The Magazine of Transactions, Cards & EBPP in Canada
Simply sales: sorting out transaction innovations in the POS revolution also in this issue:
Retail Buyerâ€™s Guide Credit scoring eCommerce concerns
PM 4 0 0 5 0 8 0 3
table of contents may / june 2013
COLUMNS & DEPARTMENTS 4
Vertical market Privacy and personal data collection in the Smart Grid.
Indisputable Cargebacks911 discloses top sources of chargebacks merchants should recognize.
Innovative tech for retailers
sorting out transaction innovations in the POS revolution
Retail Buyer’s Guide
Online security for retailers Increase sales conversions with a trusted and secure eCommerce site.
What’s behind a credit score?
Cards in an evolving payment landscape.
9 ways to keep buyers in-store.
Gerry Gaetz talks about his new role at the CPA.
may / june 2013
Time to shop
One on one
Focus on retail At Payments Business, we’re always interested in the newest gadgets that are simplifying the point of sale for both consumers and merchants. The subject of payments has become a hot topic even outside our industry with companies like Apple and Google competing to find a lucrative foothold in transactions. In this issue, we’re looking at some of this year’s great new products for retailers. We’re taking a look at innovations at the point of sale and the kind of impact they’re having on how retailers manage transactions. Restaurants, for example, were quick to take advantage of mobile POS but merchants are finding that mobilizing registers can change everything – and not always for the better. As much as I enjoy learning about what companies have come up with this year, I like to look ahead to see what technologies will be reinventing the point of sale in the future. Futuristic possibilities include soundwave-based technologies, smartwatches, augmented reality (computerized glasses) and biometrics. In an industry where change has traditionally been slow, we must move with caution and careful consideration of the customer’s needs, the merchant’s needs and not simply accept change for the sake of change. But we also don’t want to let innovations and insights pass us by.
May/June 2013 Volume 4 Number 3 Editor Amie Silverwood email@example.com Associate Editor Amy Bostock firstname.lastname@example.org Publisher Mark Henry email@example.com Contributors John Morgan, Isabelle Jones, Simon Nahnybida, Thomas Higgins, Nikki Baird, Catherine Johnston, Alyssa Kaplan and Sean Forkan. Creative Direction Demigroup demigroup.com Photographer Gary Tannyan Advertising Sales Rep Brent White firstname.lastname@example.org President Steve Lloyd email@example.com For subscription, circulation and change of address information, contact subscriptions@ paymentsbusiness.ca Publications Mail Agreement No. 40050803 Return undeliverable Canadian addresses to: Circulation Department 302-137 Main Street North Markham ON L3P 1Y2 t: 905.201.6600 f: 905.201.6601 firstname.lastname@example.org www.paymentsbusiness.ca Subscriptions available for $40.00 year or $60.00 two years. 2012 Lloydmedia Inc. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher. Printed in Canada Reprint permission requests to use materials published in Payments Business should be directed to the publisher.
august/july — Mobile revolution 4
may / june 2013
Made possible with the support of the Ontario Media Development Corporation
The dining experience at the touch of a button By John Morgan and Isabelle Jones
one are the days when a restaurateur’s greatest challenge was simply to decide on menu items. Today’s dilemmas are still focused on giving customers more choice but these choices are of a different nature – and a lot more complicated. From the wide adoption of mobile apps to advancements in EMV technology and mobile processing to sophisticated planning systems, technology is revolutionizing how North American restaurant owners interact with and serve customers, process payments and manage their businesses.
critical questions to ask: • What is the business need to be solved? • What application will help solve this need? • What is the cost of developing this application? A quick service restaurant that primarily serves millennials, for example, would benefit from an app that speeds up customer orders. Yet, a high-end establishment, such as a steakhouse, may consider an app that helps loyal customers earn exclusive rewards for higher spending.
While Canada is slower than the U.S. in adopting restaurant mobile applications, it is a North American leader in EMV compliance, also known as chip-and-pin technology. In addition to ensuring more secure credit and debit card transactions, EMV allows restaurateurs and customers to “pay at the table” using mobile POS terminals. Offering all the benefits of a standard POS terminal, these wireless solutions, fully integrated with a restaurant’s operational system, allow guests to pay their bill without leaving their table with a chip enabled credit card. Mobile POS terminals improve wait staff productivity, increase table turnover and reduce the amount of cash employees carry, while eliminating the need for preauthorizations and additional dial-up lines. The emergence of “contactless” payments based on Near Field Communication technology is another major trend transforming the restaurant industry – especially at fast-food outlets. By waving or tapping a credit card over the point-of-sale terminal, customers are able to make small purchases securely without a signature or PIN, improving wait times at the counter. This technology is thought to be a major factor behind the steady increases in spending at fast-food restaurants in Canada
A restaurant experience is no longer confined to a physical space. Soaring smartphone sales go hand in hand with an explosion of restaurant and food-related mobile applications. Even a pizza can be ordered through an app these days – and restaurateurs, who once questioned the benefits of creating a website for their establishments, are now considering whether a restaurant app will add value to their business. Once used to locate a nearby restaurant in a specific category, provide a calorie count of a particular meal or post a restaurant review, apps now offer more meaningful engagement for guests. Customers can access restaurant loyalty programs, interact through social media, and even open, view and pay for their restaurant tab using their smartphones, in a secure, seamlessly integrated, hassle-free environment. Developing these apps, of course, can be quite costly. While larger chains are more likely to invest in such advanced applications, smaller restaurants can benefit from this new technology, while keeping their costs down, by participating in thirdparty applications. What is important is the relevance of the chosen solution to the restaurant’s objectives. Here are three may / june 2013
over the last several years. Contactless debit card payments – which enable customers to make transactions using their smartphones linked directly to their financial institution – recently debuted in Canada and are also expected to grow, providing convenience and security to customers and businesses alike.
Integrated systems In addition to improving the guest experience, apps and mobile payment options bring many benefits to restaurant owners. Integrated with management systems, they dramatically enhance data analysis and business intelligence capabilities, helping to better predict ordering behaviours, spending volumes and reward redemption patterns. Using these tools to create short- and long-term plans and forecasts can help restaurateurs manage their business more strategically. Mobile enhancements empower customers, giving them more choice, flexibility and better service. However, they don’t come without their challenges. The increasing complexity and integration of restaurant systems mean that more technical competence is required to manage them effectively. Implementing cutting-edge solutions is futile if employees don’t know how to use them to reap the full benefits of innovation. In an industry known for its high staff turnover rate – with restaurants providing more first jobs than any other industry – managers need to proactively offer their employees more and better training around the use of emerging technologies. Restaurant owners and managers also need to stay up-to-date on the latest restaurant applications and payment processing options – and that means making smart choices when it comes to investing in the right tools to help them sustain the relevance of their establishments in a hypercompetitive, fast-evolving economy, to take their business to the next level. John Morgan is the Director of Sales Engineering and Integration. Isabelle Jones is the Manager of Business Development and Integrations Support at Moneris Solutions Corporation in Toronto, Ontario. PAYMENTSBUSINESS
reasons cash saves cash for budget conscious consumers By Simon Nahnybida
or the budget-conscious consumer looking to tighten their spending without sacrificing their lifestyle, the opportunities can be perceivably slim. The art of balancing budget and lifestyle can be complicated but people are finding ways to save without making sacrifices to freely live the way they want, simply by using cash. Cash provides money-saving benefits generally not associated with the use of plastic and has contributed to the slowing usage of credit cards by some consumers over the past few years. Withdrawal fees, transaction service fees, annual fees, late fees; they all add up and can be a silent killer to budget-conscious consumers’ wallets. With that in mind, both consumers and enterprises are finding ways to leverage cash payments to increase transaction potential.
While it may be a bit more difficult to track transactions over a long period of time, watching hard currency come and go has become a strategic way for the budget-conscious to cope outside the world of plastic.”
1. Visualizing cash flow Prevention from overspending can be as simple as mind over matter. It becomes a critical tool for consumers to manage their money when they have the ability to physically see their money being saved or spent. While it may be a bit more difficult to track transactions over a long period of time, watching hard currency come and go has become a strategic way for the budgetconscious to cope outside the world of plastic.
2. Merchants save, consumers spend Having customers use cash to pay for goods and services is mutually, financially beneficial to both the merchant and the consumer. Businesses are charged a service fee for every credit card and bankcard transaction - with small businesses taking a bigger impact. The growing population of cash-preferred customers using hard currency helps merchants avoid adding costs to each transaction and passing those added costs back to their customers. Low prices are always an incentive to consumers and will keep them coming back for more.
3. Online merchants are now accepting cash Retail giant, Walmart, has already implemented their strategy to cater to the large amount of the budget-conscious, cash-preferred customer demographic with their Buy Online, Pay in Cash option. This gives consumers the same convenience of shopping online with the flexibility to pay cash without incurring debt and fees against their credit card. As retailers (specifically those with an online storefront) begin to cater to the millions of cash-preferred
customers, we will see a renaissance of cash payment transactions for online goods.
