The Merchant’s Guide to Transactions, Cards & eCommerce
REVENUE STREAMS AND OTHER MARKETS Leveraging payments industry technology also in this issue:
❱ Hacker’s Kryptonite:
Encryption and tokenization
❱ P-card Programs:
Optimizing the benefits
❱ e-Commerce Delivery: The
retailer’s competitive edge PM 4 0 0 5 0 8 0 3
Table of Contents
November/December 2014 Volume 5 Number 6 Editor Karen Treml firstname.lastname@example.org Publisher Mark Henry email@example.com
COLUMNS & DEPARTMENTS 4 News 27 Payments Ecosystem FEATURES
Contributors Marc Dion, Monique Duquette, Jim Hackett, Nancy Harris, Catherine Johnston, Ben Kaplan, Jennifer Lee, Kevin O’Brien, Nathalie Reinelt
A Frosty Winter, Indeed
Creative Direction Jennifer O’Neill firstname.lastname@example.org Photographer Gary Tannyan President Steve Lloyd email@example.com For subscription, circulation and change of address information, contact firstname.lastname@example.org 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 email@example.com www.paymentsbusiness.ca Subscriptions available for $40.00 year or $60.00 two years. ©2014 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.
Made possible with the support of the Ontario Media Development Corporation
26 Events 28 ACT Update
Happy holidays! Mitigate the risks of credit card scams during this busy season
INSIDER REPORT How to optimize the benefits of a P-card program
The Crossfunctionality of Technology
A delivery solution for e-commerce gives retailers the edge
Leveraging payments industry technology for use in other industries
Beyond Gifting Boosting marketing efforts by harnessing the power of digital gift cards
Where’s the Money in Payments A look at the stages of growth from emerging to mass market
RISK MANAGEMENT Encryption and tokenization are the hacker’s kryptonite
PAY CHANNEL A card for all seasons means building a personalized approach
SEGMENT UPDATE A look at the future of loyalty
JAnuary/February — The Technology Report – A look at ATM/ABMs November/December 2014
ATMIA launches ATM OS migration cost model for deployers ATMIA has released its migration cost model for ATM deployers to use as a tool to calculate costs of different migration strategies to new operating systems. The model was developed in conjunction with leading banks and a team of experts drawn from ATMIA’s various 2020 committees looking at the most optimal approach for the industry when support for Windows 7 OS ends in a few years from now. “ATM operators are faced with the on-going challenge of deciding on their best approach to future migrations,” says author Francesco Burelli, partner at Innovalue Management Advisors and winner of the association’s ‘2014 International Consultant of the Year Award’. “Our industry model offers the ability to compare four different migration scenarios from a financial perspective, based on a bank’s typical cost drivers. ATM operators can compare the costs of different upgrade options depending on factors like number of ATMs and the risk levels. Even the pre-populated baseline data is leveragable by ATM Operators straight away and offers a realistic and valuable benchmark.” “This intensive study of the costs of migrating ATMs to a new operating system brutally exposes the fallacy we sometimes come across in our industry that doing nothing when support for the existing OS ends is fine,” adds Mike Lee, CEO of ATMIA. “It’s definitely not fine, but highly risky. I urge all ATM deployers to read and use this superbly benchmarked new model as a planning tool to prepare for ongoing and future OS migrations.”
Everyday banking simpler for on-the-go Canadians President’s Choice Financial® services has added a mobile cheque deposit feature, adding to its array of convenient services aimed at making banking simple and better for busy Canadians. The free service allows customers to safely and securely deposit cheques on-the-go through their mobile devices. “As more and more Canadians use mobile devices in their everyday lives, we’re committed to providing our customers with tools that add both value and convenience to their banking experience,” says Barry Columb, president of President’s Choice Bank. “For more than 16 years, PC Financial has offered Canadian families the convenience of banking where they shop for groceries, while also providing an opportunity to earn PC points redeemable for everyday rewards. With this new feature, we’re helping free up more time for the things customers would rather be doing, while still offering great value and rewards.” Available on both Apple® and Android™ devices, the PC Financial® mobile cheque deposit feature is fast, easy, and secure. Customers’ financial information is not stored on mobile devices when using this feature and all wireless communications are securely encrypted. Mobile cheque deposit is the latest in a series of initiatives for PC Financial® services aimed at simplifying the customer experience and providing added value and convenience. These efforts have led to President’s Choice Financial® services being named #1 in the “Value for Money” category among all Canadian financial institutions as part of the 2014 Ipsos Best Banking Awards.
Oink introduces prepaid card for teenagers Virtual Piggy, provider of Oink , has launched the Oink Discover prepaid card, a physical extension of the company’s digital wallet. The new prepaid card allows teens to shop at any of the more than 25 million merchant locations that accept Discover, but within limits set and managed by parents. The Oink Card is accepted everywhere Discover is accepted and is powered by Marqeta, a payment card platform for global enterprises. Virtual Piggy is the provider of Oink, an ecommerce solution that enables children and teenagers to manage and spend money within parental controls. It enables parents to teach financial management through the use of a family wallet. The technology company delivers online security platforms designed for the ‘Under 21’ age group in the global online market, and also enables online businesses to function in a manner consistent with the Children’s Online Privacy Protection Act (COPPA) and similar international children’s privacy laws.
UGO, the wallet for your phone has arrived UGO Mobile Solutions L.P. today announced the availability of UGO Wallet, an open digital wallet application that enables consumers to start replacing credit cards and loyalty cards from their physical wallet with a simple, secure digital payment method on their smartphone. UGO Wallet is a free app and available now for download from BlackBerry World and Google Play™. In its initial release, UGO Wallet is available for use with eligible TD credit cards and PC Financial MasterCard credit cards. With just a tap of their smartphone, users can make purchases wherever Visa payWave* and MasterCard® PayPass™ are available. Registered PC Plus members can also instantly get PC points with the same tap when making eligible purchases at participating grocery stores where President’s Choice products are sold. “The launch of UGO Wallet marks an important Canadian milestone: this is the first open digital wallet to combine multiple payment and loyalty programs in one convenient and secure mobile solution,” said Alec Morley, CEO of UGO Mobile Solutions. “Unlike any other mobile payment offering currently available to Canadians, UGO has two participating banks, operates on both Visa and MasterCard payment networks and is supported by Canada’s three biggest network carriers, while integrating the extremely popular PC Plus loyalty program.” November/December 2014
MERCHANT-FRIENDLY PAYMENT SOLUTIONS Monetico, a result of the partnership between Desjardins Group and Crédit Mutuel-CIC Group.
Mowingo, Star Micronics partner on mobile solution for legacy POS systems Results of a pilot completed this month reveal a unique mobile analytics solution and data-driven insights for solving a primary concern of merchants and restaurateurs held back by outdated point-of-sale (POS) systems – receiving optimal return on investment (ROI) for mobile offers and promotions. A technology partnership between Mowingo, a mobile customer engagement platform, and Star Micronics, a printer manufacturer, created a mobile analytics solution for these merchants. Mobile offer and sales data from local owners of a national quick service restaurant revealed that, on average – • Stores receive the highest incremental sales using ‘free with purchase’ offers • The highest ROI is achieved with ‘buy one, get one free’ (BOGO) offers, which regularly outperform price-point and percentage discount offers by up to 55 per cent, and outperform ‘free with purchase’ coupons by up to 28 per cent. “We knew our customers redeemed buy-one-get-one-free offers at high rates when compared to other offers, but didn’t have any straightforward means of actually comparing our promos against sales,” says Cosme Fagundo, a local owner of several quick service restaurants in the Bay Area. “With Mowingo and Star Micronics’ solution, we’re now able to see that certain offers bring a much higher ROI on a more consistent basis than others, and it certainly eases our mind to know that we’re regularly bringing in profit well beyond the cost of a burger.” As most restaurant owners are tied to their current point-ofsale (POS) system, due to cost or franchise contractual restrictions, any room for innovation in areas like mobility had to be brought to restaurateurs through peripheral products, like Star Micronics’ network of smart receipt printers. “Our mobile redemption data showed us what brought customers in-store and what the most popular coupons were,
coming in the
Jan/Feb issue of
but we weren’t able to track results beyond redemption at the POS,” says Mowingo’s CEO, Daniel Dreymann. “That’s a lot of analysis missing in the sales cycle [due to expensive, outdated POS technology]. We wanted to delve into the problem and come up with something that restaurant owners could use to track the ROI of specific promotions, and, by extension, boost it. We finally found a solution to close the loop with our loyalty and engagement platform through Star Micronics’ smart printers at the POS, and were able to offer the merchant the ability to do receipt analysis on the back-end.” “Once the POS system registers the order, our cloud-enabled printers can capture the information shown on the receipt, allowing the sales data to be reviewed by retailer or their partners,” says David Salisbury, director of global marketing for Star Micronics. “The possibilities for a store owner to create and track promotional programs are expanded significantly now that they don’t have to wait until they can afford a new POS system to enter the mobile age.” “We’re all excited that through our work together, a solution to a problem faced by many store owners is finally available,” says Dreymann. Mowingo’s mobile customer engagement platform makes it easy for brands and merchants to connect with customers, driving more store visits and repeat purchases. Mowingo helps brands empower their local managers to control promotions at the regional, market, and store levels. Using targeted, intelligent offers, and time-sensitive notifications, in combination with geolocation technology, such as GPS and iBeacon, the company effectively pushes the right message, at the right time, at the right location. Whether Mowingo creates a new app, or enhances a brand’s existing app, its platform raises customer engagement, leading to improved business results.
