact consumer spending habits across the globe, including Canada. To measure the impact of this trend, Paysafe surveyed consumers from Canada, the U.S., U.K., Germany and Austria for Lost in Transaction: Payment Trends 2018, our annual consumer research report. The results painted a clear picture of how improved technology, changing consumer habits and new regulations are reshaping the role of mobile in making card present (CP) and card not present (CNP) payments. In the report, nine per cent of consumers stated that they had made purchases in-person using mobile wallets in the past month. At the same time, 10 per cent of consumers from the same regions that were questioned on this topic confirmed that they had made a purchase in-app during the previous month. And this isn’t a trend that will fizzle out in 2019. Here are the factors that will ensure mobile payments continue to be at the forefront of payment innovation for the foreseeable future.

The role of biometrics Mobile or m-commerce, even with mobile-optimized web pages or inapps, has often been clunky, delivering a poor user experience due to a lack of mobile native payment authentication processes. However, the introduction of biometric authentication through fingerprint technology or facial recognition is a significant upgrade in this area. This will be particularly relevant as Visa and Mastercard roll out their new 3D Secure 2.0 authentication process, of which authentication by “who you are” (biometrics) will be a key component. And not only will a vastly improved authentication process make CNP payments on mobile more appealing for a user experience perspective, biometric authentication will also likely appeal to consumers with security concerns about making online payments. Indeed, 64 per cent of Canadian consumers and an even higher proportion of Americans surveyed (68 per cent) by Paysafe said that they found two-factor authentication systems more appealing when shopping online. 4


Contactless payments gaining momentum In the U.K. the adoption of contactless technology, which has been part of the payment landscape for over a decade, has skyrocketed. In Lost in Transaction, 54 per cent of U.K. consumers told us that they had made a contactless payment in the previous month. According to a recent Mastercard report, almost half (46 per cent) of all in-store transactions in that country are today made via contactless. While the majority of contactless transactions are still made using credit and debit cards, consumers that have adopted mobile wallet technology are overwhelming positive about its benefits, leading us to believe that we will see greater adoption moving forward. An overwhelming majority (84 per cent) of mobile wallet adopters said that paying using their mobile devices was more convenient than cash and over three-quarters (77 per cent) agreed that mobile wallets were more convenient than contactless cards. We expect to see the number of mobile wallet users rise in 2019, as awareness of their benefits filter into the mainstream. Adopters will also use their mobile wallets more frequently. A large majority (85 per cent) of current mobile wallet adopters told us that they would be using their mobile wallets much more for making payments by 2020. Furthermore, three quarters (74 per cent) stated that they would use their mobile wallets to pay for higher-priced items if the value limit for contactless payments was raised. And whilst adoption of contactless technology in North America is generally much lower than in the U.K., awareness of mobile wallets is more equitable. Four out of ten Canadians (42 per cent and more than half (54 per cent) of American consumers have used a mobile wallet to make a payment, compared to 56 per cent of U.K. consumers. And close to two-thirds of North American consumers —58 per cent of Canadians and 61 per cent of Americans—revealed that they preferred to shop at stores that offered contactless payments at the checkout. But perhaps the biggest driver of in-store mobile wallet adoption in 2019 and beyond will be the manner with which businesses are embracing the new technology. For our Lost in Transaction: The future of payments for SMBs report, published in October 2018, we asked small and medium-sized March/April 2019

Mobile Payments businesses (SMBs) about their priorities for improving the checkout experience. Raising the number of available payment methods and increasing the speed of the checkout were the key takeaways. For these reasons, the number of businesses in Canada and the U.S. that accept in-store payments by mobile wallets is expected to increase by more than 100 per cent by 2020, from a total of 29 per cent to 62 per cent.

Consumer appetite Much as the adoption of contactless as a solution allowing more convenient commerce payments, consumers also now demand a secure and convenient alternative to cash when making payments to friends, family or peers. This is why demand for peer-to-peer payment (P2P) capabilities through digital apps has been a growing trend for several years, particularly in the U.S., with quarter-on-quarter payment volume growth exceeding 20 per cent for several industry leading providers in this area1. It was predicted that 63.5 million Americans (32 per cent of smartphone users) made a payment on a P2P app in 2017, according to eMarketer’s research2. This figure grew to 82.5 million users in 20183.

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It is unsurprising that tech giants, including Apple, Facebook and Google have launched products that will continue to boost adoption of these apps. Industry commentators have predicted that the total transaction value of mobile P2P payments will have grown 37 per cent in 2018 in the U.S. to $167 billion and this figure could rise to surpass $300 billion by 20214. Whether it is a payment via a P2P app on a smartphone, the rising use of mobile wallets or more sophisticated biometric technologies for payment authentication on a mobile device, the future of payments is on the move: quite literally. Daniel Kornitzer is chief business development officer, Paysafe Group ( Daniel is responsible for developing strategic partnerships designed to meet customer needs and grow new revenues. He has over 20 years’ experience in technology management. Daniel holds a B. Eng. in Electrical Engineering from Ecole Polytechnique, a M.Eng. from McGill University and a diploma in Network Engineering from the University of Toronto. 1 Rahul Chadha, “Mobile Proximity and Peer-to-Peer Payments 2018”, report, eMarketer, August 13, 2018. 2 eMarketer, “P2P Payment Transactions to Exceed $120 Billion This Year”, report, July 18, 2017. 3 Caroline Cakebread, “Who's Using P2P Payments in the US?”, infographic, eMarketer, December 5, 2018. 4 “Zelle Will Overtake Venmo in 2018”, article, eMarketer, June 13, 2018.



Mobile Payments

How to drive mobile wallet adoption By Ryan Ahern


ayments are driven heavily by consumer behaviour and preferences, making it only natural that mobile wallets would catch on as smartphones have essentially become extensions of consumers. However, despite the move to contactless payments, mobile wallets have not been as readily adopted by merchants and consumers. But accepting all forms of electronic payment methods, including magstripe, EMV and near-field communications (NFC)/contactless is only half the battle. Merchants need to make sure customers are aware that they can pay with mobile wallets such as Apple Pay and Google Pay and that their staff can guide them at the point of sale (POS). Here are several options for driving mobile wallet adoption. Pushing wallet use. It is in the merchants’ best interests to drive mobile wallet adoption as it can benefit them immensely, including: • Faster speed of transaction. A quick checkout creates efficiencies for merchants as they are able to serve more customers; • Stronger security. Mobile wallets use tokenization to replace the cards’ original account numbers, providing enhanced transaction security and assuring customers their card data is safe; and • Enhanced brand perception. Acceptance of NFC/contactless payments helps improve consumers’ perception of merchants and their commitment to cutting-edge technology. Merchants that are active in how they alert their customers to the contactless capabilities have the opportunity to process more transactions each day. But also critically, they would be able to boost how their brands are perceived by their customers. These factors could enhance customer loyalty and attract more clientele, hence generate higher profits, by creating a superior shopping experience while keeping costs down through greater productivity. In-store signage. A barrier that’s hindered mobile wallet adoption is unclear payment direction at the POS. Consumers want to reach the checkout and minimize any time spent waiting on payments. With POS systems capable of accepting any number of payment forms, this means if it’s not immediately clear what’s accepted, customers will revert to whichever they’re most comfortable with (often a more traditional method like magstripe or cash). If a customer is hung up even momentarily, they could become frustrated and be less likely to attempt to pay using mobile wallets or contactless cards again any time soon. Implementing in-store signage makes it clear to customers that 6