What the future holds for cash trends The future of cash will be steered largely by consumer shopping habits and preferences. We are seeing the mobile revolution shifting into fast-forward and dramatically changing the landscape of how we consume. Smartphone adoption has become commonplace, increasing the number of potential customers at any time through the conveniences of online shopping. The budget-conscious, cash-preferred customers are a large part of this revolution. Businesses are beginning to build a solid bridge between the cash-preferred and the conveniences of online shopping and we are already seeing cash become the preferred method of payment. Simon Nahnybida is the SVP of Business Development for ZipZap Inc. He has over 30 years experience in payment processing, electronic payment infrastructures and money transfers. may / june 2013
ACT Canada, stakeholders driving payment evolution and digital ID Technology is often the easy part of launching new initiatives. Today, many organizations are focussed on mobile apps including payment and ways to secure digital identities. These are complex issues, each involving traditional and new stakeholders in both the financial and public sectors. To help them meet their business and policy goals, ACT Canada provides a neutral forum where stakeholders can come together to understand these convoluted issues. Over 120 members from around the world use ACT Canada Strategic Leadership teams to achieve this understanding, to filter the truth from all the noise in the market and, when necessary, to facilitate resolution to problems. This dialogue helps members increase profits and manage their risks by providing an inclusive view of the ecosystem. The current Strategic Leadership teams are Mobile, Secure ID, Prepaid and Point of Sale. A Customer Authentication team will be launched next month and all members are invited to participate on the teams of their choice. The association is now in its 25th year and provides insights, networking and visibility for members. The insights are derived from a profound knowledge of the market and a global network that has been built over this
quarter century. Networking takes many forms including personal introductions and Cardware Connections, an exclusive event where members are privy to a snapshot of what the market is thinking about critical issues. The Cardware annual conference provides both insights and networking. This year, the conference will be held June 19 and 20 in Niagara Falls. Over 60 speakers from around the world will tackle timely subjects related to payment and digital identity. Don’t miss this event, rated as the premiere payment stakeholder conference! ACT Canada has also been busy providing information and insights for Americans as they move toward EMV. We learned, as we made that journey, that chip changes everything —stakeholder engagement more than anything else. Whether a chip sits on a card or in a phone, whether it is a contact or contactless interface, it will affect stakeholder processes, policies and business flows. For that reason, all stakeholders need to understand more about the businesses of the others in the chain. Only then can costly mistakes be prevented. ACT Canada is where that work is done in a neutral forum. Stakeholder dialogue helps you make profitable decisions. Join the discussion.
may / june 2013
RSPA actions in the payment industry The payments and point of sale industries have been intertwined for years. The Retail Solutions Providers Association has been actively involved with the intersection of payments and POS in many ways: raising awareness, providing education, collaborating with interested parties and being an advocate for our member companies and the best interest of the retail technology industry in general. RSPA’s PCI (Payment Card Industry) Committee was established in 2006 with a three-part mission in mind: to make retail technology providers aware of the data breach issues, to bring that same message to the merchant community and to provide education that will help both retail technology providers and merchants as it relates to PCI compliance. RSPA’s “Are You at Risk” video brought the realties associated with a small merchant breaches to the marketplace. Our online education series “PCIwise” is a requirement for RSPA member certification. Notably, the education series is also available to the merchant community – at no cost. We attempt to ensure that our members have access and education on all of the latest technologies to secure merchant transaction and payment data. Robust collaborations are critical to bring the message about the importance of secure payments to the marketplace. RSPA has worked with most of the merchant-based associations and has established the Coalition of Association for Retail Data Security (CARDS). Together this group represents a large community of providers and users of payment/ merchant services. We are working with key representatives from each of the credit card brands and the PCI Security Standards Council on a number of issues affecting small merchants: awareness, education and simplification of compliance. Together with RSPA, the retail technology providers, the merchant-based associations, the PCISSC and the card brands are all working to achieve a common purpose: to secure payments against the criminal hackers. RSPA recently earned a seat on the 20132015 PCISSC Board of Advisors, furthering the opportunity for collaboration and advocacy for the providers and users of payment/merchant services. Ultimately, our goal is to help all of our RSPA members be “trusted advisors” for the merchant community. Using RSPA members as trusted advisors, we believe that retail technology providers and merchants can work together to maintain a compliant, collaborative, secure data lifestyle. PAYMENTSBUSINESS
Retail Buyer’s Guide
Innovative tech for retailers
NCR Mobile Shopper
allows shoppers to save time and make shopping easier by using their own iPhones to scan items as they shop. Shoppers use the app to create virtual shopping lists before going to the store, further increasing the speed, efficiency and ease of their shopping trips. To checkout, shoppers go to the self-checkout (SCO) stations and scan a QR code on their phones to transfer their mobile shopping information. The SCO station confirms the weight of the items scanned with the phone against the items bagged at the SCO station. Shoppers then pay with their preferred method of payment and are on their way. Free WiFi throughout the store means shoppers don’t use their own data plans. 8
Ingenico’s iSMP Series Smart Mobile Payment Solutions enable retailers of any size
to revolutionize their customer’s in-store experience by converting a fixed-point checkout into a secure mobile payment acceptance device. Built on Telium2, Ingenico’s global payment platform, the iSMP Series mobile devices connect via a physical connection or Bluetooth to virtually any iOS, Android or Windows-based smart tablet and convert it into the most secure mobile payment and customer engagement solution on the market today. With the iSMP Series, retailers can accept all forms of electronic payment, including EMV cards and NFC-enabled mobile transactions. The devices meet all Canadian secure payment standards, including Interac, EMV Level 1 and Level 2, PCI PTS 2.1 & 3.0, PayPass 3.0 and payWave 2.1.1. The iSMP Series gives retailers convenience and the competitive edge to close the sale anywhere throughout the store. may / june 2013
OneID Confirm is a customizable, easy-to-use two-factor authentication solution that is designed to adjoin a site’s existing identity management system. Based on the same, highly secure architecture as the OneID Suite, Confirm protects consumers and businesses from today’s security threats by offering flexible, out-of-band tools to authenticate transactions. All of OneID’s solutions rely on device-based, cryptographic secrets for authentication. The OneID architecture eliminates shared secrets by instantly authenticating through code embedded in personal devices. With OneID Suite – businesses get both the Sign In and Confirm functionality, letting their customers enjoy click (or tap) to login and confirm transactions. But for businesses seeking the twofactor authentication only, OneID Confirm offers: flexibility to meet varying authentication needs; ease-of-integration into existing identity management solutions; simple customer enrollment right on your site.
Retail Buyer’s Guide
audio jack connectivity and encryption technology to ensure secure and reliable operation in mobile POS applications. The device can be integrated with a variety of third-party mobile payment apps or with the AnywhereCommerce app that is available for download from major app stores.
Strum Points too. For businesses, Strum offers a robust, cloud-based tool to engage with the customers that love them, recognize their rock-star employees and give their regular customers more attention and rewards. Visit Strum at www. strumapp.com, @Strumspp or download it from the Canadian iTunes app store.
These portable systems complement a range of easyto-use, powerful retail POS devices and tools designed for small and mid-sized business and featuring EMV and NFC payment acceptance. VeriFone offers countertop, PIN pad, touch screen and mobile payment options that meet the latest security standards.
Harbortouch POS Elite combines state-of-
the-art software with top-ofthe-line hardware to deliver a full featured, touch-screen POS system that is unmatched in functionality, reliability and usability and is offered as an unprecedented “free” program with no up-front costs. Custom programming, professional installation, on-site training and award-winning 24/7 support are included with every order.