EXECUTIVE ROUNDTABLE The Winning Combination Technology & Payments: Beyond the Hype
There is a great amount of activity in the payments sector, driven by advances in communications and associated technology. Financial services companies and payment companies are making major investments, launching innovative initiatives, and jostling for leadership in a rapidly changing market. However, it is far from clear that anyone has identified a winning proposition that will be able to dominate the market. Providing real benefit to the consumer will be key to widespread adoption of new platforms. But what is that winning combination?
Giesecke & Devrient is pleaseD to announce:
Mr. Willis Morettin has been appointed President and Managing Director, Canada. Mr. Morettin brings 29 years of financial and government experience in north america to the position.
Mr. Edgar Salib has been appointed Head of the Financial Institutions Division for Mobile Security, Global. Mr. salib brings 23 years of extensive international and canadian experience to the position. Mr. EDGAr SALIB
Mr. WILLIS MorEttIn
During his 17 years with G&D, Mr. salib has held several key international roles including chief Financial officer (cFo) of the G&D subsidiary, Ba international inc. (BaBn) in canada, and as the founding chief Financial officer and Managing Director of G&D Malaysia. He was Group vice-president Finance of the Government solutions Business unit, as well as the new Business Division of G&D Munich where he was responsible for the incubation of various products and several major M&as including venyon, a joint venture with nokia. Most recently, he has been president and Managing Director of G&D canada overseeing the successful expansion of government, transit and payment technologies in the evolving canadian market. He has been a Board Member on the venyon Board and on G&Dâ€™s Malaysian and canadian Management Boards.
During his 14 years with G&D, Mr. Morettin has held various roles including strategic account executive, Director, senior vice-president sales & Marketing, and Member of the Board for canada. in 2000 he joined G&D as the sales Manager responsible for its Banking portfolio. He put in place a comprehensive strategic sales and account management framework that was instrumental in rebuilding profitability, and was promoted to spearhead the national sales and marketing programs. in 2003, entrusted with expanded accountability for sales and service, he assumed executive leadership for Marketing. He has been senior vice-president sales & Marketing responsible for banking, transit and government solutions since 2009. Mr. Morettin and his team have played a pivotal role in securing key client relationships that have made G&D the partner of choice in canada for banks, transit authorities and governments.
prior to joining G&D, Mr. salib moved progressively through senior positions, including vice-president Finance at Quebecor inc.â€™s Ba Banknote. Mr. salib holds an Msc. economics from the university of paris, and an undergraduate degree in Finance and post-graduate degree in accounting from the university of Quebec.
Mr. Morettin began his career in 1985 with Bank of Montreal. prior to joining G&D, he was area Manager with over caD 1 billion under his responsibility. He holds a Bachelor of Business administration and earned his Masters of Business administration from the schulich school of Business at York university.
G&D is a leading international technology provider headquartered in Munich, Germany. Founded in 1852, the Group has a workforce of over 11,660 employees and generated sales of approximately EUR 1.75 billion in the 2013 fiscal year. 58 subsidiaries and joint ventures in 32 countries ensure customer proximity worldwide. G&D develops, produces, and distributes products and solutions in the payment, secure communication and identity management sectors. G&D is a technology leader in these markets and holds a strong competitive position. The Groupâ€™s customer base mainly comprises central and commercial banks, mobile network operators, business enterprises, governments, and public authorities. For more information, please visit: www.gi-de.com/ca
The Crossfunctionality of Technology Could the payments industry technology infrastructure be leveraged by other industries?
T By Jim Hackett
he payments industry has a highly development technology infrastructure. Leveraging this infrastructure for use in other industries is a topic that has intrigued me for several years now and is one that has generated much discussion amongst my industry peers. Huge investments in payments industry technologies have been made over the years and it is worth exploring how these technologies may be replicated within other industries. The following sections are intended
to draw an analogy between payments processing and processing of health care records.
Transaction processing From a payments processing perspective, I will use the processing of an ATM transaction as an example. Interac has developed a hub that is designed to move money between acquiring institutions and issuing institutions. This hub, known as the Inter Member Network (IMN), acts as a ‘traffic November/December 2014
cop’ by directing the movement of money between institutions on a peer-to-peer basis. As a consumer, the actual details of your accounts and associated balances reside within your financial institution’s banking system. By using a proprietary debit card from your financial institution, you can gain access to your funds from any ATM that participates in the Interac network. Your debit card contains a Primary Account Number (PAN) that identifies your financial institution and
Feature your personal account number. When you insert your debit card into the ATM of another financial institution, that institution then routes your information via the Interac network to your financial institution to authorize for the withdrawal amount that you have requested. Once authorized, a message is sent back to the ATM, your cash is dispensed, and your account is updated in realtime. As a part of this process, certain data is encrypted to protect confidentiality. The transaction is pretty simple and is completed in a matter of seconds. The Interac network is an example of one commonly used payment scheme; the CPA Automated Funds Transfer (AFT) is another. In simple terms, an AFT is a prearranged debit or credit to your personal account. The AFT can originate from one of many sources. In the case of both Interac debit and the CPA AFT, following strict transaction standards is imperative. These payment schemes have been in existence for several years now and most would agree that when it comes to transaction processing (data processing), the payments industry has it figured out. Whether it is debit, credit, or automated funds transfer, standard payment schemes have been in place for many years. It’s all about moving money.
ATM transaction and moving medical records between health care facilities. On the surface they are different applications – medical data versus financial data – but in reality they aren’t that different. In each case the intent is to move data from one location to another. As a patient you retain your primary health records with your general practitioner (GP). Other than the specific information content, this is no different than retaining your banking information with your financial institution. Suppose then, you are referred to a medical specialist for one reason or other. How easy is it to gain access to your medical history from your GP’s health facility? Wouldn’t it be nice if each healthcare facility had a classification similar to financial institutions for the purpose of exchanging medical records? You could have a medical card that identifies your healthcare facility and personal health record – a record that could be retrieved by your specialist to obtain your medical history. Of course, the records would have to follow a pre-defined standard. The specialist could then add further information about you to augment your medical history and route it back to your GP to retain. This same process could take place whereby a hospital could retrieve your medical history upon admission.
The development process
The question then becomes, is moving money really any different than moving other defined data? Let me draw an analogy between processing an Interac
How easy would it be to develop this type of exchange of medical records and what processes would have to be put into place to make this happen? First and foremost, a November/December 2014
recognized organization would have to take the lead. Perhaps this could be championed by the Ontario Medical Association (OMA). Next, and likely the most difficult step would be identifying a transaction standard that health care facilities would be prepared to adopt. Following that, the health care facilities that would be prepared to participate in this method of exchanging medical records would need to be identified, followed by the development of a numbering scheme that would facilitate identification of the health care facility and, ultimately, the specific patient within that facility. There would also need to be development of a method(s) for providing ID cards to patients that, when presented, would initiate access to their medical history record. As well, health care facilities would require devices to read these ID cards and to route the requested transaction. Finally, an inter-health care network hub (similar to the Interac IMN) would be required to facilitate the movement of the medical history on a peer-to-peer basis. Any data within the medical records that might need to be encrypted to maintain confidentiality could use the same data encryption standards (DES) as used for financial transactions. All confidential data would be treated in a safe and secure manner in the same way that payments transactional data is treated.