NFC/contactless transactions are an accepted, important and simple way to spread awareness. Card brands such as Visa offer free POS signage for contactless that merchants can download and affix on payment acceptance devices. Stickers to show mobile wallet acceptance are also available from Apple and Google; cashiers can point to these signs to remind customers they are able to pay using their smartphones. The end goal is to make it so clear to consumers how they can pay via mobile wallets so that merchants don’t risk losing mobile transactions over moments of frustration. Training staff. Some merchants that are capable of accepting NFC/contactless payments have even lost out on mobile transactions because they’ve neglected to turn those capabilities on at their POS. Employees who don’t know that mobile wallets are accepted and who aren’t trained well enough to walk customers through the payment process contribute further to the problem when they can’t communicate to customers what payments are accepted. This lack of education among merchants can affect the checkout experience for shoppers and discourage mobile payment adoption. Merchants should train their staff on how to accept mobile wallets at the point of service. They should also be able to articulate where on the payment devices consumers should tap their contactless cards or smartphones. While the terminals or card readers should clearly indicate where to tap the devices or cards, often staff will need to direct the cardholders. This helps ensure a smooth transaction process and encourages shoppers to use this payment method more often. Merchant employers should also encourage employees to get and use mobile wallets. This way staff becomes well-versed in the technology and be able to help customers to pay with this method.

It is up to the merchants Enabling NFC/contactless payments is just the beginning of the journey for merchants. By motivating customers to use mobile wallets, they are not only enhancing the checkout experience, but they are also creating efficiencies within their businesses. Merchants’ success hinges on being able to evolve at the pace of their customers’ changes preferences. The technology is already largely in place for mobile payment adoption to grow exponentially in North America. But it is up to merchants to close the gap between the payments technology they offer and the payment method their customer reaches for first at the point of sale. Ryan Ahern is payments solution manager, Ingenico Group North America (

March/April 2019

Mobile Payments

Developing a digital payments infrastructure By Mikko Rieger


anks and credit unions are struggling with complexity and how to manage competing priorities. Mobile payments are growing by more than nine per cent a year, with more than 70 per cent of Canadians using their mobile devices for sending and receiving money1. Now too, consumers are showing increasing interest in Internet of Things (IoT) payments, including wearables, smart fridges, virtual assistants and soon, connected cars. This means that banks and credit unions need a back-end infrastructure that can flex to accommodate new and diversifying payment-enabled form factors. Furthermore, open banking is coming to Canada. According to PwC, it’s only a matter of time before this fundamentally reshapes the payments industry2. These concurrent industry developments are creating the following pain points: • If open banking and account personalization services aren’t made available on smartphones, then consumers won’t use them, and banks won’t be able to leverage them to differentiate themselves and create revenue; • If tokenization isn’t used to secure transactions initiated from mobile devices, then an increasing amount of payment and account data will not be adequately protected; and • If payment-enabled connected IoT devices, which have been growing in popularity in the Canadian market3, aren’t supported in the back-end by issuers, their card offerings may become obsolete once these devices become mainstream. Virtual cards and the existing card infrastructure enable these services. However, legacy systems are holding issuers back from responding fast enough to changing market conditions. According to Ovum, nearly two-thirds of banks believe their payments infrastructure will need a significant upgrade in the next three years as the back-office domain becomes a key part of their digital strategy4. But this is a massive undertaking, and issuers are understandably wrestling with how best to approach it. To streamline the process and ensure that they reach the best solution, here are the key questions to ask when developing a card, mobile and IoT payments infrastructure strategy. march/April 2019

1. Is outsourcing right for my bank or credit union, or should we keep development in-house? (a) Can your existing consumer management system (CMS) support the growing and evolving payments ecosystem? (b) Do you have a large enough team of developers experienced in this area to build your own infrastructure and implement it with minimal disruption to end users? (c) Will the significant capital expenditure be recouped quickly? (d) Are you confident in your technical ability and capacity to quickly create an infrastructure that enables scalable, valueadded financial services that can be accessed on any connected device? If your bank or credit union can answer “yes” to all of the above, then there’s no reason that you couldn’t develop and manage your infrastructure internally. If the answer to any of the above is “no”, however, outsourcing may be the best approach.

2. We’re going to outsource our infrastructure upgrade. Should we go with a software-only or full-service provider? (a) Do you need to launch new products quickly to ensure faster creation of new revenue streams? (b) Would you benefit from bespoke technical support in developing new and innovative services? (c) Would you benefit from informed regional support and a collaborative development process that takes your institution’s individual needs into account? (d) Do you want to be able to guarantee your end users a stable infrastructure with high availability? (e) Are you moving towards a lean fixed-cost setup, so building and maintaining a team to manage a provider and realize the upgrade isn’t high on your list of priorities? If the answer to any of the above is “yes” then a software-only provider may not have the capabilities required to successfully implement and manage card, mobile and IoT payments infrastructure on an issuer’s behalf. Continued on page 9



Mobile Payments

The digital payments opportunity By Anurag Kar


o much of our daily lives is online, digital and on-the-go, whether it’s how we communicate with each other, how we learn about current events or consume entertainment and increasingly how we conduct business and make purchases. Naturally enough, businesses from large retailers to financial services providers and even sole proprietors in the gig economy will rely more and more on digital payments to transact with their customers and suppliers. What does this mean for businesses that want to grow? The speed and effectiveness of how businesses adopt digital payments solutions will play an increasingly larger role in how they connect with customers, disburse payments, manage cashflow and grow revenue. As Canada’s leading payment and digital information network, Interac has unique insights into how consumers and businesses alike are embracing digital payments: and how both consumers and businesses are using Interac e-Transfer at record levels for a wide variety of payments.

A surge in digital payments 2018 was a banner year for digital payments in Canada. At Interac, we saw an unprecedented surge in the use of Interac e-Transfer both by consumers and businesses. There were 371.5 million Interac e-Transfer transactions: which represents a 54 per cent year-overyear growth in transaction volumes. That’s the highest level of growth since 2005. More specifically, Interac e-Transfer was used by Canadians more than one million times per day. To put this in dollar terms, the total value of Interac e-Transfer transactions in 2018 was $132 billion, a growth of 45 per cent from 2017. While we’ve seen year-over-year growth with our Interac e-Transfer platform, we’ve simultaneously seen growth in the service’s mobile adoption, with more than 76 per cent of all transactions being deposited on mobile devices. This data point shows that users are not just embracing the ease and convenience of digital payments, but they are taking to mobile payments as well.