Cannon’s imageFORMULA P-208 Scan-tini personal
Strum is a free application
Walker, by AnywhereCommerce
is a compact and rugged payment acceptance device that is compatible with most mobile smartphones and tablets and enables mobile payment acceptance that is compliant with EMV rules for Chip and Signature as well as legacy magnetic stripe use. The product is available immediately and operates with payment networks throughout the world. Walker employs patented
that connects customers directly with their favourite local businesses at the store-level so they can feel more welcome, more important and more appreciated. Strum’s patent-pending architecture makes it easy for customers to locate and send messages to their favourite businesses, tag specific employees for great service and send private or public messages to business owners directly. Strum enables customers to earn Strum Points for their activity and use those points to bid on great local goods and services in the Strum Auction. Employees noted for great service earn may / june 2013
VeriFone offers EMV and
NFC capable payment solutions to meet the needs of multiple market segments. The latest portable offering (the VX 680 3G), is one of the fastest handheld payment devices on the market, allowing merchants to download apps and software upgrades quickly. This portable, EMV-capable system helps merchants serve their customers and make the sale quickly, inside or outside the store. VeriFone portable payment solutions are designed for rugged environments including restaurant and hospitality where drops and spills are common, as well as transit and outdoor retail where multiple wireless connectivity options are needed.
document scanner is an ideal solution for large companies, home offices and work on the road. Any business will find this portable scanner useful for its simplicity, compact size and high quality imaging. At just over 1 pound, the Scan-tini includes an automatic document feeder that can scan eight pages a minute for black and white and colour. It also handles double-sided documents. These features make it the perfect choice for scanning documents, like receipts, bills and invoices, quickly and easily at a desk or in an office. This scanner was designed to improve productivity by conveniently allowing the user to execute standard scanning tasks simply, quickly and anywhere. PAYMENTSBUSINESS
By Thomas Higgins
ooking at the scoreboard during my son’s volleyball game, I began to think about the scores and how relative they are to the scores the credit information companies produce. Like a score in a volleyball game (or in just about any other game for that matter) the higher it is, the better it is. My son and his team (who won by the way) worked really hard for that score that won the game for them. In the world of consumer lending, the consumer too needs to work hard to maintain their own credit scores. There is no denying that the higher a credit score, the better position a consumer is in to “win” the credit they need or want. Information found in an individual’s credit report is used to calculate a variety of different types of scores. For the lender, these credit scores greatly increases the efficiency of the adjudication process for granting credit but many of us don’t give much thought to what goes on behind the scenes in order to create them. Just as in volleyball, there is a lot more that goes into a credit score. Credit scores are calculated using information from
What’s behind a an individual’s credit file. An individual’s credit file information is constantly being updated by lenders and other information providers for use in calculating scores. When a score is generated, it is taking into account information from various categories found within a credit information company’s database. Surprisingly, some can be calculated with as little as one trade-line or account. It is important to note that only the information found within an individual’s own credit file (and not that of their spouse or partner), is being used in determining his or her credit score. In general, there are four key categories of credit information typically used in the
majority of credit scores. The categories’ impact is weighted based on what the score has been developed to determine, e.g. new account opening or general risk, and the predictive value of each one. Of all these categories, payment history or how often an individual is paying their financial obligations on time usually has the largest impact on an individual’s score. Any previous delinquencies, collections or bankruptcies will have a negative impact. At the very least, people should be making their minimum payment each month in order to maintain a good score. Another major category that is taken into account is any current amounts owed. Credit scores look at how large a may / june 2013
consumer’s balance is across all open and active credit accounts and how much of the credit limit is currently being used. Both balance and utilization can have an important impact on scores. The other two key categories include length of credit history and those with new accounts and credit inquiries. The longer the credit history of a consumer, the more information is available to review to identify future credit behaviour and the more predictive scores can become. Those having many credit inquires, particularly in a recent period (i.e. weeks or months) are generally a higher risk. It is also important to note that a consumer who inquires on their own credit file as well as any “soft” inquiries (e.g. employment and insurance inquiries) have no impact on the score. Most credit scores will come with a “scorecard indicator” that allows the lender to know what type of credit file the consumer’s score was calculated on (e.g.. new file with limited history or a possibly older thin file with limited credit lines open). If we were to look at all these categories together as a percentage of what makes up a credit score it would generally look something like this:
HANDLING YOUR NEW POLYMER NOTES
LEARN MORE: BANKOFCANADA.CA/BANKNOTES
• Payment history – 35 per cent • Current amounts owned – 35 per cent • Newly opened accounts and credit inquiries – 20 per cent • Length of credit history – 10 per cent So how did the industry come up with the design for the credit score? The concept of credit scoring is to predict the likelihood or odds of a specific event occurring over a future period of time. Most credit scores focus on the likelihood of a consumer having at least one trade becoming 90+ days past due or worse over a 12 to 24 months period. So using a score gives lenders predictive insight into how a consumer will probably
behave. Building a credit score is based on the statistical notion that past behaviour is a good predictor of future behaviour. Using the credit file information, statisticians identify key information characteristics that align with a consumer either being delinquent or not. With this analysis, the statistician will create a mathematical formula, very similar to what you did in your high school algebra class, which will assign the highest possible score to those people who will perform well. Now, contrary to some beliefs out there, credit scores do not take into account any
cultural, demographic or psychographic information such as where someone lives, race, gender, marital status, income, occupation or employment history. They are purely based on credit past and present behaviour. You may not be aware that these scores can also be useful in many other aspects of business, well beyond traditional scoring and risk management. Besides new applications, many lenders can use credit scores throughout the rest of the customer lifecycle such as account management and collection recoveries. There is a lot more going on in the background when it comes to credit scores and because of this, they can provide a wealth of assistance well beyond standard risk management. In the end, it is about giving access to credit that consumers have earned, allowing the purchase of a car with the best possible rates on a Saturday afternoon or opening a charge account - on the spot - at their favourite department store. At the end of 2012, the average Canadian held over $27,000 in nonmortgage credit debt. Given the amount of credit granted in the Canadian economy and the differences in the management of individual finances, you can imagine how important it is for lenders more than ever to consider using credit scores to determine the credit worthiness of their customers. Like any score, whether it’s in a game of volleyball or a credit evaluation, the higher the score, the bigger the win! Tom Higgins is vice present of Analytics and Decision services for TransUnion of Canada. He oversees the design, development and implementation of complex generic and customer scoring systems, segmentation analysis, desicioning platforms and other customer analytics for TransUnion’s clients in Canada. Prior to joining TransUnion in 2007, Mr. Higgins has worked for five years in the Canadian credit Industry with a focus on analytics. Previous employers include CIBC Visa and American Express. He is a 1992 graduate of McMaster University in Ontario where he obtained a Master of Business Administration. He also holds a bachelor’s degree in business from Simon Fraser University in British Columbia.
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sorting out transaction innovations in the POS revolution By Nikki Baird
hile the payment has historically been the most important event in retail - the moment of truth - one thing omni-channel retailing has taught retailers is to think far more broadly than just that one moment. So as retailers navigate an amazing barrage of payment innovations, they are keeping one thought firmly in mind: the payment is just the icing on the cake. The real money is in the relationship that retailers can build with their customers. With that in mind, here is the current state of the payment innovations that retailers are paying attention to, along with their pros and cons.
Retailer-provided mobile POS Retailers are highly interested in mobile point of sale and they’re looking to consumerized devices to drive it. Tablets and smartphones are being used to help empower store associates to meet and serve a much more informed consumer. To that end, most retailers aren’t thinking about mobile POS as line-busters. They are much more interested in using mobile devices to bring the digital experience into stores. Retailers appreciate the multifunction nature of consumer-oriented devices - if they want to add inventory receiving for back-of-store operations, well, there’s an app for that. And if they may / june 2013
have a card swipe and need to think about EMV, well, there’s a new sled for that. Retailers are concerned about the lack of retail hardening but frankly, most of these devices are so cheap that retailers expect only one or two years out of them. As a shopper, you’ll definitely see more and more mobile POS in store associates’ hands. PAYMENTSBUSINESS
Tech update Consumer-provided POS Consumers are already jumping the line in stores by buying online with an in store pick-up. Consumers using a mobile phone in store to order online for store pickup can potentially save a lot of hassle at stores that can turn orders around quickly. And there are some providers looking at enabling POS right on the consumer’s phone - not as an online purchase but as an in-store purchase where the consumer can scan and pay for items at the shelf. There’s no hardware required for the retailer - the consumer brings it with her. And now every customer in the store has the potential to transact at his or her convenience. But it can create a lot of operational problems: where does the receipt print? How do you handle bagging? Do you have to staff someone at the door to check purchases on the way out? Is that really the kind of experience the retailer wants to create? There’s also another downside that retailers need to overcome before they’ll be very enthusiastic about this option. Card Not Present (CNP) transactions are more expensive for the retailer and prone to fraud. There have been some innovations in this area (look for a future where the camera on the smartphone takes a picture of the front and back of the credit card as the card-present validation) but retailers won’t jump on board until this obstacle is addressed.
Biometrics Everything from fingerprint scans, palm prints, to some sci-fi methods can be used for payments. For example, it’s possible to create a biometric key from the pressure and minute movements you make when you write your signature. Even if someone can successfully forge your signature at a visible level, apparently it is about as difficult to replicate the pressure and speed of a signature as it is to fake a fingerprint. Consumers, however, are hesitant to adopt biometric payment methods. You might remember PayByTouch, one of many vendors that tried to link shoppers’ fingerprints with their bank accounts. These companies had to spend an inordinate amount of time educating shoppers that they didn’t keep the actual fingerprint and that it couldn’t be used, for
And now every customer in the store has the potential to transact at his or her convenience. But it can create a lot of operational problems.”
example, in law enforcement. And even that such an authentication method was secure - there were several rumors of people breaking these methods with PlayDough and even raw potatoes. These methods persist because they’re simple. PINs and passwords are difficult to keep straight, and mobile phones get left behind. Biometrics are literally attached to your body at all times. If the industry can educate consumers enough about security and privacy issues, and as more companies use biometrics for other security (for example, for clocking in to work or accessing secure buildings) shoppers may get comfortable enough with biometrics to use them in shopping too.