The Parallel In summary, I don’t believe that the methodology used to move money is really that
different from that of moving medical records – and other defined data. The real work would be in identifying transaction standards, soliciting participants, and identifying numbering schemes to be used for identification purposes when transferring the data. While my focus has been to draw an analogy between a payments processing scheme and a health care processing scheme, it is my opinion that if you were to apply the same type of thinking to other industry technologies you would be able to draw a similar parallel. Therefore, the answer to the question identified in the subject line, is yes; the technology infrastructure used in the payments industry could be leveraged by other industries. Jim Hackett is a senior executive focused on information technology with an extensive background in strategy development, systems development and deployment, service improvement, cost reduction and client relations. Jim is a results driven technology innovator who has led the development and deployment of a number of payments industry firsts. During his 45 year career, Jim has held a number of senior level roles within the financial services industry including Director, Systems at Credit Union Central Alberta; Chief Information Office at CU Electronic Transaction Services (CUETS); and Chief Information Office and Chief Operating Office at Credit Union Central of Canada, representing more than 28 years within the credit union system. More recently, Jim has spent the last 5 years as the Vice President, Business Development at Everlink. Jim was a director on both the Mondex Board of Directors and Interac Association Board of Directors from 1998-2001 and was Chair of the Interac Board of Directors from 2001-2005. He holds a Bachelor of Science degree and has certifications both as an Information Systems Professional (ISP) and as a Certified Systems Professional (CSP).
Beyond Gifting: Harnessing the Power of Digital Gift Cards
By Ben Kaplan
hile plastic gift cards have served as a tried and true gifting option since their debut in the 1990s, the emergence of digital gift cards in 2008 addressed many of the shortcomings of plastics. With this digital form factor, consumers gained an easy way to purchase, personalize, and send and redeem gift cards across channels while retailers benefitted from the opportunity to further influence consumer spending through personalized gifting experiences and gift cardbased marketing campaigns. However, the growth of mobile platforms and the evolving consumer shopping patterns in recent years have changed the playing field. In today’s increasingly omnichannel retail environment, the lines across channels have blurred and when channels blur, digital thrives and plastic fails. When a consumer is going in and out of channels, the flexible nature of a digital stored value product is vastly superior to “where’s my plastic gift card?”
This results in a real opportunity for retailers and restaurants that take this asset and apply it in new and interesting ways – and already, savvy retailers and brands are realizing the increasing power of digital gift cards to boost marketing efforts – and they are reaping the benefits.
Digital gift cards as branded currencies Digital and mobile gift cards are presenting an entirely new opportunity for retailers and brands to enhance their marketing and promotions efforts and inspire purchases in new and creative ways. Since consumers perceive gift cards to have a real ‘cash’ value, leading retailers and restaurants are beginning to leverage digital gift cards as a value-add to purchase, a reward for loyalty, or an incentive to come back again. For example, a retailer may offer a $20 eGift card on a $100 transaction. This offer of currency to return to the brand has incentivized an additional purchase (versus a $20 discount that does nothing to encourage a future transaction). The digital gift card promotion is a strategic asset that allows brands to interact with customers in a promotional way without it feeling like a promotion, while the consumer feels good about the reward for purchasing with
a particular brand. Campaigns and rewards like this can help build loyalty where price reduction may not. For instance, consider The Cheesecake Factory’s annual ‘Slice of Joy’ promotion. For every $25 in gift cards purchased during the promotional time period, consumers received one complimentary slice of cheesecake, delivered in the form of a digital gift card for the amount of one slice (or eSlice). Customers feel rewarded for their gift card purchase and are incentivized to dine and enjoy free dessert. Another example is Sephora. The beauty brand offers a special ‘Beauty Studio Services’ digital gift card product priced at $50, which comes with the added value of a 45-minute in-store customer makeover (in addition to the $50 in product). By strategically packaging the gift card with an in-store service, Sephora is driving store visits and lift through personalized product recommendations. The digital form factor also means that gift cards are always with consumers, since they carry their mobile phones with them everywhere – and this is enabling retailers, if they haven’t already, to realize digital gifting’s true potential. For instance, take Starbucks. Last year, the coffee giant introduced its Tweet-aNovember/December 2014
coffee program, which allows customers in the U.S. and Canada to sync their Starbucks and Twitter accounts to enable spontaneous digital gifting. By tweeting to @tweetacoffee and including the handle of the gift recipient, consumers are able to send and redeem $5 Starbucks Card eGifts online or in-store. Through this initiative, Starbucks has made it very easy to give and receive a piece of branded currency through a social network for the evermobile consumer. What began as an industry centering on a simple piece of plastic has transformed into a branded digital currency that helps merchants connect with shoppers and influence purchasing behavior by enabling personalized incentives, rewards, and offers. Digital gifting is rapidly disrupting the $130 billon gift card market while also providing an entirely new opportunity for generating revenue. With almost limitless options, it is up to you to determine how creative you want to be with this strategic marketing asset. Ben, president and CEO, brings twenty years of experience to CashStar in senior operations, marketing, and product roles at software, e-commerce, loyalty marketing and payments companies. Most recently, he was chief operating officer at Cartera Commerce, a leading provider of card-linked marketing solutions for merchants, banks, and loyalty programs.
December 2-3, 2014 | Toronto, ON
Register Today Learn from our dynamic faculty at this year’s Canadian Financial Marketing Forum. Lori Bieda
Vice President, Client Insights, Analytics & Decision Intelligence TD
Head of Marketing and Communication National Bank of Canada
Head of Digital Strategy and Mobile Payments President’s Choice Financial
year’s key topics include User Experience, Mobile Strategies, Online Strategies, Analytics and much more...
Head of Mobile Innovation Visa Canada
National Director, Product Marketing Western Union Canada
Vice President, Digital Customer Experience TD
Use Promo Code PB993 & Save 15% (over $300)
www.InsightInfo.com/CFM Promo Code PB993 *DISCLAIMER* Promo code does not apply to existing registrants. This promotion cannot be combined with any other offers. Promotion expires on November 28, 2014.
Where’s the Money in Payments? The stages of growth from emerging to mass market By Catherine Johnston
merging markets have well known stages and are usually kicked off by technology advances. The enthusiasm of the market at that stage often depends on whether the last investment made drove revenue or not. For example, we have just invested heavily in raising the security bar with EMV, a necessary step and one that will impact profit once the U.S. converts, but certainly not one that drives income. As a result, we all want to see m-commerce take us into that land of revenue. Let’s look at the stages of an emerging market.
Stage 1 – Look at what we could do. New technology enables new consumer uses. Over the past 60 years that has included credit cards, debit cards, ATMs, computers, the internet, mobile phones, compact discs, smart cards, USB keys, tablets, and countless other innovations, including many more that didn’t find market acceptance. In this stage you’ll be pitched by many companies that have a vision of how their innovation will be enthusiastically accepted by the 12
public, driving profits for you. Some of them will be right, although their time to market projection is often optimistic. As a term, technology also covers form factors – cards, mobile phones, tablets, wearables, glasses, and who knows what as we progress. It covers interfaces; contact and contactless. It involves the ability to shop and pay in store or remotely. It enables loyalty, marketing, payment, and other functions. This is a heady and dangerous stage because it is driven by optimism, not a solid ROI plan.
stick growth? Pundits continue to forecast that growth is right around the corner, but now new technology emerges and enables even newer customer experiences.
Stage 2 – Look at how much money we could make!
Pundits in the market predict that everything other than the newest emerging technology is passé and investments in everything else should stop! At any given time we could have four or more new products and/or services in play at this stage. So, you can see there is a lot of room for making or losing money in emerging markets. This is a stage of uncertainty as issuers and merchants try to decide which future to invest in and how to hedge their bets.