Driving digital In helping to understand the surge in the use of digital payments, one particular statistic stands out as encouraging—both for the continued growth of the service—and for businesses that want to better 8


understand the changing payments landscape. In 2018, the average transaction value of an Interac e-Transfer was $357. Comparing that to six years ago, that number has come down from $465. Pairing this measure with 2018’s surge in frequency is a clear indication that customers and businesses are making digital payments a regular part of their daily lives, in how they transact and how they do business. The feeling among Canadians that digital payments are becoming more normalized and more integrated into their routines will only continue to drive usage growth.

Opportunities for consumers, businesses The unprecedented surge in digital payments provides a wide range of opportunities. At the consumer level we’ve seen an embrace of digital payments for transactions that range from making group purchases—for example, sharing the cost of a meal of a trip to the movies—to paying a babysitter or dogwalker. Our numbers demonstrate that Interac e-Transfer has become a trustworthy payment solution known for its speed, security and convenience. The latest additions to the platform are now making it that much easier for everyday use. One of the newest options for users the ability to Request Money, a feature that makes it easier for individual consumers to make group purchases. But there are significant opportunities for businesses as well. Coupling this feature with Autodeposit—which has four million registered users—provides businesses with the opportunity to streamline their invoicing and payments to create seamless realtime payment (RTP) processes.

Moving to RTP For many years, the majority of businesses have relied on cheques and electronic funds transfers (EFTs) for their payments. But these options can still be subject to clearing delays and liquidity issues. This is payments the old-fashioned way. It’s not real-time and it imposes burdens on companies and their back offices. In contrast, RTP offer speed, efficiency, convenience, transparency and security. RTP solutions like Interac e-Transfer are the future of digital payments for businesses of all sizes. Smart businesses can capitalize on this surge in consumer adoption of this payment platform. This presents businesses with opportunities to improve their cash flow through quicker payments and potential revenue growth by providing a smooth payment experience for their customers. For sole proprietors, features like Autodeposit and Request Money offer a solution that eases administrative burden and increases March/April 2019

Mobile Payments convenience. With Interac e-Transfer Business Payment Services, business owners can use one platform to receive customer payments, pay rent, manage supplier and vendor invoices and streamline payrolls. For businesses, RTP offer a solution for both high-volume commercial transactions as well as lower-volume transactions. In fact, in 2018 alone, businesses sent $465 million through Interac’s e-Transfer Bulk Disbursement feature. And for large commercial businesses, the growing ubiquity of RTP technology offers significant opportunities for back-office efficiencies in their business-to-business (B2B) transactions and in their transactions with individuals. When combined with enhanced, automated data analytics they give businesses more time to focus on revenue growth and customer service. Taken together, the growing adoption of digital payments by both consumers and businesses—alongside the further integration of these technologies into our daily purchasing, spending and business routines—is a trend that will only become more ubiquitous as technology improves. Businesses of all sizes should take advantage of these opportunities to maximize their connection with customers, the efficiency of their payments processes, and the ease and speed of real-time payments. Anurag Kar is Interac’s director of digital push payments.

Central 1 blends invoicing, payments with Request Money Central 1 has integrated the Interac e-Transfer® Request Money feature into its small business online invoicing and payments product. This single digital platform means fewer fees for small business users than with traditional online payment solutions by enabling them to access funds directly from bank accounts and avoiding costly credit card fees. “For small businesses in particular, the timely collection of outstanding payments is crucial to their success,” said Central 1 senior product manager Randy Johal. “This integrated invoicing and payments solution leverages Interac e-Transfer Request Money, an enhanced user feature, combining two steps into one and, in turn, more quickly putting the hard-earned money back into the pockets of small business owners.” Saskatchewan-based Synergy Credit Union is the first credit union to offer the service to small business members. “We’re always looking for ways to serve the growing small business community in the areas we serve,” said Trevor Beaton, Synergy chief innovation and people officer. “Through this exciting partnership with Central 1, we’re able to leverage innovative technology to provide our members with a more simple, streamlined and faster invoicing and payments experience. Credit unions are already the financial institution of choice for small business owners, and Request Money integration with online invoicing stands to bring the community a tremendous amount of added value and efficiency.” march/April 2019

Developing a digital payments infrastructure Continued from page 7

3. We have identified a full-service CMS provider. What questions should we ask them to ensure they’re the right choice? (a) Does it have migration experience? (b) Is the solution flexible enough to adapt to future consumer demands and new financial products? (c) How smooth is the onboarding process? How much disruption to our end users will there be? Can we migrate product by product, instead of all at once, to mitigate possible risks? (d) Can the solution be expanded to cover value-added services beyond CMS? To learn more about the challenges and opportunities behind upgrading your card infrastructure, download our eBook Payments: Card vs Mobile vs IoT. Does it Even Matter? Mikko Rieger is senior vice president of consumer management services (CMS) at Nets ( He has a background in software platforms, cloud adoption and telecoms and has worked across Europe and North America. He holds a B.Eng. in electrical engineering, a Dipl. Ing. In computer engineering, a Master’s degree in engineering management and an MBA in finance, entrepreneurship and innovation from Northwestern University. 1 Research and Markets, “Canada Mobile Wallet and Payment Market Opportunities (Databook Series) - Market Size and Forecast across 45+ Market Segments”, January 2019. 2 PwC, “Canadian Banks 2019”, report. 3 Michael Tompkins and Viktoria Galociova, “Canadian Payment Methods and Trends: 2018”, Payments Canada, report, December 2018. 4 “Banks see payments infrastructure renovation as key to digital strategy,” Finextra, October 22, 2018.

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How payments are made and managed payments is undergoing an exciting evolution. Examples include: • Contactless cards and mobile wallets • Internet of Things • Real-time payment rails • Blockchain and cryptocurrencies • ATM, cash and cheque modernization But security and fraud risks also are rapidly evolving. There are new techniques, tools, standards and regulations to facilitate fast, intuitive, transparent and secure transactions and processing. Payments Business (, published by Lloydmedia, keeps track of these trends and provides thought leadership from industry experts.

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Alternative payments

Why daily pay for gig workers By Chris Seip


n Canada, and across the globe, we’re seeing the emergence of a gig economy that is fuelled by on-demand workers. According to EY, the U.S. contingent workforce has grown by 66 per cent in the past 10 years1. Ride-hailing services are one of the largest users of contingent workers. Today, our estimates show that over 25 million drivers around the world drive for the three largest companies, Uber, Lyft and Didi in the ride hail space.