NFC NFC on mobile is probably the hottest opportunity around payment innovation, thanks to the somewhat natural affinity with EMV. For retailers, the problem is that they are dependent on an awful lot of large players in other industries to figure out how it’s going to work and get it into consumers’ hands on a large scale. Retailers are more than content to wait until everyone else dukes it out and the dust settles before they make any investments to support NFC - whether card-based or on mobile. However, there is a real opportunity for NFC if it can be designed and deployed in a way that supports both in-store and online transactions. Retailers have watched EMV rollouts and seen that fraud shifts significantly as EMV becomes more widely deployed - from card-based fraud to CNP-based fraud. The vendor or coalition of vendors who can figure out how to make online transactions look like card present transactions will have struck a nerve with retailers - and may finally get retailers to take a more active role in supporting NFC.
Retailer Imperatives Whatever the future holds, the most important thing to remember is that from the retailer point of view, they want five things when it comes to payments: • the transaction has to be fast; • the method must be easy to use; • it must be inexpensive; • it must be secure; • it must be broadly supported by issuers and consumers. Nikki Baird is a managing partner at Retail Systems Research, a market intelligence analyst firm focused on retailer trends and technology adoption. She can be reached at nbaird@ rsrresearch.com. may / june 2013
COMING IN SEPTEMBER
Women In Payments Awards 2013 Presented by:
For Sponsorship details, please contact: Mark Henry, Publisher at 905-201-6600 x 223 or by email to email@example.com may / june 2013
Asking questions: cards in an evolving payment landscape By Catherine Johnston
hat does payment innovation really mean? Technology allows us to make payments in new ways but does it drive increased market share? Does it help us retain customers? Does it drive additional profit? Each innovation will be judged against these criteria by issuers, merchants, consumers and other payment stakeholders. After sixty years where innovation emerged at a slow, measured pace, we are now challenged by new opportunities and a desire to make them profitable. Today there are those who predict that payment cards will go the way of the dinosaur in the coming years but we would be well served to look at the history of payment. While we no longer use salt or gold to settle our bills, we still use coins, bills and cheques. These have all changed since their inception, taking advantage of emerging technology to offer new security and convenience. Payment cards have also kept pace with technology and will continue to do so.
Payment cards: past and future From the early days, when a payment card was simply a piece of cardboard, the addition of a magnetic stripe provided machine readable functionality, 16
may / june 2013
After sixty years where innovation emerged at a slow, measured pace, we are now challenged by new opportunities and a desire to make them profitable.” allowing the proliferation of cards around the world. Suddenly we needed global interoperability and brands such as American Express, MasterCard and Visa played a crucial role in providing the processes and security to make that happen. Over time, holograms and other security features were added but mag stripe was not designed to stop counterfeiters and is being replaced. Today the world is moving to chip, not only to provide that security but also to add functionality to the cards we carry. At the same time, we are following the lead of smartphone companies to introduce payment applications on chips in mobile phones. Will payment stakeholders abandon one for the other or will both prevail? The very easy answer is that both will find acceptance in the market. A much harder question to answer is: “how do we make money from both?” Perhaps the “magic” is in the process of answering that question, because mobile apps are merely the current payment innovation and we will need to address profitability for every new innovation. Let’s start by looking at key stakeholders and what they want.
Consumers Consumers’ expectations related to payment rarely change. Key desires are security, fewer cards in their wallets, convenience, global access, a consistent payment experience, reliability and zero liability for fraud. Until now, cards could deliver all PAYMENTSBUSINESS
Securing Mobile Life.
Creating Confidence. Giesecke & Devrient offers a comprehensive range of payment products and solutions based on the latest EMV, contactless and dual interface technologies. Our smart debit, credit and prepaid products are available on a wide range of platforms based on secure and highly flexible operating systems. Alongside the comprehensive portfolio of easily configurable card products and card solutions, we offer all services related to electronic payments including m-commerce and transit. Our services include personalization, system integration, project management and technical consulting from a single source. For more information, please visit: www.gi-de.com/ca
If the consumer doesn’t know whether to tap or wave or doesn’t know how often to tap, it leads to a bad experience and a slowdown in the payment process.”
but one of these – fewer cards in the wallet. Although chip always provided the promise of multiple applications per card, the process to design and load those applications was a non-starter for most issuers. Here mobile had the advantage because consumers could choose and download their own apps. Now there is an operating system that allows the same functionality on a chip card. How will consumers balance multi-application cards against phones? The answer may lay in how each is used at the point of sale, whether the apps can be used globally and whether consumer perception of convenience and security is comparable.
Merchants Until now, merchants have also had a stable wish list for payment and mag stripe fulfilled many of their requirements. It allowed a consistent, fast experience at the point of sale and a positive customer experience, so cashier training could be reasonably managed. Today merchants have concerns about the consistency of the payment process with new interfaces and form factors. If the consumer doesn’t know whether to tap or wave or doesn’t know how often to tap, it leads to a bad experience and a slowdown in the payment process. If the customer doesn’t know how to do a mobile payment while on a phone call, it is the same concern. These are issues that go away with consumer training but during that period it is a problem for cashiers and customers and can have a negative impact on a merchant’s bottom line. Unfortunately, mag stripe cannot be used effectively in an online environment resulting in higher fraud costs to merchants so they are looking for ways to control those costs as chip, mobile and other payment innovations move forward. Then there is the issue of transaction data ownership and this one has the greatest potential for pushback from merchants. It could be argued that what consumers buy, when they buy it and how much they pay, is their data. It can also be argued that it is the merchant’s. How that data is used is becoming an issue. There is a growing concern that transaction data, either related to a payment or flowing through an e-wallet, could be used by a third party in a way that is not in the best interests of the merchant. Also, while there is a distinct advantage to accepting payment via a card or app, merchants are concerned about the implementation cost of future innovation, a cost that goes far beyond new hardware. They want a process by which they can have input into decisions that affect their operations.
Issuers Whether it is a card or an app, issuers share many of the objectives of merchants and consumers; limited liability, payment reliability, good customer experience and great customer and merchant acceptance. Their challenge will be finding a way to drive more profit, increase market share and retain existing customers. Each innovation will be judged against these factors, including the prospect of potentially leveraging their existing card base by making new apps available to their customers.
The role of technology Technology is an enabler and most often comes before we know how we want to use it. For example, optical disc technology, the basis for CDs and DVDs was invented in the 1950s, although it is rumoured that it was actually invented by Philips prior to World War II. It took until 1982 for the music industry to figure out how to make money from the technology. The pace with which technology evolves will continue to escalate because we use technology itself to drive the innovation. The challenge for all stakeholders is in finding a way to use technology only as an enabler, not as a driver.
Making it all work Moving forward, a forum is needed where all payment stakeholders can work together to develop products and services that meet the needs of all. Members of ACT Canada have often come together to address specific issues or opportunities. We need to address the question, “who owns the customer?” The answer is no-one. The customer chooses the payment type, the merchant and the products and services. The customer chooses the phone and the carrier. So when we take that off the table, the best question to ask is, “what will the customer pay for and what will it cost me to have that customer?” Answering that question is the best start toward building a positive business case. ACT Canada is a non-profit membership association whose members drive payment evolution. The association provides a neutral forum in which members work together to develop the market, supported by insights drawn from our 25 years of history. ACT Canada is the place to be to:Filter the truth from market noise Understand complex issues Facilitate problem resolution Because stakeholder dialogue helps you make profitable decisions. Please join us at Cardware 2013: Payment Insights June 19 and 20, Niagara Falls, Ontario. Payment stakeholders will meet there to discuss, debate and foster the future of payment! For more information, please visit www.actcda.com. may / june 2013
may / june 2013
CARDWARE 2013: Payments Insight
CARDWARE 2013: Payments Insight We will celebrate the successes of our industry at the Visa Awards luncheon on Thursday. ACT Canada is also celebrating the start of our 25th year.