Someone predicts that the market will be worth billions within a few years. Remember dotcom? What about the e-commerce projections of the past 10 or more years?
Stage 3 – Let’s take a closer look. Organizations invest to test the market or establish their reputation. The winners at this stage are often the SMEs with innovative products or services.
Stage 4 – Hmmm? Where is that rapid hockey-
Stage 5 – How many balls are in the air? Organizations now have three areas of investment – their legacy technology, the ‘old’ emerging technology and the ‘new’ emerging technology. At this point only the legacy technology is making money for the organization.
Stage 6 – Back to the pundits.
Stage 7 – Can we? Issuers start to identify whether they can: November/December 2014
• make money from new products or services enabled by a new technology and they start planning their pricing strategy • influence customer behaviour for their own benefit • If they can’t make money they may launch anyway: • for first-to-market bragging rights • because a major competitor offers a similar product • because the Stage 6 technology is part of a larger vision or plan or • because someone has convinced senior management that this was a great technology, investments were made, and no-one wants to admit that it is not a winner.
Stage 8 – The heavy lifting. If you are an SME, this is the stage where you will likely drive most of your revenue as your clients pay you to develop their new product or service. Of course to get to this stage, you’ve had to invest in sales, marketing, human resources, proof of concept development, and all the other things that companies need to keep in business. This means that you need to be very comfortable
Feature in your knowledge of how to price your services.
Stage 9 – Here come the early adopters. Everyone is thrilled to see customers signing up for the cool new technology. These are the early adopters that are driven to be the first to try everything that is new. During this stage you’ll encounter some issues and resolve them before mass adoption takes place.
Stage 10 – The mass market. Many months and possibly years have passed and finally a significant number of consumers are ready, willing, and able to use the ‘new’ technology because it’s more than just cool – it offers convenience and the price point is appealing. Issuers and merchants will either reap the benefits they want or they will limit/ discontinue or refine the technology.
these stages is the time between thinking that a consumer will use and pay for something until it actually reaches the mass adoption stage. ATMs and credit cards have consistently made money since their invention. Both offer convenience that consumers
are willing to pay for. Paying by phone has been technically feasible for a long time but is just now emerging into the market.
evaluate innovation in terms of how soon and how much profit it can support will drive your career.
The bottom line
Catherine Johnston is President and CEO of ACT Canada: stakeholders driving the evolution of payment and digital identity. ca.linkedin.com/in/ catherinejohnstonact/www.actcda.com
Without hope and enthusiasm there would be very little innovation. Your ability to
Each Click is a Residual Payment.
And then… We return to stage one with a new technology. This pattern repeats throughout our careers.
Authorize.Net has paid out more residual payments than any other payment gateway. Contact us to learn why.
Best practices Get to Stage 7 as quickly and economically as possible in terms of understanding the value to your organization. Your employer and your career will thank you.
Call 1.866.437.0491 or visit www.authorize.net
Where is the money? Whether you are an SME, issuer, acquirer, merchant, or other payment stakeholder, it isn’t hard to see patterns of success and failure. The other factor to consider as you work through
©2013, CyberSource. All Rights Reserved.
A Frosty Winter, Indeed Credit card scams increase during the holidays By Nancy Harris
is the season for mistletoe, stockings, polar bear commercials, wish lists, hot chocolate, and credit card fraudsters. Yes, credit card fraudsters. Canadian holiday spending has been rising. Last year, a survey by EY predicted Canadian holiday retail sales were expected to grow 3.5 per cent. Furthermore, the ‘2014 Accenture Holiday Shopping Survey’ found that consumers will spend an average of $683 on gifts this season, and 42 per cent of shoppers will increase their spending by at least $250. Many of those gifts will be purchased using credit cards. Thirty-four per cent of shoppers plan to spend 50 per cent or more of their total holiday gift dollars online, up from 26 per cent in 2013, according to the Accenture survey. The overall increase in credit card transactions during this time of year means hackers and scammers work overtime to cash in on all the action. Here are a few tips to help merchants ensure that, even if scammers leave their mark on the holiday season, it won’t be at the expense of their business or their customers:
1. The Grinch couldn’t have stolen anything, had the ‘Who’s’ been PCIcompliant It is imperative (and required) that any business accepting credit or debit cards be Payment Card Industry (PCI)-compliant. 14
Perhaps the easiest way to lose customers is to allow their payment information to be pilfered when shopping at your store or your online website. Maintaining PCI-compliance not only helps to plug security holes, but also serves to significantly dampen the effects of a breach.
equipment. While these devices can be concealed to look like a piece of the machine, an attentive employee should be able to easily identify extraneous equipment.
2. Encrypt your payment information, not your holiday greeting cards.
Unfortunately, even with the best payment security, a breach can still happen. Therefore, be meticulous in the credit card sales records you maintain. If an issue does arise, it is essential you have a means of retracing your steps in an effort to determine where the breach occurred as well as to prevent any further theft. Not only will the ability to work backwards to determine the source of the breach allow the organization to plug any security holes and abate the possibility of additional customer information becoming exposed, but it also often provides a trail straight back to the scammer. Nothing says “Happy Holidays” quite like “You’re under arrest for attempted credit card theft.”
Whether your organization is PCI-compliant or not, fully encrypting all points of payment is paramount to keeping vital company and customer information from being hacked. The technical term for this is end-to-end encryption, and it essentially boils down to scrambling the data sent from one device to another. A company’s mobile payment devices, credit card terminals, software applications, and online payment portals need built-in encryption functionality when transmitting customer information.
3. Take a look around and observe all the holidays have to offer Scammers will often attempt to tamper with an organization’s credit card terminals in an effort to steal credit card information, often with a small device attached to the terminal itself. Alert your employees to the possibility of this occurring and remind them to regularly conduct a visual assessment of all payment processing November/December 2014
4. The guy in the red suit isn’t the only one checking a list.
Hopefully, these points will help to ensure you and yours are curled up by the fire with presents from your loved ones this holiday season, while your would-be hackers are lamenting their only gift, an orange jumpsuit. Nancy Harris is Senior Vice-President and General Manager, Canada, for Sage North America.
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
Tokenization: Hackers’ Kryptonite Comprehensive encryption and tokenization can ensure protection from sensitive data exposure
By Nathalie Reinelt
here are two types of companies: those that know they have been hacked and those that don’t know they have been hacked. In the last 24 months, one organization after another has come forward with news that its perimeters have been penetrated by cybercriminals. The headlines are so frequent that no one seems all that surprised anymore, and the reactions from participants in the security community span from relief that it was not their own organization to concern that it very well could have been. Even though readers are becoming increasingly desensitized to the headlines, the reality of these breaches is not falling on deaf ears. Security professionals, vendors, and
global standards committees, e.g., EMVCo and the Payment Card Industry (PCI) Security Standard Council, are actively working to address this very broad issue while continuing to innovate technologies and standards that will protect consumer financial data—namely, encryption and tokenization. What is also becoming absolutely clear is that cybercriminals are growing more sophisticated in their attacks and will exploit any possible vulnerability within the payment life cycle to get their hands on payment card data. Relentless, entrepreneurial hackers are not simply going to grow a conscience and change careers. As long as there is a financial payoff at the end of that cybertunnel, these criminals
About the only thing that is certain is that the attacks will continue and eventually another one will be successful. 18
will continue to advance their knowledge and sophistication to win the cyberwar. About the only thing that is certain is that the attacks will continue and eventually another one will be successful. This is why the security industry is so focused on removing the incentive. Every organization should assume that they will be breached at one time or another and to varying degrees. If hackers are unable to obtain any useful data during these breaches, however, the damage to the affected organizations, their consumers, and the payments industry as a whole is minimized. Data security is not a new concept. IT and security professionals have always focused on protecting their infrastructure and data from cyberattacks. What is rarely reported is the frequency of attacks that organizations actually thwart on a daily basis, because those success stories do not make great headlines. Unfortunately, it does not matter how many wins an organization can claim in the cyberwar; it only takes one high-profile loss to call an organization’s entire security
Risk Management practice into question, which has proven to be incredibly damaging to the brands of recently breached merchants. How encryption and tokenization are deployed is equally important in data protection. Although merchants may have payment data encrypted and tokenized in various applications and databases within their ecosystems, the only way to truly ensure that they are fully protected from sensitive data exposure is to deploy encryption and tokenization at every single point of potential compromise. It is clearly no longer enough to tokenize the data merely for storage and analytics. The recent breaches have made clear that all data needs to be either encrypted or tokenized at the point of capture (e.g., upon card swipe or online entry of the credit card number) and beyond. Perhaps the only positive outcome of these breaches is that other organizations are learning about vulnerable points of compromise that they may not have even realized were unprotected in their own ecosystem, PCI audits notwithstanding. As with any technology, there are multiple approaches to tokenization. While tokenization itself is not an emerging technology, the various methodologies used to deploy the technology continue to evolve. Although merchant and acquirer tokenization solutions have been in existence for nearly a decade, issuers are now also able to tokenize payment data before a transaction even occurs, thereby protecting themselves and their
cardholders in the event of a merchant breach.