Financial vulnerability In contrast to the past, when employees typically put down deep roots and rarely changed careers or even employers, the gig economy is built on temporary, flexible jobs that are filled by independent contractors and freelancers. But the gig economy also presents some unique challenges. Traditional weekly or bi-weekly payment cycles do not meet the needs of the on-demand workforce, thereby leaving them financially vulnerable. Based on Payfare driver data, a typical on-demand driver works full or part time up to 18 days per month, earning $1,180 per month. These earnings are usually carefully allocated towards rent, food, childcare and transportation down to the last cent. Problems occur when an unexpected expense arises. For a ride hail or instant delivery driver, vehicle maintenance or repair or a rise in the cost of fuel could suddenly leave them unable to work if payday is still days away. Alternatively, they may be forced to turn to credit cards, credit lines or steep payday lending rates to cover the expenses: which often begins a cycle of debt they cannot break. Unexpected expenses aside, the rising cost of living and the growth of income disparities are making it difficult for on-demand workers to cover basic living expenses. To illustrate, even in the face of a stronger economy 40 per cent of American households cannot cover a $400 expense2 while 78 per cent of American households live paycheque to paycheque3. While these statistics are concerning, there is a solution that creates affordable and effective working capital solutions for better cash flow to cope with every day and unexpected expenses. The solution is instant pay.

Financial inclusion Instant pay or “pay while you’re earning” can transform the lives of gig workers by providing them with financial inclusion and literacy. By giving gig workers immediate access to 100 per cent of the net march/April 2019

money they’ve earned, while they’re earning, they have better cash flow for bills, groceries, fuel and vehicle maintenance. Instant pay gives them the ability to take care of their needs, setting saving goals and ensuring they aren’t beholden to pay cycles, credit cards or exorbitant payday lending rates. Although some individuals believe traditional bi-weekly payment cycles encourage financial management, and instant pay would fuel irresponsible spending, this is not the case. Access to daily earnings encourages workers to spend within their earning potential rather than beyond it. Daily or instant pay give workers greater control over prioritizing payments so they can reduce debt on high-interest credit cards and loans, which is critical to a sound financial strategy. It helps them avoid unnecessary expenses such as overdraft fees and steep payday lending rates. Also, by knowing exactly how much money they have, gig workers can increase their work and their earnings when unexpected expenses are incurred.

Pay cycles contract Currently, traditional employers provide data for payrolls which in turn are directly deposited into employees’ bank accounts. However, in the gig economy, workers will benefit most if earnings are generated daily and provided to a payroll solutions company. Businesses enrolled with an instant pay solution offered by it then provide their workers with mobile banking applications paired with debit cards. Individuals can then perform all of the transactions offered through traditional bank accounts for a fraction of the cost, including cashing out their earnings multiple times daily, viewing their card balances, transaction and earnings histories, transferring money, paying bills and depositing cheques. The emerging gig economy can’t thrive with traditional payment cycles. By disrupting them, and enabling same-day earnings, instant pay delivers financial inclusion to gig workers globally. Chris Seip is chair and CEO of Payfare (, a financial technologyoperations company that provides instant pay, every day to businesses and their workers. Payfare’s proven, in-market, scalable solution is backed by major investment firms and financial institutions around the world and has strong partnerships with Mastercard, issuers, processors, card manufacturers and other providers. 1 David Storey, Tony Steadman and Charles Davis “Is the gig economy a fleeting fad, or an enduring legacy?”, EY, report, 2016. 2 Federal Reserve Board, “Report on the Economic Well-Being of U.S. Households in 2017”, report, May 2018. 3 CareerBuilder, “Living Paycheck to Paycheck is a Way of Life for Majority of U.S. Workers, According to New CareerBuilder Survey”, press release, August 24, 2017.





March/April 2019

espite being one of the highest banked populations in the world, Canadians are increasingly turning to alternative payment tools, including mobile, PayPal and prepaid. A new study, "How Canadians Pay Today", commissioned by the Canadian Prepaid Providers Organization (CPPO,, revealed that the use of these means, led by prepaid, has increased by 14 per cent since 2016. Detailed findings and trends include: • As cash purchases continue to slow, consumers are ready for non-traditional banking. Nearly two-thirds (65 per cent) of consumers have made fewer cash purchases than the year before, compared to 58 per cent in 2016, especially Millennials (75 per cent). While the vast majority (99 per cent) of Canadians have bank accounts, around three in ten (29 per cent) want to sidestep traditional banking in favour of new tools that offer convenience and cost savings; • Credit and debit cards remain popular, but adoption of alternative payment tools is on the rise. Credit and debit cards are used most frequently by Canadians (40 and 33 per cent


Survey: Canadians turning to alternative payment methods Alternative payments

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1 BMO Wealth Management, “The gig economy: achieving financial wellness and confidence”, Insight, July 2018.

The CPPO is the voice of the rapidly growing $3.8 billion Canadian prepaid payments industry. Prepaid has grown rapidly as a major form of electronic payment without involving credit. It is being used to power new FinTech and PayTech solutions aimed at improving customer experience, financial inclusion and faster payments delivery through its ease of use and ubiquity of acceptance. “As Canadians increasingly opt for non-traditional banking solutions, they are raising the bar for a faster, frictionless experience and added convenience in the entire payments industry,” said Peter Read, CPPO chairman of the board. “Prepaid has emerged as a popular foundation for innovations in bank account replacement, money transfer, in-app payments and more.”

respectively), followed by cash (18 per cent). However, 73 per cent— up from 59 per cent in 2016—have started using other payment technologies, including PayPal (55 per cent), prepaid cards (27 per cent), Apple Pay (11 per cent), Google Pay (seven per cent) and other mobile payments (seven per cent). But prepaid cards saw the highest growth, jumping 17 percentage points since 2016. Among those using these tools, six in ten (61 per cent) of Canadians say they are comfortable with their security; • Canadians are turning to new tools and apps to help them budget. More than four in ten (43 per cent) Canadians struggled to stay within their budgets in the past year and 23 per cent often have running balances on their credit cards. Canadians find that certain tools are useful in helping them stick to budgets, including easy-to-use online tools that track spending (46 per cent) and budgeting apps (43 per cent) as well as reloadable prepaid cards free of interest charges and overdraft fees that limit spending (34 per cent). Three in ten (31 per cent) currently use apps to manage their finances. Moreover, nearly half (46 per cent) with children under 18 years old would give them spending allowances on prepaid cards to help control and monitor their spending; and • Evolving workplace arrangements and technology call for real-time pay. Statistics Canada estimates that 2.18 million Canadians are taking part in some form of temporary work1. Evolving workplace arrangements and technology are shaping payment expectations among the workforce. Six in ten (62 per cent) Canadians said they feel more loyal to a company that pays them in real time and 39 per cent would prefer to be paid via prepaid cards. Prepaid capabilities are rapidly replacing cheques as a less expensive and more secure option for issuing payments, incentives and disbursements. A third of workers (33 per cent) prefer to receive incentives through a prepaid card to enjoy real-time fund availability and flexibility in redeeming their pay.

Open Banking

Why open banking By Gary Schwartz


pen banking is the creation of well-defined protocols and standards for sharing and exchanging real-time data in a secure and in a trusted manner between financial institutions, third parties and customers. The market is demanding modernization. Payments Canada is looking to the key requirements to compete globally. Worldwide there is an effort to enable real-time, data-rich ISO 20022 payments (the standard for electronic data interchange between financial institutions). We know speed and data power this modernization. Open banking is a crucial prerequisite. It aligns with the Government of Canada’s mandate to become a global player in innovation, data and technology. An open banking mandate in Canada will position our country as a global leader, alongside the European Union and the United Kingdom. Department of Finance Canada is conducting a review of open banking. As the president of the Canadian Lenders Association (CLA) we have submitted a response as we view open banking standards as an essential step in normalizing the Canadian marketplace and bring vibrant, customer-first financial services to our economy. It is the next step and the natural evolution of Canada’s banking and financial services. As payments and financing services evolve and modernize, multiple stakeholders need to work together to develop the appropriate risk, policy, liability and compliance framework.