On behalf of ACT Canada, our board and our members, I am delighted to welcome you to Cardware 2013 Payment Insights, where stakeholders come together to drive payment evolution. Cardware is known for its ability to deliver not only quality information but also valuable insights. The program and the people you will meet will help you foster your business goals and spark conversations that will carry on well beyond the conference. :PaymentInsights
If you are not already a member of ACT, I would invite you to speak to our staff, Strategic Leadership team members or our Board Directors about the benefits of belonging to the Association. Now in our 25th year, ACT Canada is the internationally recognized authority in presented by the market. As the eyes, ears and voice for stakeholders The program encompasses the leading experts in the focused on secure payment, mobile, NFC, loyalty, secure th PaymentInsightsThursdayJune20 (continued) payments realm…over 60 speakers and panelists from identity and leveraging EMV, we promote knowledge TheBusinessofWallets–InittoWinit?TheBusinessImplicationsforIssuers,Merchantsandother around the world, who will provide their insights into transfer, thought leadership and networking. Stakeholders mobile commerce, e-wallets, and the complex world of ACT Canada is the place to be to: SponsoredbyInteracAssociation payment innovation. Join us as we ask hard questions 1:30–2:00 MobileWallets:Whataretheoptions,whoaretheplayersandwhatchoicesdidtheymake Filter the truth from market noise and debate the future ofNaveenKumar,KPMGManagementServicesLP,SeniorManager,ManagementConsulting customer authentication. Understand complex issues
During the breaks,Whoownsthedata?Canconsumersbeengaged?Whatmakesthemselectonewalletoveranother?Whataretheliability I encourage you to visit The Facilitate problem resolution rules,Howdoeschargebackwork?Willthecustomerexperienceatthepointofsalebeconsistentorwillmerchants Exchange Place to discuss these learnings with the …Stakeholder dialogue helps you make profitable havetosupportmultipleprocesses? partners who can help turn your business concepts into decisions. Moderator NicholasNorman,ConsultHyperion,HeadofSales reality.Panelists As we move intoGeoffKeast,ABnoteNorthAmerica,DirectorofEmergingFinancialMarkets this new wave of payment, we BrendaClark,CIBC, VPͲStrategicInitiatives&Payments need to adapt old lessons learned and share insights MariodeArmas,MerchantCustomerExchange and these companies can help. Welcome to Cardware! ErikVlugt,VeriFone,Inc.,VPProductMarketing,NorthAmerica Catherine Johnston hear fromCoffeeservedintheOakesBallroomsponsoredbyNXPSemiconductors We will China UnionPay at our Giesecke 2:45–3:30 Willmobilewalletshelpyouretaincustomers,growyourmarketshareanddriveprofits? President & CEO, ACT Canada & Devrient keynote luncheon on Wednesday as they Moderator DougMacdonald,DeloitteInc.,SeniorManager Chairman, International Smart Card Associations discuss: “The change and trend of development of Panelists MarkHorwedel,MerchantAdvisoryGroup,CEO Network (ISCAN) electronic payment.” SirajNazir,OberthurTechnologies,BusinessDevelopmentManager–Solutions JimmyDinh,President’sChoiceFinancial, SeniorDirector–MobilePayments&CommerceStrategy
MarcBrûlé,RoyalCanadianMint,CFO Join us on Wednesday evening at the Gemalto Gala SimonLaw,SALTTechnologies,CoͲfounderandCTO reception to enjoy networking while taking in the 3:30–3:45 breathtaking view Closingremarksanddrawforprizes of Niagara Falls.
Payment Insights Sponsors
Premier+GalaEvening Platinum+Payment InsightsTrackSponsor ReceptionSponsor
Exchange Place Experts
Visit our exchange place in the Oakes Foyer to meet with the experts
ABNote »» Discover ABnote’s secure payment solutions including EMV, open payment, stored value, prepaid, contact, contactless, RFID and more. »» Trust in ABnote’s expertise with TSM and NFC services and participate in a live demo. »» Discover ABnote’s secure collaborative solutions between payment and transit, payment and loyalty, and more. Aimia »» Ground-breaking research on customers; moments of truth to drive your loyalty program. »» Leading loyalty platform solutions with the launch of Aimia Systems. »» Bringing Financial Services, Telecommunications and Retail Industries together through the mobile wallet and Cardlytics. Apriva »» Leading provider of wireless payment processing in North America. »» Apriva is very active in providing cashless payment vending solutions within campus card programs. »» Apriva provides integrated support for Unattended Solutions (kiosks, cashless vending, closed or open loop systems). CPI Card Group »» Open and closed-loop reallife examples of online card management system usage in Canada and in the US. »» Online production and shipping tracking, co-branding logo management, pick, pack and ship, B2B and B2C solutions. »» Online tools that are agnostic to program type (open or closed loop) and payment instrument (cards, a smart phone or simply a mobile application). Discover »» Capturing global spend with Discover, Diners Club International and partners such China Union Pay and BC card. »» Competitive pricing, improved customer experience. »» Increase competition in the Canadian landscape. Fime »» Planning to launch a mobile payment project? »» Do you want to benchmark different contactless technologies
available on the market? »» Do you want to ensure the global security and interoperability of your solution? Giesecke & Devrient »» See a demonstration of Canada’s first open-wallet solution, G&D’s SmartTrust Portigo. »» Learn more about G&D’s Visa- and MasterCard-certified TSM platform and its role in Canada’s first commercial deployment of NFC mobile payments. »» Come see Canada’s first Interac Mobile Payment solution in action. ICC Solutions Ltd »» Learn more about why ICCSimTMat test tool is the preferred North American acquirer solution for certification. »» Speak with our industry expert staff about your organization’s testing and training requirements for EMV implementation. »» Arrange a demonstration of stateof-the-art ICCSimTMat innovative test tools that have simplified and enhanced contact and contactless testing in North America and beyond. Information Packaging Corporation »» Information Packaging has been manufacturing card sleeves and specialty envelopes since 1985. With high quality in-house printing, die cutting and folding operations, we maintain total control over the entire manufacturing process. »» ArmorShield™ RFID blocking material is ideal for contactless smart-card card sleeves; protecting users from skimming and unauthorized scanning of bank and ID cards. We are known industry-wide for excellent customer service, quick turnaround and our capacity that exceeds 32 million sleeves per month. We can produce your orders from a thousand to several million. »» Stop by our table and enter to win a free give-a-way of ten thousand Tyvek sleeves, printed two colours. Ingenico »» The world’s leading provider of payment solutions. »» A deep knowledge of local payment markets and value-added solutions, 30 years of expertise in secure payment system deployment. »» Our Telium series products
and services are comprised of payment hardware, transaction solutions estate management and innovative business solutions. INSIDE Secure S.A. »» Proven leader providing embedded solutions for securing content, transactions and communications between devices, services and people. »» Enabling customers to deliver innovative products and revenuegenerating services securely and conveniently. »» Delivering a comprehensive range of secure semiconductor, IP, software and NFC solutions worldwide. Mastercard 1. Are you looking for a Digital Wallet Platform? 2. Do you need a solution to extend your payment brand into the Canadian eCommerce market? 3. Do you need a mobile payment solution that will turn every connected device into a commerce device? MSC »» Multi vendor POS hardware procurement. »» Certified EMV applications across multiple vendors’ terminals. »» Comprehensive merchant deployment services from coast to coast. NBS Payment Solutions »» See innovative POS solutions with premium value add features and functions. »» Learn of ways to increase revenue and lower the cost ownership at the checkout. »» Explore new options for the checkout counter. NBS Technologies Inc. »» A world leader in scalable and customizable solutions for EMV migration. »» NBS Trusted Service Manager (TSM) provides a cost-effective open software platform for distributing and managing mobile payment applications. »» NBS has nearly 40 years of experience in developing card personalization equipment, software and Smart Card manufacturing equipment. Oberthur Technologies »» Oberthur Technologies offers secure technologies for smart cards including card design,
manufacturing, data management, procurement, personalization and fulfillment. »» In July 2012, Oberthur Technologies opened a service centre in Ottawa to meet the growing demand for EMV and NFC solutions, which we can meet because we are a leading global provider of EMV. Also, we have participated in trial and commercial NFC launches in 17 countries and have been at the forefront of this emerging technology for the last six years. »» Oberthur Technologies provides its customers with award-winning innovative mobile secure services including NFC, wallet management, mobile money, and Trusted Service Manager (TSM) solutions. We have relationships with leading NFC ecosystems, including ISIS (U.S.), Cityzi (France), and Visa mobile provisioning service. PayFirma »» Learn how technology is changing the retail industry with smartphone and tablet payments. See how easy it is to take payments anywhere, connect with your customers and grow your business. »» Discover how you can combine eCommerce, mobile and in-store payments with one solution creating a seamless experience for customers. »» Experience a new way to checkout with Tablet POS. Demo a big box POS solution in a simple mobile package. RFID Canada »» Our new EMV Certified Reader can be mounted on metal. »» We have a new NFC Encoder System. »» RFID Canada has the most complete line of NFC and RFID Readers and Tags in Canada. Threshold Financial Technologies Inc. »» Innovative ATM and payments solutions. »» Interactive teller systems. »» Integrated managed services.
Visit our exchange place in the Oakes Foyer to meet with the experts
Wednesday June 19th, 2013
UL »» UL is uniquely positioned as the world’s number one competence center in transaction security technology. We are the independent, trusted partner for end-to-end transaction security services for the mobile, payment, e-ticketing and ID management sectors on a global scale. »» UL is officially recognised by numerous payment associations, including Visa, MasterCard, JCB, American Express, EMVCo, PCI, APCA, GlobalPlatform, MobeyForum, Smart Card Alliance and ACT Canada. »» Our experts from UL will be among the panelists that will be looking at how international developments impact Canada. We will also be discussing whether there is a smart implementation strategy for mobile and NFC.