So, what is the difference between merchant and acquirer tokenization versus issuer tokenization? Merchant and acquirer tokenization services obfuscate the payment card data as it flows through the merchant point-of-sale system, whereas issuer tokenization replaces payment card data with a token as soon as it is captured by a specific platform. Take Apple Pay as an example, which is the first deployment of issuer tokenization since EMVCo introduced the approach back in March 2014. This new tokenization framework allows payment networks (e.g., Visa, MasterCard, and American Express) to provision tokens on behalf of the participating issuers (e.g., American Express, Bank of America, Capital One, Chase, Citibank, and Wells Fargo) to be securely stored in the secure element of the iPhone6. There are two primary reasons why issuer tokenization is different from the merchant and acquirer tokenization approaches: • The tokens are provisioned at the point of capture when a payment card is added to Apple Pay, as opposed to merchant and acquirer tokenization solutions that tokenize the payment card data after the transaction has already taken place. • The tokens will be provisioned and managed by the payment networks on behalf of the issuers, ensuring that merchants never see payment card data November/December 2014
in the clear, which should be very appealing to merchants in the wake of all the recent point-of-sale data breaches. Although issuer tokenization will address fundamental security vulnerabilities at the earliest possible point in the payment life cycle (e.g., issuance), it is still considered complementary to merchant and acquirer tokenization solutions, since it will be a while before issuer tokenization reaches ubiquity, and in the meantime merchants still need to protect their data within channels where issuer tokenization is not deployed. When it comes to data security, there is no silver
bullet. There is such a thing as death by a thousand cuts, however, and both merchants and issuers can do much to chip away at cybercriminals’ fraud schemes to eventually send them packing – or, at a minimum, hacking elsewhere. For more information on tokenization, see Aite Group’s recent report ‘How Tokenization and Encryption Can Take the Wind Out of a Hacker’s Sails’, October 2014. Nathalie Reinelt is an analyst within Aite Group’s Retail Banking & Payments practice, focusing on the global payments ecosystem, including alternative payments, crossborder remittances, and emerging technologies complementary to payment processing and commerce.
Improveyour yourbusiness businesswith with Improve a small to medium loan that a merchant cashsize advance thatcan be for your needs such as: canused be used for needs • Expansion
• New location
• Manage seasonality
• New equipment
• Unexpected expenses
At SterlingCard, we understand the delays and difficulties encountered by businesses seeking traditional bank loans. Our funding program works by converting future credit and debit card sales into working capital that you can use for your business today.
SterlingCard Benefits • Simple application process • Funds can be received in as little as 48 hours from application approval • Up to $150,000 per location • Funds may be used for any business purpose
Apply online: sterlingcardps.com
Call: 888-729-0368 ext 239
Email: firstname.lastname@example.org Note: this is not a loan product, but a sale of future credit and debit card receivables.
The Future of Loyalty By Kevin O’Brien
oyalty programs date as far back to 1793, when a U.S. merchant began giving out copper tokens that could be exchanged for items in his store. The industry has evolved since and what started as a copper token is now in many cases a plastic loyalty card. The industry has seen its most transformational shift within the last decade. If the 1990s saw the dawn of the age of information, the 2000s brought the age of the digitally-savvy customer, characterized by empowered buyers demanding a new kind of service. This new age has certainly turned loyalty’s gradual evolution into a revolution. Unsurprisingly, people wonder what’s next. The physical, plastic loyalty card has played an important role for so long, many question whether we will soon see its end. In the near future, a digitally savvy customer may not intuitively think to carry a plastic card. But to get into a debate over the future of the loyalty card misses the point. Just like the copper token, it is a means to an end. It’s a loyalty tool. 20
And whether loyalty evolves to be delivered through mobile, plastic, online, or wearable technology, the fundamentals of its delivery, first introduced in 1793, won’t change. These fundamentals were established by relationships, which take us right back to the early days of retail. The local butcher shop knew its customers’ favourite cut of meat and so offered it at a discount. The local bakery knew when it was a customer’s birthday and gave them a free cake on the day to celebrate. Customers valued these relationships and kept going back. In an era of hypermarkets, price comparison websites, and discounters, many worry that these fundamentals are being lost. That is why loyalty, in whatever form, will continue to be so important. Ultimately it will be the pursuit of loyalty that will define success because there is now a new battleground. This is one centered on winning more repeat business than competitors by creating a more engaging, targeted, and rewarding shopping experience over the long term. This means retailers must resist the temptation of deep discounting or offering one-off freebies to attract short-term customers. Instead they must work at re-finding that ‘local store’ experience –
and creating those powerful relationships that keep customers coming back. In many ways, loyalty needs to act as the antidote to the short-termism of deep discounts and freebies, engaging customers in a longer term perspective. It has been proven many times that anyone can bribe customers to change their behaviours in the short term, but only truly customer-centric companies can create mutually rewarding relationships over the longer term. There’s no reason why this can’t be done. Through the customer data collected via loyalty programs, retailers hold such a depth of knowledge on their customers that they are in a stronger position than ever before when it comes to building relationships based on knowledge. The ability to turn this knowledge into a personalized experience relevant to the customers’ needs is what will differentiate them from competitors. It means consumers getting money off of their favourite item, being rewarded on special days, and being given special, personalized treatment. For those that don’t use the vast amounts of customer data available to them, the future is more likely to develop into a November/December 2014
dangerous cycle of discounts driving promiscuity and price elasticity. These sorts of sales promotions can, when used carefully, be an important part of the marketing mix, but few brands will survive for long without a strategy to also build deep relationships with customers and deliver longterm loyalty. In an environment where businesses are fighting tooth and nail to offer the lowest price, the all-important customer relationship which drives customers to continue coming back is at risk of being lost. Understanding data is the most important way in which loyalty will be able to carry its fundamental principles into the future. The ability to form real relationships and create loyalty through that will ultimately determine the winners from the losers. Kevin O’Brien is Senior Vice-President and Chief Business Development Officer at Aimia. Aimia delivers loyalty services, launches and manages coalition loyalty programs, creating value through loyalty analytics, and driving innovation in the emerging digital and mobile spaces. To read some
Optimizing the Benefits of a P-Card Program By Marc Dion, M.Sc.
hile Canada still lags in cheque elimination, the P-Card has been part of the electronic payment portfolio for some time. Although no one can deny its substantial growth over the past decade, the solution has not been fully embraced by corporations and governments. From basic P-Cards to Electronic Accounts Payable (EAP), these programs can benefit most mid- and large-size organizations. If you haven’t yet implemented a P-Card program or have done so with little success, there are some points you’ll want to discuss with your banker or card provider.