Air travel analogy Moving toward an open banking economy is analogous to the transformation of other verticals both internationally and in Canada. One illustrative example is the airline industry. Travelers historically were required to contact incumbent airline companies directly to book or manage reservations, check availability, check in and check arrival times. Modern standards in our airline industry have now placed the customers in control, enabling them to decide what, when, where 14


and how they wished to consume airline services. This amounted to expanded and improved services for would-be travellers. The modernization of the travel industry allowed for open functionality through secure application programming interfaces (APIs). This re-visioning of the industry enabled customers and thirdparty apps to perform most, if not all of the travel functions, without the need to ever contact the airlines through slow, analogue channels. It allowed for a proliferation of enhanced functionality and services which are now accepted and indispensable and which have helped incumbent businesses to thrive while opening the door to innovation across the sector, thereby spurring a larger and more vital economy. Similarly, open standards in banking will bring that vitality to the financial services marketplace. It will create new and enhanced functionality and services that will become indispensable parts of our growing economy.

Open banking benefits Open banking brings significant benefits to the Canadian market for customers and businesses. Providing all Canadians agency over their data also allows them to benefit from the resulting financial access, efficiency and innovation. Here is a list of some of the meaningful benefits that the CLA and our members expect from open banking standards. 1. Greater innovation and competition. Open banking will fuel and fast track Canada’s FinTech and innovation ecosystem. It will open the doors for FinTech start-ups to offer customers the ability to better manage their debt and get sound real-time investment advice and offers. Open banking will also spark increased competitiveness between financial institutions and open doors for new entrants to provide increased financial services and options to Canadian customers. 2. Improved access and efficiency. Open banking removes a huge burden off customers by giving them the ability to consent and choose what data can be shared with whom, thus allowing for faster and broader access to funds. It will allow customers March/April 2019

Open Banking to effectively access third-party financial tools and products and make it easier for them to pay and get paid. Open banking opens the door to third party providers to deliver services such as consolidation of payments (multiple invoices) and of account statements for treasury and investment purposes. Customers can give consent and provide instructions to their bank(s) to make multiple payments on their behalf, share their account balances with other banks and/or payment providers and save themselves the inconvenience of logging in to each bank separately. 3. Standardization. Open banking gives customers a consistent user experience across all banks. Customers can better manage their financial health through better and broader access to their financial data; they will be able to see their credit scores in realtime through their bank accounts, get real-time advice to improve their scores and better manage their debt. Customers will also have the ability to change their addresses with all banks and/ or service providers without the need to do so separately with each institution. Without open banking FinTechs rely on offerings that might compromise banks’ security, such as bank scrape technology. Open banking allows for these services to be more standardized and secure and will give banks the ability to monetize these services and make them readily available to customers. 4. Serving the underserved. Open banking will make banking broadly available to the underserved market including women, new Canadians (immigrants) and indigenous peoples. Lenders are requiring more and more banking data to understand their customers’ spending habits and behaviour to be able to provide funding. Open banking streamlines access to this data and will result in more access to funds for the underserved customer segment. 5. Customer-first design. Open banking allows customers to have agency over their data that is critical to develop trust and accountability and allow the customers to better participate in essential financial services. With open banking, customers can access and safely transfer their banking data to trusted parties. It will provide customers with more control over their data as they will have more visibility into what data their banks have on them and can select which parts of that data can be shared and with whom. Moreover, open banking provides customers more options to shop and compare products and end up with best products and rates. Crucially, open banking will result in more educated and active financial services customers. 6. Commercial benefits. Open banking will allow more smallmidsized businesses (SMBs) to access capital more efficiently than ever before, which increases economic output. It will increase cash flow by streamlining access to capital for SMBs and increase the competitiveness of alternative lending options. At the same time open banking will decrease the amount of time SMBs dedicate to business administration, allowing them to spend more time investing in the success of their operations.

Security and compliance

protection and information security provisions. APIs provide access to broader sets of data in a simpler and more scalable manner. But this means that a breach of these APIs could be extremely costly and could have significant consequences due to the vast amount of data that could be breached and leaked. In order for customers to feel safe and protected, there must be government-mandated standards and framework that all financial institutions must comply. The rules within these standards should be comprehensive and cover all risk profiles and tiers by putting the customers in control of what data can be shared, when and with whom. Banks today use their customers transactional data to educate their fraud detection systems and algorithms. Since open banking allows customers to perform certain third-party tasks and transactions from within their banks, those transaction details might not be available to the banks to analyze. However, it could make it more difficult for banks to protect customers from fraudulent transactions that are not within their control. Open banking also will introduce new types of transactions that incumbent banks are not necessarily familiar and might require time to adopt proper security to manage. A period of transaction history may be required to build appropriate fraud detection tools and algorithms. In order to make open banking operate effectively and efficiently in Canada, unlocking its full potential and value for the customer, we believe that standardization and compliance is crucial. The Personal Information Protection and Electronic Documents Act (PIPEDA) already provides a robust framework for the privacy and protection of customer data. PIPEDA can be enhanced to make it more comprehensive by including open banking standards.

Crucial government role The federal government must play a leadership role in bringing open banking to Canada. Any open banking initiative necessitates that all stakeholders in the financial sector participate in it. First, it is essential that the government mandate standards and enforce them in order to create a unified vision of open banking that all stakeholders in the industry can comply. It should establish and advance them by working horizontally with incumbent and alternative sector stakeholders. Second, the government should evolve the customer-first data policy, thereby ensuring the protection of customer data by placing the customer in control of their own data. Finally, the government should work across ministries, benefiting from standards in privacy and consent investigated by the Treasury Board’s Digital ID initiative. Gary Schwartz is author of the award-winning books “Impulse Economy” and “Fast Shopper, Slow Store.” Gary is president of the Canadian Lenders Association (CLA). The CLA ( represents and promotes services and innovation in the Canadian lending sector. The CLA’s lending members provide credit to both the SMB and consumer markets.

Open banking relies upon the accessibility and sharing of customers’ data, and thus demands a higher degree of privacy safeguards, march/April 2019



Points & Rewards

Evolving Canada’s iconic loyalty programme By Susan O’Brien


oyalty programmes are an important part of the toolkit for many retailers. Yet few of them have the legacy and reputation of Canadian Tire Money®, Canada’s first loyalty programme. Canadian Tire Money or CTM is a Canadian icon. With more than 12 million members nationwide and over $1 billion of the currency issued since its debut in 1958, Canadian Tire Money has long been considered Canada’s second currency. It is so deeply rooted in Canadian heritage that it is even included in the Oxford English Dictionary. Canadian Tire Money has been evolving since its introduction. This includes the integration of CTM into the Canadian Tire Options Mastercard in 2000 and the 2014 launch of the My Canadian Tire “Money” programme, which introduced electronic CTM to cash, debit and third-party credit customers at Canadian Tire Retail (“CTR”).