Global Changes and the Canadian Market
VeriFone »» In one word: experience. VeriFone has more than thirty years supplying point of sale software and hardware to the payments industry. Partner with the most experienced suppler. »» Explore: visit our booth at Cardware to explore our certified payment solutions. »» Engage with us while at the conference. Hear us speak on mobile wallets and visit our booth to see and touch our Canadian payment solutions.
Finances & Insurance Sector Charles Walton, SecureKey Technologies Inc., CEO 11:30-12:00 am Keynote Presentation:
Track sponsored by Interac Association 7:30-8:30 am
“The change and trend of development of electronic payment”
Networking Breakfast Sponsored by TD Merchant Services
Mr. Li Wei, China UnionPay Co., Ltd., Assistant General Manager of Technology
12:00-1:30 Pm Keynote Lunch Sponsored by Giesecke & Devrient
International developments: how do they impact Canada? Moderator: Catherine Johnston, ACT Canada, President & CEO
Mobile: Stakeholders ‐ Friends or Foes? Track sponsored by Interac Association
Panelists: China ‐ Market Update Frank Xu, Smart Card Federation of China, Executive Director Digital Innovation Around the World Derek Colfer, Visa Canada, Head of Product Platforms Mobile Innovations in the Americas’, EMEA and APAC Karl Theo, Giesecke & Devrient, Director of Payment Solutions Developments of International Schemes and EMV Related Product Innovations Peter Helderman, UL, Principal Consultant North America Payment Changes and the Impact on Retailers Mario de Armas, Wal‐Mart Stores, Inc., Senior Director International Payments EMV Progress in the US Randy Vanderhoof, Smart Card Alliance, Executive Director
1:30 - 2:30 Pm
Coffee in the Exchange Place
Boomers Panel: What do they want from mobile and wallets? Live market research session 2:30 - 3:30 Pm
The Complexities of Partnerships in Delivering on the Mobile Promise Sponsored by Bennett Jones Moderator: Duncan Card, Bennett Jones LLP, Partner Panelists: Frank Maduri, BlackBerry, Senior Director, Product Management, NFC, Mobile Payments & Mobile Wallets Christopher Burns, First Atlantic Commerce Ltd., CEO Derek Colfer, Visa Canada, Head of Mobile Innovation 3:30-4:00 Pm Sponsored by MasterCard Worldwide
ESD Leadership Team Update
WWPass »» Eliminating antiquated usernames and passwords with advanced authentication solutions. »» Ensuring the true identity and privacy of your customers and users. »» Safeguarding your business and building trust of your brand by protecting your users and data assets.
Tracey Black, GFH Group, President
YESpay International »» Mitigate EMV and PCI accreditation, costs and timescales with EMBOSS - multichannel managed payment gateway. »» Mobile, NFC and social commerce: pay the new way. »» Profit maximization and customer stickiness through value added payment services.
Charles Walton, SecureKey Technologies Inc., CEO
2:30 - 3:30 Pm
Driving the Channel: Champions, Innovators and Followers
Coffee in the Exchange Place sponsored by the Royal Canadian Mint
Sponsored by Bennett Jones
Moderator: Catherine Johnston, ACT Canada, President & CEO
Authenticating the Customer: Can we protect the online and mobile space? 10:30-11:30 am
What is the problem we are trying to solve? Moderator: John Ambrose, Ambrose Connection Limited, Principal Panelists: Jim Robbins, EWA‐Canada Ltd., President Didier Serra, INSIDE Secure, General Manager & EVP Sales Americas Jason Davies, MasterCard, Director, e‐Commerce Jean Marchand, R3D Consulting Inc., Vice‐President,
Panelists: Douglas Kreviazuk, Canadian Payments Association, Vice President, Policy & Public Affairs William Giles, MasterCard Canada, Vice President ‐ Emerging Payments Douglas Melville, Ombudsman for Banking Services & Investments, Ombudsman and CEO Kurt Eby, Canadian Wireless Telecommunications Association, Director, Regulatory Affairs Interac Association panelist TBA 5:45 - 8:00 Pm Join us for the gala Gemalto reception on the terrace, overlooking the Horseshoe Falls
Merchants and Brands (Behind Closed Doors) 1:30 – 2:10
2:10 – 2:50
2:50 – 3:30
3:40 – 4:20
4:20 – 5:00
5:00 – 5:30
Thursday June 20th, 2013 Breakout Sessions
Track sponsored by Interac Association 7:30-8:30 am
Networking Breakfast Sponsored by TD Merchant Services 8:30-9:30 am
Mobile: Key Stakeholders Completing the Circle Panelists: Frank Maduri, BlackBerry, Senior Director, Product Management, NFC, Mobile Payments & Mobile Wallets Kurt Eby, Canadian Wireless Telecommunications Association, Director, Regulatory Affairs Amol Deshmukh, Gemalto, Director, ST Solutions David Robinson, Rogers Communications, VP, Emerging Business 9:30-10:00 am
The Security of Mobile Payments: Battling Fear, Uncertainty and Doubt Jay Graver, Giesecke & Devrient Systems Canada, Inc., Head of NFC Solutions – Canada 10:00-10:30 am
Coffee 10:30-11:00 am
Authenticating the Customer: Can we protect the online and mobile space? 10:30-11:00 am
Mobile Payments; Navigating a New World of Legalities Simon Hodgett, Osler, Hoskin & Harcourt LLP, Partner Joel Ramsey, Osler, Hoskin & Harcourt LLP, Partner 11:00-11:30 am
Mobile NFC and the World of Debit Avinash Chidambaram, Interac Association/ Acxsys Corporation, Director, Mobile Programs Lorna Johnson, Interac Association/Acxsys Corporation, Senior VP Products, Services & Innovation 11:30-12:00 Pm
Mobile Strategic Leadership Team Update Mike Kelso, Threshold Financial Technologies Inc., Vice President, Product Development & Innovation
Merchants 8:00-8:30 am
Merchant Customer Exchange 8:30-9:00 am
Wallets: The state of the market ‐ What merchants need to know about options and impacts on their business Panelists: Syndi Pak, AIMIA, Director, Strategic Development Mario de Armas, Wal‐Mart Stores, Inc, Senior Director International Payments Pierre Roberge, Mobile & Payment Innovation Consultant 9:00-9:30 am
Are we closer to knowing what the consumer wants? Loyalty and the Mobile Wallet Syndi Pak, AIMIA, Director, Strategic Development 9:30-10:00 am
Coping with How Virtual Payments are Changing the Retail Environment Michael Gokturk, Payfirma Corporation, CEO 10:00-10:30 am
Coffee 10:30-11:00 am
Authenticating the Customer: Can we protect the online and mobile space? 10:30-11:00 am
Are Merchants Jumping on the Mobile Payments Bandwagon? Rohit Patni, YESpay International, EVP Sales & Marketing 11:00-11:30 am
What are the Options for Merchants Facing a Plethora of New Payment Products? Nicholas Norman, Consult Hyperion, Head of Sales 11:30-12:00 Pm
Using Authentication to Manage E‐commerce Fraud Shirley Matthew, Visa Canada, Head of Product Platforms
The Consumer Experience 8:30-9:00 am
Protecting the Customer Experience with Mobile Jonathan Magder, Deloitte Inc., Consulting, Strategy & Operations
Who is on the Hook When Things Go Wrong? Sasha Angus, Ombudsman for Banking and Investment Services, Senior Deputy Ombudsman and Chief Operating Officer 9:30-10:00 am
Mobile and NFC: Is there a smart implementation strategy? Sherif Samy, UL, Commercial Director ‐ North America 10:00-10:30 am
Coffee 10:30-11:00 am
Innovation Viewed Through the Eyes of a Consumer (The Ticketmaster Story) Felipe Papaleo, CPI Card Group, EVP Sales and Marketing 10:30-11:00 am
Emerging Payments ‐forecasting the year ahead in eCommerce and Mobile William Giles, MasterCard Canada, Vice President ‐ Emerging Payments 11:00-11:30 am
What are the Options for Merchants Facing a Plethora of New Payment Products? Nicholas Norman, Consult Hyperion, Head of Sales 11:30-12:00 Pm
Technology Issues and Opportunities Track sponsored by EWA‐Canada Ltd. 8:30-9:00 am
Who is responsible for the user experience of NFC? Guillaume Lemoine, FIME, Business Development Manager for Mobile Payments 9:00-9:30 am
Easy Interoperability, a case study on delivering NFC enabled payment solutions Geoff Keast, ABnote North America, Director of Emerging Financial Markets 9:30-10:00 am
Cloud Architecture: A New Approach for Authenticating Mobile Transactions Didier Serra, INSIDE Secure, General Manager & EVP Sales Americas 10:00-10:30 am
Thursday June 20th, 2013 10:30-11:00 am
Vice President Business Development
Safety in the Cloud: Securing Sensitive Data from a Mobile Device into the Cloud
Card Failure ‐ How Issuers Can Avoid It
Nils Gerhardt, Giesecke & Devrient, Vice President, Head of Product and Project Management
Ron DeDera, MillenTech‐CTI Group, CEO/ Chairman
Multos in Motion – mobile with a twist
Sponsored by Interac Association 1:30 - 2:00 Pm
Mobile Wallets: What are the options, who are the players and what choices did they make
The Business of Wallets – In it to Win it? The Business Implications for Issuers, Merchants and other Stakeholders
Naveen Kumar, KPMG Management Services LP, Senior Manager, Management Consulting
Michel Chalifoux, Multos International Pte Ltd,
2:00 - 2:45 Pm
Canada’s credit unions
Act Canada On behalf of the Canadian credit union system, Credit Union Central of Canada proudly supports ACT Canada in its role in facilitating, educating and fostering co-operation in the Canadian payments industry.
membership affiliated credit unions
® HANDS & GLOBE design is a registered certification mark owned by the World Council of Credit Unions, used under license.