Streamlining processes Organizations began using commercial cards in the late ‘80s to pay for their business expenses where credit cards were accepted. The main objective was to use P-Cards instead of paper cheques when paying multiple suppliers for low-value items, thereby streamlining B2B payment processes. P-Cards are mostly used to purchase low-ticket
items (under $2,500) where the transaction volume is relatively high. P-Cards tend to be used for purchases such as office equipment, computers, and MROs, and for services like printing, mail delivery, and telecom. P-Card transactions have surpassed paper cheque transactions in the low-ticket item segment and are also making headway in the $2,500 to $10,000 purchase segment, taking shares away from paper cheque transactions. Part of this growth can be attributed to the increasing use of Electronic Accounts Payable (EAP) and non-plastic P-Card solutions, also referred to as ghost card accounts. The benefits of using a P-Card program include: • Less need for paper cheques • Lower administrative costs for purchase order processing • Better access to purchasing data • Possible financial rebates • Suppliers benefit from accepting card payments through: • Reduced costs by streamlining the entire invoicing process (invoice generation, handling, and mailing), payment processing, and collection activities • Improved cash flow through faster receipt of payments • Increased sales if considered November/December 2014
a preferred supplier • No more paper cheques to handle as funds are deposited electronically • Lower credit risk Organizations already operating a traditional P-Card program are aware of all the benefits of using this solution to pay for certain types of purchases. To increase the use and benefits of P-Cards, consider the following:
Program optimization Program optimization, through better use of all available purchasing data, should enable an organization to maximize its program by targeting specific products and services for P-Card payments and others for EAP payments, and by identifying and favouring suppliers that accept card payments.
Electronic Accounts Payable (EAP) Electronic Accounts Payable solutions featuring paperless electronic processing are a good complement to a P-Card program. An interesting model is based on a single-use account principle.
Strategic selection of the P-Card issuer Some P-Card issuers also deal in merchant acquiring activities. By being both issuer and acquirer, they can offer a
significantly more competitive processing fee to suppliers accepting card payments, much lower than the usual 2.5 per cent to three per cent. An organization and some of its suppliers using the same vendor to operate both the card program and merchant acquiring activities is like running the P-Card program on the equivalent of a private network, outside of the traditional Visa and MasterCard networks. This could allow the vendor to strategically price the transaction fees it charges suppliers, so that both the organizations using the P-Cards and the suppliers accepting the card payments would see benefits in maximizing usage.
The future looks bright Although the use of P-Cards has grown tremendously over the last 10 years, there are still plenty of opportunities to grab market shares from paper cheques and to expand into the larger-ticket purchase segment (over $10,000). However, vendor acceptance of card payments will always remain a key element in the successful growth of the P-Card business. Marc Dion, M.Sc. is Product Manager, Commercial Cards with Desjardins Group. www.desjardins.com/ purchasing
Delivering the Goods How a game changing delivery solution can help increase consumer e-commerce convenience and give retailers a competitive edge.
By Jennifer Lee
hey’re secure, brightly lit, and will soon be conveniently located in strategic locations in urban and suburban markets – a possible remedy for today’s value-rich, time-poor consumer. Earlier this fall, SmartCentres, Canada’s largest developer and operator of unenclosed shopping centres, announced its plans for Penguin Pick-Up, a network of secure drive-through pick-up locations for purchases made online.
How it works When shopping online, consumers can choose to have their online purchases delivered 22
to a specific Penguin Pick-Up location. Notified when their parcel arrives, they then go to collect it when it fits their schedule. With a backseat full of rambunctious kids, rain outside and no umbrella, or simply looking for the next level of convenience, customers don’t even have to get out of their car, their parcel is brought to them. It’s a groundbreaking development and it’s the first time this kind of solution has been introduced in Canada. It’s exciting to see a real estate company innovate distribution in the retail industry. Penguin PickUp is retailer-agnostic allowing current tenants and non-tenants November/December 2014
to sign on. SmartCentres plans to offer the pick-up service to pure play e-commerce retailers as well as brick and mortar retailers that offer e-commerce. This kind of service effectively builds a new bridge between retailers, brands, and manufacturers and their customers, bypassing traditional stops along the way to the customer. It can streamline processes and support businesses as they build their omnichannel capabilities and can enable them to penetrate new markets. The model also helps retailers reduce their shipping costs in the ‘last mile’ to the customer.
Vertical Market Why is this so game changing? It’s the first time that a real estate developer has entered the e-commerce playing field in this way. SmartCentres will test the concept starting with three pilot locations in the Greater Toronto Area of Ontario – two of them in SmartCentres parking lots – and will observe the operations and collect customer feedback and analytics. The service will begin with direct-to-car delivery and the opportunity to add selfservice lockers to expand to 24hour service will be explored. This type of solution responds to the demands of the emerging ‘consumerin-chief’ who is driving unprecedented changes in the retail landscape – a shopper who not only wants to shop anytime and anywhere but also wants a say in how their goods are delivered. The Penguin PickUp service will provide easy delivery and return options for increasingly busy consumers and help mitigate the high costs of home delivery for retailers that are associated with multiple delivery attempts and the risk of theft and damaged parcels that are dropped at the doorstep.
Turning threat into opportunity Deloitte consulted on the analytic research for the implementation of SmartCentres’ Penguin PickUp model in Canada. Online shopping is not going away and traditional retailers need to find ways to better meet the demands of the omnichannel shopper. Such ‘click-and-collect’ services have already taken
Consumer habits are fundamentally changing and the retail landscape will change in response. root in Europe and elsewhere. In France, a hypermarket chain has built 352 drive-through pick-up locations for sales made online. Over the 2013 holiday season, almost one in five U.S. customers clickedand-collected their purchases. In 2014, 45 per cent of online purchases were picked up at other locations in the UK. The experience of these retailers in other parts of the world prove there is a voracious consumer appetite for ease and convenience throughout the path to purchase. Canadian consumer businesses have started to take note. Canadian retailers are integrating e-commerce, mobile, and network systems to provide a seamless and intuitive omnichannel shopping experience. The big challenge for retailers will be in the ‘last mile’ – getting the goods to the consumers’ home – and handling any returns. In Canada, the ‘last mile’ accounts for about 75 per cent to 85 per cent of total cost of distribution. Retailers hesitate in offering free shipping and free returns because it is an enormous cost to the business. But not giving customers one of the things that’s most important to them is a big obstacle to the ability of e-commerce to really take flight in this country. This last mile solution option provides an enhanced omnichannel shopping experience. Retailers can leverage the service to gather even more insight into consumer habits, preferences, November/December 2014
and behaviours through data analytics from online delivery selection. Consumer habits are fundamentally changing and the retail landscape will change in response. With online purchases made in Canada expected to rise almost 70 per cent over the next few years, retailers must position themselves now to capitalize on all the opportunities it presents – or risk being left behind. Improving the last mile experience presents an opportunity for businesses to differentiate themselves
from the competition and be responsive to the demands of customers. It’s an exciting time in the Canadian retail marketplace. I expect as e-commerce continues to grow in Canada we will see the continued emergence of new players innovating solutions to win the consumer. Jennifer Lee is a partner and the national omnichannel and digital leader at Deloitte. She helps retailers build e-commerce and mobile strategies to drive revenue growth and operational efficiencies.
CANADIAN TREASURER invites you to a
FREE breakfast briefing in January Learn all about Better Drug Benefits For Less. Why You Won’t Believe It and Why You Should.
We know it’s hard to believe but it’s true. Come and learn how we have helped companies maximize the value of their existing drug benefit program without the need to change plans. EVENT DETAILS: January 27, 2015 • 7:30-10am The National Club 303 Bay St, Toronto M5H 2R1
Ms. Liz Galloway,
CFO SCI Logistics Plan Sponsor Case Study
BRING YOUR TEAM.
SIGN UP AS MANY AS 3 INDIVIDUALS AT NO CHARGE.
Register now to reserve your seat at www.canadiantreasurer.com For more information, call Chantal Goudreau (905) 201-6600 x224 or e-mail Chantal@canadiantreasurer.com
A Card for All Seasons:
Building a personalized approach key to customer engagement By Monique Duquette
he choice of debit and credit cards for Canadians is seemingly endless. Dozens of companies offer them, from retailers to banks to trust companies. Some are simple no frills, no fees cards. Others offer concierge services and VIP treatment â€“ with annual fees approaching $1000. There are cash-back cards, travel reward cards, merchandise reward cards, and low fee options.