Canadian Tire Money to Triangle In April 2018, Canadian Tire Corporation (CTC) announced the most significant evolution yet with the launch of Triangle Rewards™ the foundation for CTC’s future growth. The main objective was simple: to create the easiest and most rewarding loyalty and credit card programme in the country. But evolving Canada’s oldest loyalty



programme was no small feat and it required insights from our retail banners, dealers and of course, our customers. Canadian Tire Financial Services and our retail banners spent almost a year building Triangle Rewards™. The result was a no fee loyalty and credit card programme that makes life easier for our customers by providing features and benefits designed for life in Canada.

The main objective was simple: to create the easiest and most rewarding loyalty and credit card programme in the country. Triangle Rewards allows customers to collect Canadian Tire Money faster, redeem their earnings at more places and receive personalized offers. With the ability to earn and spend CTM across banners, Triangle Rewards also has the added benefit of uniting them as one company in the eyes of our customers. Today, customers can collect and redeem electronic CTM at Canadian Tire, SportChek, Mark’s and Atmosphere locations, and

March/April 2019

points & rewards on fuel purchases at Canadian Tire Gas+ and participating Husky stations. In all, it enables members to collect CTM online and in-store at more than 1,300 locations and to redeem it at more than 1,000 outlets. As part of the Triangle Rewards programme, Canadian Tire Bank offers a premium, no-annual-fee Triangle World Elite Mastercard, which gives holders the benefit of collecting CTM on purchases and redeem special offers. This new, younger and more inspired Triangle Mastercard programme is designed to attract a new customer to Canadian Tire Financial Services and to engage and reward Canadians in an innovative way.

Enabling personalization

Photos Courtesy Canadian Tire Corportation

To make Triangle Rewards the best loyalty programme in Canada it was crucial for us to give more control back to customers, offering more choices on how they can collect and redeem their money and to create personalized offers. Following the launch of Triangle Rewards, we introduced and the Triangle™ App which delivers personalized weekly offers and relevant content to members on an ongoing basis. Using the Triangle App, members can view their offers in one place, manage their loyalty accounts and credit cards from anywhere, track credit card and loyalty transactions simultaneously and activate new offers. Additional perks include exclusive shopping events for Triangle Rewards members and credit cardholders. Whether its through the Triangle App or e-mail, we regularly notify members of upcoming sales and events so they can redeem their rewards often and collect even more Canadian Tire Money. To make participation easier, there are also more than 23,000 associates across participating retailers in-store and online ready to help Triangle members get the most out of their everyday shopping. With millions of members from coast to coast, the Triangle Rewards programme provides us with unique insights into Canadian consumers and it is

Susan O’Brien is senior vice president, marketing, for Canadian Tire Corporation, Limited (CTC). Canadian Tire Money or CTM is arguably recognized as distinctly Canadian as Canada’s paper and coin currency. Since its inception in 1958, CTM has been evolving to include loyalty cards and mobile to provide a greater customer experience.

march/April 2019



Points & Rewards

Photos Courtesy Canadian Tire Corportation

The success of loyalty programmes lies in delivering a clearly understood value proposition combined with ease of redemption. Canadian Tire Corporation has been providing just that for over 60 years, and now across multiple channels.

adaptable to their shopping habits to stay relevant over time. Using the programme’s customer data, we are able to identify ways to improve the programme’s offerings and opportunities to add even more value. In October 2018, we partnered with Husky Energy and expanded the programme to give consumers the ability to earn more Canadian Tire Money on fuel purchases. We are also currently exploring ways to expand the programme to other businesses.

Customer response Triangle Rewards signalled that we are committed to creating a Triangle Marketplace to deliver the best of what CTC has to offer throughout our customers’ lifetimes and that message is resonating with Canadians. Since its launch, Triangle Rewards has had an overwhelming response and awareness of the credit card and loyalty programme has grown. We’ve seen a substantial increase in loyalty issuance and redemption and double-digit increase in active members and spend per customer. From humble beginnings as Canada’s first loyalty programme, Triangle Rewards is the underpinning of our organization’s future and a key driver to our continued success. CTC is on a journey to become the number one retail brand in Canada by 2022. As a unique touchpoint with Canadians, Triangle Rewards will play an important 18


role in getting us there, serving as an incredible growth engine that enables us to seamlessly engage customers, deliver great offers and create new experiences for years to come. Susan O’Brien is senior vice president, marketing, for Canadian Tire Corporation, Limited (CTC), and is responsible for all marketing and branding strategies for Canadian Tire Retail, Mark’s, SportChek and Canadian Tire Financial Services. Known for her 360-degree view of campaigns, Susan is an expert in brand reinvention and positioning. Since joining CTC in 2008, Susan has held a number of progressively senior roles. Most recently she served as senior vice president, marketing and corporate affairs. Prior to that she was vice president of marketing. In this role, Susan was responsible for the development and execution of marketing and branding strategies for Canadian Tire Retail.

March/April 2019

points & rewards

A rewarding card strategy By Allen Pettis


anadians love their credit cards. In TSYS’s most recent Canadian Consumer Payment Study, consumers ranked credit cards as their number one favourite payment method for the fourth year in a row. And for the first time since the study began, Canadians across age groups and income levels said they prefer paying for purchases with them. These findings are good news for credit card issuers and the strength of their products. But the same study also has potentially cautionary findings for the industry. For the fifth year in a row, loyalty or rewards programmes came in as the top factor driving consumers to select particular credit cards, with 90 per cent of respondents selecting rewards as a feature that causes them to use one credit card over another. This data suggests that consumers aren’t necessarily committed to credit cards. Instead they’re committed to rewards. And the companies that offer the most attractive rewards programmes are best positioned to take market share from competitors: even if they are not traditional credit card issuers.

Digital wallets, merchant apps competition Enter digital wallets and merchant apps, which represent growing forms of competition for issuers. Amazon, for example, has a credit card that seamlessly integrates with its e-commerce platform, allowing customers to apply points they earn toward purchases (Alipay has the same type of programme). Venmo recently introduced a debit card, positioning it to launch a loyalty programme in the future, although it has not done so yet. Scores of other merchants have rewards programmes that encourage customers to pay for purchases within mobile apps. For example, Starbucks customers earn rewards by ordering through its app, which can be set to automatically reload a customer’s prepaid card once the balance falls below a certain level. The threat that each of these companies pose to traditional credit card issuers, notably the larger banks and credit unions, and risking eroding their market positions, is that customers could take more of their business to other companies with whom they have relationships, such as Amazon and Venmo. Even when these issuers provide the infrastructure for the cards—as is the case with the Amazon credit card, which is issued by Chase—customers are being trained to view e-commerce retailers and other non-bank entities as viable financial partners. Long-term, this could exert new competitive pressures on the banks and credit unions.