Wallets: The critical questions that must be asked and answered Who owns the data? Can consumers be engaged? What makes them select one wallet over another? What are the liability rules, How does chargeback work? Will the customer experience at the point of sale be consistent or will merchants have to support multiple processes? Moderator: Nicholas Norman, Consult Hyperion, Head of Sales Panelists: Geoff Keast, ABnote North America, Director of Emerging Financial Markets Brenda Clark, CIBC, VP ‐ Strategic Initiatives & Payments Mario de Armas, Merchant Customer Exchange Erik Vlugt, VeriFone, Inc., VP Product Marketing, North America 10:00-10:30 am
Will mobile wallets help you retain customers, grow your market share and drive profits?
Moderator: Doug Macdonald, Deloitte Inc., Senior Manager Panelists: Mark Horwedel, Merchant Advisory Group, CEO Siraj Nazir, Oberthur Technologies, Business Development Manager – Solutions Jimmy Dinh, President’s Choice Financial, Senior Director – Mobile Payments & Commerce Strategy Marc Brûlé, Royal Canadian Mint, CFO Simon Law, SALT Technologies, Co‐founder and CTO
151 Yonge Street, Suite 1000, Toronto, ON M5C 2W7 Tel.: (416) 232-1262 Fax: (416) 232-9196 www.cucentral.ca
YEARS SUPPORTING CANADA’S
Indisputable: chargebacks911 discloses top sources of chargebacks merchants should recognize By Alyssa Kaplan
he word “chargeback” is enough to have many online merchants cowering in fear. Chargebacks occur when consumers dispute purchases made with their credit cards. Limiting chargebacks is becoming an essential part of ensuring a resilient online business and many retailers have tried a variety of methods to counteract them. Unfortunately for many merchants, some of their own processes are encouraging chargebacks, rather than preventing them. The problem with too many chargebacks is that it may result in negative consequences for merchants, including loss of time, money and potential business. Many merchants are unknowingly employing practices that are responsible to induce chargebacks and actually encourage the problem instead of curbing it. Monica Eaton-Cardone, founder of Chargebacks911, a company established by a former online retailer, explains five problems as hidden sources for increasing retailers’ chargeback rates.
the customer has to wait a long period of time to speak with a real person, they may get frustrated or hang up. Solution: provide immediate human interaction.
Problem 2 Shipping an additional, free item: shipping another bottle of the same product for free in hopes of improving customer loyalty often backfires because customers may assume they are getting double-charged and initiate a chargeback. Solution: skip the free item or include a notice clearly explaining they are not getting charged for it.
Problem 3 Automated rebate offers: some companies exercise a rebate offer to provide an incentive, avoid giving refunds or reward customer loyalty. Anytime something is advertised as automated but requires the customer to complete a form, wait a long period of time or receive a company check, you will end up with more chargebacks. Solution: avoid automated rebate offers.
Automated answering services: depending upon their use, this type of system can bring tremendous value to customer service. However, anytime something is automated and
No refund policies: instituting a no refund policy in the hope of eliminating chargebacks will only drive more customers to their bank for resolution. Even if you fight each chargeback may / june 2013
and win a hundred per cent of the resultant cases (due to your ironclad policy), you didn’t do yourself any favours. The real harm with chargebacks is the negative statistic you cannot reverse. Solution: the best policy is to avoid them altogether.
Problem 5 Automated chat support: generally, it’s a great idea to employ 24hour support options for your customers, especially if you operate an internet business. However, if your option for customer support involves automated response systems, your efforts to avoid upset customers—and curb chargebacks as a result—may end up creating more than you bargained for because they can actually breed more frustration and drive your
customers to call their banks for a resolution. Solution: have a live communication option. Chargebacks are an inescapable facet of online sales and merchants must be proactive in limiting them in order to keep business thriving. Although Internet businesses can never completely eliminate chargebacks, a safeguard is available—a solutions expert can assess the risk, handle costly chargeback disputes and resolve cases without unfavourable consequences. Chargebacks911 provides an exception to standard dispute processing for dissatisfied consumers who wish to remedy transactional disputes without the requirement of additional intermediaries or lengthy correspondence. For more information, visit http:// chargebacks911.com/. PAYMENTSBUSINESS
Online security for retailers By Sean Forkan
ith summer approaching, more Canadians are shopping online for vacations, entertainment and retail splurges. According to comScore, we spent over $22 billion online last year! This is not only good news for online retailers but unfortunately for cyber criminals as well. Like all thieves, cyber criminals go where the money is. They are launching more sophisticated attacks by exploiting new trends in technology or consumer behaviour to steal credit card or other financial information. So it is understandable that nearly one-fifth (19 per cent) of Canadian shoppers cite security concerns as a reason not to shop online, with identity theft as their leading concern. Even for those who do not shop online, this still leaves a vast majority of Canadians vulnerable to potential attack. Symantec’s recent Internet Security Threat Report (ISTR) highlights “Malvertising” as one example of how cybercriminals are exploiting online shoppers. Attackers
Nearly one-fifth (19 per cent) of Canadian shoppers cite security concerns as a reason not to shop online.”
warn you of possible infections, will help reduce risk and protect your online reputation. Left undetected, malware can lead to search engine warnings and blacklisting or can redirect customers to malicious websites. Look for an anti-malvertising solution that can monitor for malvertising and reduce the risk of cybercriminals hijacking and exploiting customers.
Use SSL certificates
buy legitimate advertising space on mainstream websites and post enticing (yet fake) ads that contain attack code. When users click on an ad, they unwittingly download malware to their computers. Meanwhile, the website owners are completely unaware that their site has been compromised or their customers are at risk – not great for repeat business. With more than $22 billion in consumer spending at stake, the question for e-retailers is how do you keep your website safe and ensure your customers’ confidence to shop, click and buy? The answer is to protect your eCommerce site.
SSL certificates authenticate the identity of businesses and show customers that a site is safe by displaying “https” in the address bar. SSL encrypts the online session so that data in transit, like sales or data transactions, cannot be intercepted and stolen by the bad guys. It’s important to migrate from 1024 bit to 2048-bit SSL certificates for advanced protection and encryption.
Upgrade to Extended Validation SSL Consumers need to know they are doing business with their favourite retailer and not with a fake company that
Scan your site for malware and malvertising Browsers and search engines require website owners to prove their sites are not infected with malware. Automated malware scans that check your site daily and
may / june 2013
is impersonating one for malicious means. Extended Validation SSL (EV SSL) offers stronger SSL protection and is denoted by a green bar or padlock icon in the browser URL. This visual provides an important verification that a website is legitimate so customers know they are safe.
Provide a security and privacy explanation page
Display website trust marks
If a businessâ€™ server software is outdated, then itâ€™s not secure and neither is the website. Make sure you install the latest updates and patches including: browser, applications, content management and database updates. Run
Trust marks or security seals, like the Norton Secured Seal, can increase your website traffic, provide customer assurance that your site is safe and increase sales transactions. Look for seals (not a static image) dynamically linked to real-time tracking information, noting the SSL hosted company and Certificate Authority (CA) who issued it.
By posting security and privacy details, customers know that their favourite site and their personal information are protected.
Keep server and data center security software up-to-date
may / june 2013
daily malware and vulnerability scans to check your site to find new threats and exploits. Customer trust and brand reputation is critical to the success of your e-business. Implement the strongest security solutions and policies to keep your online business safe and profitable. Canadians visit trusted sites which help drive increased traffic, sales conversions and eCommerce.
9 ways to keep buyers in-store 30
may / june 2013
tâ€™s no secret that smartphones have changed the way we socialize, travel, check the weather and access information. They are also increasingly impacting the way we shop. Shoppers are increasingly roaming the aisles of physical stores only to search online for better deals. This practice is called showrooming. GroupM Next and Catalyst,
a leader in search marketing innovation, teamed up to conduct research in order to provide brands with an understanding of consumer behaviour as it relates to showrooming in Canada. The question this research attempted to answer is, how much of a discount will compel a customer to make an online purchase? All else equal, consumers would prefer to have an item now, rather than later, so how much of a discount would it take for someone to leave the store and wait for shipping? How many would leave for a five per cent discount? What about ten per cent? How many shoppers would walk away for merely pennies?