The average Canadian adult has over two cards in their wallet and relatively easy access to acquire others if they choose. The question for issuers is why does a person choose one card over another? Certainly rewards, interest rates, fees, and the level of credit awarded all play an important role. Yet, in this day and age Canadians are also looking for a more personalized November/December 2014
experience; they want to do business with companies that engage with them on a personal level, not as a collective, and the stats back this up. An Ernst & Young survey reported that, even though more than twothirds of Canadians have been with the same bank for more than a decade, about half would switch banks to receive more personalized experiences.i The fact is that a card may
Pay Channel well stay in a customer’s wallet not because the rewards program is bad, or the interest rate too high, but because the issuer is not engaging with the customer as an individual. The customer feels no personal affinity to the product, or the issuer. In short, they don’t feel a connection to the brand. Many people in the financial industry have been moving towards a shift in strategy – from product-focused to customer-focused. This means a realignment of organizational strategy with the customer at its centre – affecting everything from how they serve customers, to the products and services created, to the types of pricing, risk, and fraud strategies they employ. In a SAS report, ‘Connecting the Dots with Customer Analytics’, Mark Gorman CEO and founder of The Gorman Group Insurance Consultancy spoke about business strategy versus customer relationships, saying: “Strategy is a military term; it’s all about overcoming the competition. It’s about overcoming what the others are doing, getting your share, being in the right place. When we talk about the customer, it’s about developing a relationship. In building that relationship and trust, we have to be careful that we aren’t bringing this mindset of strategy – of overcoming the competition – into the conversation. We have to ask, ‘Are we doing the right thing for the customer?’” As such, the biggest hurdle for many organizations will be shifting focus from gaining value from a customer, to one focused on creating value for
the customer. By creating value you create brand affinity and increase brand loyalty. But to do this you need to know the customer better, and to do that you need to make better use of customer data.
Target customers as individuals Some card issuers use a onesize-fits-all approach to their customer engagement and customer communications are still hinged on product rather than customer. Access to the right customer-level data (think credit bureau information, other product holdings, transactional data, demography, client preferences etc.), enhanced with customerlevel predictive analytics make it possible to balance product needs with customer-level requirements and, therefore, optimize the customer contact. There is room to balance both the product-level business requirements and organizational profitability thresholds with clientlevel needs. Doing this achieves client relevance and subsequently enhances your open rate, preventing customers from opening up the monthly billing statement over the garbage can and letting the litter of inserts tumble out.
Give customers something in return for all that data Canadians are well aware that companies collect personal data and they expect something in return. A SAS Canada survey found that three-quarters of Canadians indicated that when they give a company personal November/December 2014
information (such as their age, email address, income, or birth date), they expect the company to tailor offerings and deals in return.ii Predictive analytics helps identify opportunities to engage with customers in a manner that shows companies understand their needs. It doesn’t necessarily have to be a deal, coupon, promotion, or points. It could simply be an offering of a service that better fits their payment needs, fraud alerts, or tips for how to save money. If that customer’s goal is interest savings, than your message earns you the dividend of loyalty. The key is using your data and analytics to pinpoint the relevant message at the right time to ensure the message is on point.
Focus measurement on customers, not products or services Refocusing measurement is a tall order since it requires a wider degree of institutional change in the way banks look at success measurement. It is the consummate trade-off between the product versus customer P&L view. Many banks are shifting the way they view cross-product profitability and customer segmentation to accommodate a more client-centric way of doing business. Those measurement changes are happening at a client contact level, often in marketing teams who assess optimal marketing offers across products and manage that delicate trade-off, robbing from Peter to pay Paul (or robbing from insurance to pay lending, as it is most often).
Know thy customer The Greeks lived and died by the famous aphorism to ‘Know Thyself’. For today’s business leaders that needs to become ‘Know Thy Customer’. Knowing your customers, their behaviors, their personal preferences, and the details of how they like to engage your brand should be a top priority for anyone working mature industries with strong competitive forces – such as the Canadian cards business. While customers have become more price-conscious since the global recession, they’ve also shown more affinity for brands that engage them on their own terms, in a personal way. And while there will undoubtedly always be a segment of the population that uses payments cards specifically for rewards, and that will jump ship if another, better offer, comes along, it is clear that Canadians are becoming more discerning and are looking for the businesses they deal with to engage with them on a personal level. Data analytics technology is the key to helping card issuers get there. Monique Duquette is the National Practice Lead, Customer Intelligence at SAS Canada. In this role, Monique works with customer-focused marketing organizations to drive strategies that elevate their customer engagement to the next level allowing them to be more decisive, more relevant and more agile. i http://www.ey.com/Publication/vwLUAssets/ Canadian-Retail-Banking-Survey-2013/$FILE/ Canadian-Retail-Banking-Survey-2013.pdf ii http://www.sas.com/en_ca/news/pressreleases/2013/july/mobile-marketing-toincrease-sales.html
2014/2015 Industry Events
November November 2-5 Association of Financial Professionals AFP Annual Conference 2014 Washington, DC www.afponline.org November 2-6, 2014 Money20/20 Las Vegas, NV www.money2020.com November 4-6 Comexposium CARTES & Identification Exhibition 2014 Paris, FR www.cartes.com November 12-14 BAI BAI Retail Delivery Conference 2014 Chicago, IL www.BAI.org
December December 7-9 Members Meeting Smart Card Alliance Coral Gables, FL www.smartcardalliance.org
January 2015 January 11-14 National Retail Federation The Big Show 2015 New York, NY www.nrf.com January 14-15 2015 NAPCP Canadian Commercial Card and Payment Conference Toronto, ON www.napcp.org/2015Canada
February February 3-5 Smart Card Alliance 8th Annual Payments Summit Salt Lake City ,UT www.smartcardalliance.org February 17-19 ATMIA ATMIA Annual Conference Las Vegas, NV www.atmiaconferences.com
Februrary 18-20 WB Research eTail West Palm Springs, CA www.wbresearch.com February 19-20 InfoTech Canadian Financing Forum 2015 Vancouver, BC www.financingforum.com
May 12-13 Finovate Finovate Spring Conference San Jose, CA www.finovate.com
June June 2-5 Internet Retailer IRC&Exhibition 2015 Chicago, IL www.internetretailer.com
March 2-4 BAI BAI Payments Connect Conference Phoenix, AZ www.BAI.org
June 10-12 FEI Canada Annual Conference Winnipeg, MB www.feicanada.org
March 29-April 1 ICMA Annual Card Manufacturing & Personalization Expo Phoenix, AZ www.icma.com
June 16-17 ACT Canada Cardware 2015: Payment & Digital ID Insights Niagara Falls, ON www.actcda.com
March 31-April 2 Electronic Transactions Association 2015 ETA Annual Meeting & Expo San Francisco, CA www.electran.org
April April 13-16 NAPCP Commercial Card and Payment Conference San Antonio, TX www.napcp.org April 19-24 NACHA, The Electronic Payments Association, Payments 201 New Orleans, LA www.nacha.org
MAY May 5-7 Cartes North America 2015 Washington, DC www.cartes-america.com May 11-13 WB Research eTail Canada 2015 Toronto, ON www.wbresearch.com May 11-14 IFO Fusion 2015 Forum & Expo Orlando, FL www.financialops.org
June (TBA) Credit Scoring & Risk Strategy Association 22nd Annual Conference Niagara Falls, ON (TBD) www.csrsa.org June (TBA) 8th Annual Prepaid & Payments Retreat Toronto, ON www.paymentseXchange.ca June (TBA) Payments Awards 2015 Toronto, ON www.paymentseXchange.ca
August August 2-5 Retail Solutions Providers Association RetailNOW 2015 Orlando, FL www.gorspa.org
September September (TBD) IFO Canada 5th Annual Canadian Financial Operations Symposium Vancouver, BC (TBD) www.financialops.org/ canada2015 September (TBD) Women in Payments™ Symposium & Women in Payments™ Awards Toronto, ON www.womeninpayments.ca
October October 12-15 Sibos Annual Conference 2015 Singapore, MY www.sibos.com October 27-29 Smartcard Alliance NFC Solutions Summit 2015 Phoenix, AZ www.smartcardalliance.org October (TBD) Canadian Automatic Merchandising Association CAMA Expo 2015 Quebec City, QC (TBD) www.vending-cama.com
June (TBA) ATMIA Canada Annual Canadian Conference 2015 Niagara Falls, ON (TBD) www.atmiaconferences.com June (TBD) EMV User Meeting 2015 EMVCo Kuala Lumpur, ML (TBD) www.emvco.com June (TBD) NBPCA Annual Congress-The Power of Prepaid 2015 National Harbor, MD (TBD) www.nbpca.com
Visit us online
Chart courtesy of Payfirma
ACT Canada – A Busy Month of Ceremonies and Events
ctober was a very busy month as we hosted four events. On October 16th members met for our annual Cardware Connections networking event and annual general meeting, followed by a celebration of our 25th anniversary and a sold out awards ceremony. The 2014/2015 members of the board of ACT Canada are: • Catherine Johnston, President & CEO, ACT Canada • John Flett, President, CanCard Inc. • Christian Ali • Pawel Chrobok, Director of Business Development, EnStream LP • Paul Zatychec, Director, EWA-Canada Ltd. • Karrie MacDonald, Vice President, Secure Transactions, Gemalto • Tracey Black, President, GFH Group • Wendy Maisey, Customer Relationship Director, ICC Solutions Ltd • David Chaudhari, Managing Director, Ingenico Canada, Ltd. • Lorna Johnson, Senior VP Products, Services & Innovation, Interac Association/Acxsys Corporation • Doug Hatton, Vice President, MSC Payment Solutions • David Metcalfe, Director, Payments and Operations, Scotiabank • Nancy Krattli, Head of Merchant Sales & Solutions, 28
Visa Canada Corporation • Owen Gingras, Senior Director of Operations and Technology, Walmart Canada Corp.