Bank, credit union advantages Bank (or credit union) credit card issuers still have major advantages over non-traditional competitors. In most cases, banks and credit unions offer a broader range of rewards programmes. A retailer march/April 2019

that encourages customers to link a store card directly to their checking account, for example, might reward those customers with cash back, discounts at the register or points that could be used for future purchases. However, the benefits are typically limited to the products sold by that retailer. In contrast, banks and credit unions can offer various products that appeal to clients’ specific areas of interest, such as travel, restaurants, entertainment, groceries or cash back. Banks and credit unions know more about an individual’s broader spending habits than any single merchant. They should leverage this information to target customers with rewards programmes that are most likely to appeal to them. Finding new ways of segmenting customers and understanding their purchase patterns will enable banks and credit unions to develop new and creative rewards programmes. They can play leadership roles in curating new experiences for customers based on in-depth knowledge of their interests.

Learn from the retailers and innovators The innovation that’s currently happening in the loyalty and rewards space is focused on making the process of redeeming rewards easier and faster. The push toward the seamless customer experience is driven by companies such as Amazon, Apple and PayPal that have excelled at simplifying various tasks, from buying music to ordering things online or paying a friend. Consumers now expect their payment card(s) to deliver the same kind of experience. The frictionless rewards experience has already gained relatively widespread adoption. Most anyone with a mobile banking application has seen special offers from various merchants appear at the bottom of their screen. All they need to do is accept the offer within the app and the discount is applied whenever the purchase is made. FinTech players across the industry are working to bring this same type of immediate redemption opportunity to other types of transactions.

Embracing the innovator role The banking industry, along with credit unions are well-positioned to invest in loyalty programmes that provide new ways of giving consumers the instant gratification they desire instead of waiting for retailers and other technology startups to bring these types of solutions to market. Banks and credit unions can and should play a leadership role in this space because nobody understands consumer purchase patterns better than them. And in today’s data-driven world, the companies that understand the consumer are in a much stronger position to win them over. Allen Pettis is executive vice president and chief customer officer of Issuer Solutions at TSYS (, responsible for all global account management and sales.



Industry news

2019 CPPO Prepaid Symposium May 13 Prepaid cards play an increasingly vital role in Canada’s payments system. The Canadian Prepaid Providers Organization (CPPO) is offering an opportunity to learn more about it at the third annual CPPO Prepaid Symposium on May 13, 2019 at the Toronto Region Board of Trade in Toronto, Ont. The one-day event precedes the Payments Canada Summit, which is being held May 14-16, 2019 also in Toronto. The CPPO has been bolstered recently by five new members. Galileo, Netspend, Spring Card Systems and Vancity Community Investment Bank have joined as general members and Stack has been welcomed as a board member. “As the prepaid market continues to evolve, this year’s Symposium will focus on prepaid as a driver of financial inclusion and innovation and a core capability in Canada’s PayTech growth,” said Peter Read, CPPO chairman of the board. “A wide range of the industry’s local and international thought leaders will present actionable insights around payment technology and trends for consumer and business applications.” The Symposium will kick off with a keynote address from Jim Marous, co-publisher of The

Financial Brand and owner and publisher of the Digital Banking Report. The Symposium will also feature a keynote presentation by Kelley Knutson, president of Netspend, and more than ten panel discussions, presentations and workshops by leading industry voices about the evolution of prepaid and the broader payments ecosystem. Symposium topics include: • How to compete in loyalty programmes; • AI-based digital identity/authentication solutions; • The real-time rail: threat or opportunity for prepaid? • Merging banking and payments with securities and investing; and • Federal regulations and their impact on payments.

Among the other speakers are: • Daniel Eberhard, co-founder and CEO, Koho; • Scott Harkey, global payments lead, Levvel; • Yves-Gabriel Leboeuf, CEO, Flinks; • Gabriel Ngo, advisor, financial crimes policy, Department of Finance Canada; • Felipe Papaleo, general manager, Incomm;

• Miro Pavletic, CEO, Stack; • Charumitra Pujari, vice president of machine learning, Paytm Labs; • Jacqueline Shinfield, partner, Blake, Cassels & Graydon LLP; • Sue Whitney, head, product management and strategy, Payments Canada; and • Clay Wilkes, founder and CEO, Galileo Processing. The corporate sponsors of the 2019 CPPO Prepaid Symposium include: Blake, Cassels & Graydon LLP, Galileo, Incomm, Mastercard, Pace, Peoples Card Services, Payment Source, The Fletcher Group and Ubiquity Global Services. “Attendees from the 2017 and 2018 Symposium expressed great enthusiasm for the content and speakers,” said CPPO co-founder and executive director Jennifer Tramontana. “So we have expanded those offerings this year with a deep dive into new applications and case studies from proven programs and leaders.” For more information and to register for the CPPO Prepaid Symposium visit

Mastercard debuts sonic brand Setting a new tempo for brand expression, Mastercard has debuted its sonic brand identity, a comprehensive sound architecture that signifies the latest advancement for the brand. Wherever consumers engage with Mastercard across the globe the distinct and memorable Mastercard melody will provide simple and a seamless familiarity. It will extend to many assets, from musical scores, sound logos and ringtones to on-hold music and point of sale (POS) acceptance sounds. The news comes on the heels of Mastercard’s recent transition to a symbol brand and is part of its continued brand transformation. Sound, it said, reaches people through another sense. Therefore, having a unique sonic identity is critical to Mastercard’s distinctiveness. 20


“Sound adds a powerful new dimension to our brand identity and a critical component to how people recognize Mastercard today and in the future,” said Raja Rajamannar, chief marketing and communications officer, Mastercard. “We set out an ambitious goal to produce the Mastercard melody in a way that’s distinct and authentic, yet adaptable globally and across genres. It is important that our sonic brand not only reinforces our presence, but also resonates seamlessly around the world.” With voice shopping set to hit $40 billion by 20221, audio identities not only connect brands with consumers on a new dimension, they are tools enabling consumers to shop, live and pay in an increasingly digital and

mobile world. “Audio makes people feel things, and that’s what makes it such a powerful medium for brands,” said Matt Lieber, co-founder and president, Gimlet. “With the explosion of podcasts, music streaming and smart speakers, an audio strategy is no longer a “nice-to-have” for brands, it’s a necessity. A sonic identity—the audio calling card for a brand—is now just as important as a brand’s visual identity.” To ensure the Mastercard melody would resonate with people the world over, Mastercard tapped musicians, artists and agencies from across the globe, including musical innovator Mike Shinoda of Linkin Park. March/April 2019

2019 Industry Events

The result, a distinct and memorable melody with adaptations across genres and cultures, making it locally relevant while maintaining a consistent global brand voice. In addition, the use of varying instruments and tempos help to deliver the Mastercard melody in several unique styles such as operatic, cinematic and playful as well as a number of regional interpretations. “What I love most about the Mastercard melody is just how flexible and adaptable it is across genres and cultures,” said Shinoda. “It’s great to see a big brand expressing themselves through music to strengthen their connection with people.” 1 Sarah Perez, “Voice shopping estimated to hit 40 billion across U.S. and U.K by 2022”, news. TechCrunch, March 2, 2018.