Study results GroupM Next surveyed two thousand Canadian shoppers, asking about 12 products across multiple retail categories and at different price points. Respondents were given a hypothetical showrooming scenario in which they could purchase a given product and own it immediately or they could take a discounted price, leave the store and have the product shipped. When the online price was just two and a half per cent lower than the instore price, 74 per cent of Canadian shoppers say they would stay and buy in-store. When the discount increased to five per cent, 63 per cent of customers said they would stay in-store. At a 20 per cent discount level, only a small number of shoppers (27 per cent) would stay in-store. It is interesting to note that throughout the study, when it comes to showrooming, there proved to be no meaningful
Twenty per cent of shoppers are going to stay in-store and buy regardless of what’s happening online.” may / june 2013
difference in preference or behaviour between English- or French-speaking consumers.
Nine tactics to combat retail showrooming Based on the results of the study, Catalyst identified nine different tactics that could be used to reduce consumers’ propensity to showroom.
Pricing In Canada, staying within ten per cent of the price online gives the brick and mortar retailer a good chance of keeping the buyer in-store. Adjust in-store pricing to be more dynamic and adjust to fluctuations in pricing online and be prepared to match on-line prices.
Targeting the right shoppers Twenty per cent of shoppers are going to stay in-store and buy regardless of what’s happening online. The most important consumers to win over are the next ten per cent after the 20 per cent who are going to stay in-store regardless. According to the study, this ten per cent retailers should focus on are slightly more likely to be female, have an average age of 58 years old, a median income of $50,000 annually and have some college or higher education.
customer is lost.
In-store exclusives Providing in-store exclusives (bundles, special editions) can provide a barrier between what is available in-store and what is available online.
Search marketing Engaging in mobile search marketing can help to control the mobile search experience. Owning search terms like product name + “best price,” “reviews” and “in stock” can reduce a consumer’s exposure to alternatives. Google’s new enhanced campaigns are well-positioned to help marketers capitalize on moments that matter.
Mobile apps Mobile apps are among one of the most effective ways to control activity on mobile devices while consumers are in-store. Give consumers a compelling reason to open a retailers’ app while in-store rather than going to a browser.
Geo-fencing The advancement of geo-fencing technologies provides retailers with the opportunity to target mobile devices inside of brick-and-mortar locations.
Consider whether consumers getting real value from retailers’ loyalty programs. Can adjustments be made to a loyalty program to keep shoppers in-store more often?
Retailers need to take measures to control what is happening on the consumers’ device. They can use a device of their own, a QR code or a mobile app to disrupt and control the interaction happening on location.
Target showrooming behaviour When a shopper compares alternatives and reads reviews on a mobile phone, they are less likely to stay in-store so providing shoppers with a knowledgeable associate will make them more likely to stick around. Make sure salespeople can identify showrooming behaviour and are trained to respond before the
Next steps for retailers Ultimately retailers need to understand their customers and adapt their strategy to include the appropriate mix of different tactics. The online market has become extremely price sensitive and as such the conversation must be extended beyond just price in order to keep buyers in store. PAYMENTSBUSINESS
One on one
Gerry Gaetz talks about his new role as President and CEO of CPA How’s your role going at the CPA. Are you enjoying it? Yes, of course I’m enjoying it. I’m coming up to the end of the second month. And I’ve been spending my time immersing myself in everything that’s going on – just to get a good lay of the land.
How does your experience at the Bank of Canada prepare you for your role at the CPA? I’ve had a number of different
roles at the bank of Canada and what I bring to this job is a broad perspective on the Canadian financial system, the economy and how the payment system is a critical part of that. I headed the payments and banking area for a period of time and I was head of most of the corporate administration of the bank, including technology, HR, finance and security so I’ve had a number of experiences both with an operations mandate and with a more strategic mandate. And I think both of those help prepare me for this role.
What are your goals as the CEO? My first goal is to get on top of the important things that are going on at the CPA. For the short term, it’s to learn about the priorities and to help the organization stay focused on what the most important things are. For the long term, it’s to set the right path for the organization and to support the people who are doing the excellent work there.
When you were with the Bank of Canada, you were working on the new polymer notes. What challenges do you foresee as you start working on electronic payments? The last role I had at the bank was to head up the currency function and one of the more prominent initiatives there was to launch a new series of bank notes. And, of course, I think they’re a fantastic success. They’re unique in the world, actually. They’re much more secure and they’re 32
saving a lot of money for the bank, taxpayers and the banking system. Over time, bank notes are going to become less important as a payment vehicle. And the challenge on the payment side is all around moving to more electronic payments. There’s a lot of attention and a lot of innovation and change at the retail level and a lot of promotion for doing things differently. Probably like what’s happening in technology generally, it’s the retail consumer that’s likely to drive the changes for a number of years. So the challenge for the CPA is to figure out how the Canadian payment clearing and settlement systems can be positioned appropriately to support that change and innovation and not hinder it but continue to keep the attention on safety and soundness. At the end of the day, what’s critically important is to be able to trust the system and not to worry about things like security and personal information. I think there’s a natural tension between innovation and change and making sure that the system is extremely resilient.
A lot of the innovators in this space are unregulated because they’re start-up companies. Is that part of the challenge for you? I think that’s a challenge for the industry, quite frankly. Because there is certainly a need to make sure the playing field is as level as it can be. There needs to be some consistency
may / june 2013
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may / june 2013
One on one
while not inhibiting positive change. I think that is an important issue that needs to be worked out front and centre.
There are a lot of new players who want to change the way we pay. Do you think new payment methods using digital wallets, etc. will gain traction with the general public? Or do you think the general public is going to remain suspicious of the security of these innovations? I think sometimes when you work in payments, there’s a tendency to be over-optimistic about how quickly the general public will move to new things. There has to be a strong reason for people to adopt something new, especially when what they have is working pretty well. So that’s the first point. I think we over-estimate how important they will be for the public. Having said that, I’m a big believer in making things work better; improving and using technology where it makes sense. I do think some of these things will catch on over time. And I think what has to be really front and centre is security, safety. Security in the methods, no compromise of personal financial information, I think these things are things that can become top of mind when there’s a problem. I’m all for the change and innovation; it has to be done in a way that really puts safety and soundness at the core.
Do you think the general public is concerned about privacy? On the one hand, we’ve got an older generation that doesn’t want to go online and participate in eCommerce because they’re worried about people stealing their identities but then there’s also young people who are going on social media and sharing all kinds of 34
personal information. I think that’s one of the tensions. One way to deal with that, I’d say, is just to make sure the information is available to people. We live in a free society where people can make choices about things that they do, including how they pay. That should be accompanied with good, solid consumer information about how systems work, what the risks are, who is regulated and who is not. All of that should be transparent. Let people decide.
How do you make that transparent? For one thing, you require people to publish how their systems work and what the safeguards are and you make that information available.
So how do you plan on educating the general public on what’s safe and what’s not safe? We have to be focused on our mandate and what we do: how payment systems function, how they operate, how they’re secured, that certainly is within our mandate. And so we do have an education program. In fact, work is going on right now to enhance that. There will be an education component strengthened through our website, through videos, which will help. So this is something that we will take seriously though it is something I am learning about in my first weeks.
It’s a complicated world and with so many new people joining it, it’s only getting more complicated. Yes, there are layers and layers of detail and I think the trick is to explain things in a way that starts quite simple, and then for those who want more details, offer additional layers of information to describe and unpack this complexity. What I mean is to start high level, simple,
direct and then move from there. It’s challenging because not only is there a lot of detail in the payment system but there are many different players and that makes it challenging.
You seem to be quite focused on advancing technology. Are there any areas that you find really interesting and that you’re keeping your eyes on? One of the CPA priorities is international standards of payments and payment messaging. The CPA has recently adopted the ISO 20022 international payment standard and I think that’s a really important enabler for technology in a couple of ways. One is that it can facilitate payments carrying better information and consistent information. That can mean that players can make use of that payment information with their technology. So it leads to things like straight-through processing and payment service providers and software providers can build these standards into their products. The other is the international operability piece where you have countries moving to a common standard and I think that’s an example of the sort of thing the CPA can do to facilitate change in the industry. And that will eventually support using technology to make payments more efficient. We shouldn’t forget the important role that competition plays in all this. And, if I can’t use a particular payment method when I want to travel, presumably, I’ll move to something that does meet my needs. So it’s a combination of trying to adopt standards and be progressive about that, having competition provide options and provide better and more efficient means of payments. While all that’s going, make sure that the core, critical parts of the system are very safe and secure. I see that, in a nutshell, as the challenge for the payment system.
may / june 2013
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