Whitepages Pro introduces Transaction Risk API Whitepages Pro has introduced the Transaction Risk API to fight payment fraud and improve the efficiency of authorizations early in the transaction flow. The predictive identity data features included in Transaction Risk API are leveraged in models, alongside internal company data, to provide an additional layer of identity verification for real-time risk reduction at scale. In under 100 milliseconds, the core identity data elements of e-mail, IP, phone, address and name are scored to return a concise response, easily consumed by risk models at high volumes. The low latency of Transaction Risk API allows for global identity verification during the authorization process, helping companies to reduce false declines while finding previously undetected fraud. And, according to the company, initial data test results for early adopters have exceeded its expectations in terms of both ease of testing and integration but more importantly, providing significant improvement in model performance. “To prevent fraud and identify good customers early in the transaction flow, businesses have historically relied on their internal data and signals,” said Whitepages Pro senior director of product management Ajay Andrews. But as they move more commerce and services online, these businesses face both an order of magnitude increase in transactions and a compressed time window to make decisions. Transaction Risk API addresses these needs by leveraging technical innovation and machine learning to deliver a suite of our most predictive attributes.”

To send press announcements, please direct them to Brendan Read, Editor, at March/April 2019

April April 3-4 The National Crowdfunding and Fintech Association FFCON19 Toronto, Ont. April 15-17 Framework Venture Partners and BDC Canadian FinTech 3.0 Summit 2019 Toronto, Ont. April 15-18 NAPCP Commercial Card and Payment Conference Miami, Fla. April 24-25 Central1 2019 Member Forum and AGM Vancouver, B.C. April 30-May 2 TRANSACT powered by ETA Electronic Transactions Association Las Vegas, Nev. etatransact/

May May 5-8 Canadian Credit Union Association 2019 National Conference for Canada’s Credit Unions Winnipeg, Man. national_conference/2019 May 5-8 NACHA Payments 2019 Orlando, Fla. May 7-9 WB Research eTail Canada Toronto, Ont.

May 7-10 FinovateSpring 2019 San Francisco, Calif. finovatespring/ May 13 Canadian Prepaid Providers Organization Third Annual Prepaid Symposium Toronto, Ont. May 14-16 Payments Canada 2019 Payments Summit Toronto, Ont. May 16-17 DigiMarCon Canada Toronto, Ont. May 21-23 Reed Expositions CNP Expo & Conference San Francisco, Calif. May 28-29 Retail Council of Canada STORE 2019 Toronto, Ont.

June June 4-6 Canadian Venture Capital & Private Equity Association Invest Canada ‘19 Vancouver, B.C. June 5-7 FEI Canada 2019 Annual Conference Blue Mountain, Ont. June 12-13 Big Data and AI Toronto 2019 Toronto, Ont.



payments Modernization

Securing payments in a connected world By Gord Jamieson


he world is becoming hyperconnected with the rise in the number of smart devices. This is driven in part by the growing comfort and habit among consumers with making purchases on their phones, tablets, computers and Internet of Things (IoT) devices. In fact, industry analysts predict there could be more than 21 billion connected devices on the edge of the Visa network by 20201. This hyper-connectivity is creating new ways to pay, such as wearable gloves for athletes to pay at the Olympics or the connected cars that pay at the pump. The trend is speeding towards an interconnected shopping experience. And Canadians are embracing a connected life. Let’s look at a trip to Vancouver. You can make an airline and hotel reservation through your virtual assistant, take an Uber ride to the airport, order a coffee there through an app for pick up, and when you arrive you tap your credit card to pay for a fast ride on the Canada Line rapid transit. Moreover, Payments Canada is developing a modern payments system that will provide new opportunities to simplify and enhance Canadians’ daily payment interactions and help secure and strengthen Canada’s competitive position as a global leader in financial services. Through its Modernization initiative a modern payments infrastructure, designed for tomorrow’s digital world, will introduce new opportunities to simplify and enhance everyday payment interactions, securely and safely.

Need for confidence and security With this transition there is a need to keep the payments networks secure and consumer confidence high. This means we need to take a deep look at the rise of the card-not-present (CNP) channel, which 22


represents transactions that occur when the cards are physically not presented to the merchants and are usually conducted virtually. The biggest challenge in the CNP channel is authentication. In the card-present (CP) space, it’s simple: a chip card presented at the terminal is authenticated by a unique cryptogram and the cardholder entering a PIN. But in the virtual world, the merchant is not face-to-face with the consumer, thereby removing the option for a cardholder to enter a PIN and creating the need for other ways to authenticate the individual making the purchase.

New methods and solutions The payment industry is way ahead of this trend. It will soon be introducing new advanced risk-based decision-making for e-commerce to authenticate purchases in the CNP space by using updated standards from EMV® 3D-Secure. It will enable financial institutions to better assess whether transactions are legitimate or fraudulent. It accomplishes this by examining ten times more risk factors than before, such as browser and device types, location of transactions and the security of merchants’ point of sale (POS) devices to help decide whether step-up authentications are required. Digital tokens are another powerful tool to secure digital payments. It replaces the transmission of actual payment card numbers so if a POS system, mobile device, mobile application or network connection is compromised, payment card numbers are safe since they are not exposed. The Visa Token Service recently expanded its partnership with Netflix and it added 20 new partners bringing the total to 60 partners around the world. The expansion means that Visa-accepting merchants will no longer have to store sensitive

data, like primary account numbers, thus greatly reducing risk for people who store their card information on mobile devices, mobile apps or online with e-commerce merchants. Instead, merchants will now be able to mask their customers’ primary account numbers with tokens, which are protected by restrictions that render them useless to fraudsters if they were ever to be compromised. In addition, Canadian companies that facilitate digital payments will likely layer 3DS 2.0 with other advanced analytics technologies like artificial intelligence (AI), similar to what Visa is doing. Visa uses AI technology, called Visa Advanced Authorization, to analyze up to 500 unique risk attributes in a millisecond, searching for fraud the moment a payment is initiated. The AI algorithm assesses these attributes to produce a score of the transaction’s predicted fraud probability and relays the score to the cardholder’s financial institution for them to decide to either approve or decline the transaction. This process is repeated up to 32,500 times per second, with Visa’s AI analyzing more than six billion pieces of data every day. Canada, through the efforts of Payments Canada and its Modernization initiative, is leading the way for securing modern payment methods. As CNP commerce becomes more commonplace, it will be important to tackle fraud using all the best tools that will enable the consumer and merchants to feel safe with each transaction. At Visa we continue to invest in new technologies to stay ahead of where Canadians’ purchasing trends are going to ensure each is transaction secure. Gord Jamieson is head of Visa Canada risk services. 1 Gartner, “Gartner Says 8.4 Billion Connected ‘Things’ Will Be in Use in 2017, Up 31 Percent From 2016”, press release, February 7, 2017.

March/April 2019

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