Awards To celebrate our 25th anniversary we rebranded our awards. We are pleased to announce the winners of the inaugural ‘IVIE Awards’, celebrating innovation in payments and identity products using secure chip technologies. The IVIE Awards recognize the ingenuity of the winners and the value that implementations of emerging technologies bring to the market. The recipients of this year’s IVIE awards are: • 2014 IVIE Award Winner for Canadian Payments Benefiting Acquirers Dream Payments Corp for the Dream Payments Mobile POS • 2014 IVIE Award Winner for Canadian Payments Benefiting Consumers CIBC for the CIBC Tim Hortons Double Double Visa Card • 2014 IVIE Silver Award for Canadian Payments Benefiting Consumers RBC for RBC Wallet • 2014 IVIE Award Winner for Canadian Payments Benefiting Issuers Rogers Communications for the suretap wallet • 2014 IVIE Silver Award for Canadian Payments Benefiting Issuers
Giesecke & Devrient Systems Canada, Inc for Starburst Data Hub • TIE - 2014 IVIE Award Winner for Canadian Payments Benefiting Merchants Clearbridge Mobile Inc for the Tim Hortons Timmy Me Application • TIE - 2014 IVIE Award Winner for Canadian Payments Benefiting Merchants RBC for the RBC Wallet • 2014 IVIE Award Winner for Canadian Secure ID Benefiting Citizens or Consumers SecureKey Technologies, Inc. for briidg.net Connect 3.0 • 2014 IVIE Award Winner for Canadian Secure ID Benefiting Governments SecureKey Technologies, Inc. for briidg.net Connect 3.0 • 2014 IVIE Award Winner for International Payments Benefiting Consumers Gemalto for AllAboutMe for Facebook • 2014 IVIE Silver Award for International Payments Benefiting Consumers Advanced Card Systems Ltd for Abiria Card - Automatic Fare Collection System • 2014 IVIE Award Winner for International Payments Benefiting Issuers Gemalto for AllAboutMe for Facebook • 2014 IVIE Silver Award for International Payments Benefiting Issuers Gemalto for CardCompiler November/December 2014
• 2014 IVIE Award Winner for International Payments Benefiting Merchants VeriFone for VTP (Point to Point) Ficus Release • 2014 IVIE Silver Award for International Payments Benefiting Merchants Advanced Card Systems Ltd for e-PLUS TaptoPay
Moving forward Plans for next year’s Cardware conference are now underway as we prepare to call for speakers. The focus will be on the business of mobile commerce: Where is the money? Speaking of conferences, we have arranged member discounts for Mobile World Congress (Barcelona), Cartes America (Washington) and IDConnect (Washington) for 2015 Q1. Future discounts will be announced on our web site. Between now and the end of 2015 we will publish our latest paper from the Customer Authentication Strategic Leadership team, our ESD paper, the Secure ID report and the Impact Assessment report on EMV Contactless certification. As you can see, it will be a busy time and although it is early, this may be our last chance to wish you a very merry Christmas, happy holidays and a very happy and successful new year. For more information on ACT Canada, please visit www.actcda.com
Service Directory Card Manufactures
Print & Mailing CMS PRINTING SERVICE. For all your printing needs.
Secure Solutions for Payment & Identification
Call 416-755-7761 ext. 227 email@example.com
Since 1852, G&D has been an integral partner that is solutions orientated and trusted by banks, governments and carriers. Our solutions are founded on trust, integrity and the creation of value through Confidence.
NEW LOWER PRICING!!!
• Contact, Contactless and Dual-Interface Smart Cards • Mobile Payment • On-line Secure Authentication • Enhanced Card Identification
Toll Free: 1-800-387-9794 EMV & NFC Consulting
secure payment solutions
Integrated Payments Solutions
Integrated Payment Solutions and Services
Apriva is North America’s Leading Wireless Gateway. SECURE DEVICES | RELIABLE SERVICE | EXCEPTIONAL SUPPORT
One of the most advanced and reliable payment delivery solutions in financial services technology.
Toll Free: 1.866.388.0076
To learn more call Paul DeRosse, Senior Vice President, Sales at 905.530.2351 or visit www.apriva.com.
Talk to Your Target Market.
Guarantee your liquidity
Advertise today contact Mark Henry, firstname.lastname@example.org
see youR company name here Contact Mark Henry email@example.com 1800-668-1838 x 223
More than 90 per cent of payroll professionals believe same-day ACH can help support needs Results emphasize end-user support for same-day ACH
ACHA – The Electronic Payments Association® – continues is work to move the ACH network from next-day settlement to same-day payment processing and results from an American Payroll Association survey show broad support for the benefits of same-day ACH to their roles and organizations. The survey, which targeted 1,500 payroll professionals nationwide, indicates that more than 90 per cent of the respondents feel that sameday ACH would help them in meeting their payroll needs. Specifically, respondents indicated that enhancing existing ACH next-day capabilities with the option of same-day ACH would better support direct deposit functions (for hourly workers, temporary staff, and termination pay needs), contingency plans for missed deadlines, payroll error corrections, tax withholdings remittances, and remittances of garnishments. Additionally, 97 per cent of respondents identified same-day ACH as a service that would add value to their organizations, and more than 86 per cent confirmed that same-day ACH capabilities would benefit their
organizations beyond payroll functions. “The results of the survey show that having the option of same-day ACH can meet a number of unmet corporate payment needs, particularly as they relate to payroll,” says Janet O. Estep, president and CEO of NACHA. “The positive support for this capability confirms that our efforts will ultimately bring additional value to more employees who will benefit from the efficiency of delivering direct deposit of payroll via ACH.” “APA members overwhelmingly support the concept of same-day ACH settlements, which will allow businesses greater flexibility when making payments and correcting errors and to maintain compliance without reverting to paper checks,” says Dan Maddux, executive director of the American Payroll Association. By year end, NACHA intends to move forward with formal rulemaking on the phased implementation approach for same-day ACH by issuing a Request for Comment to the industry. The same-day ACH phased-implementation plan would add new ACH Network functionality over
time that will provide greater value to end users. In addition to the current early morning settlement, this functionality would include two new same-day ACH clearing and settlement windows at mid-day and the end of the business day, and be available for virtually any ACH transaction. Additionally, the phased implementation approach would provide faster funds availability, improving the efficiency of hourly payroll disbursements and last-day
tax or bill payments. All of this would provide a solid foundation on which to build other innovative services. “By moving forward with same-day ACH, we can act now to provide important choices for consumers and businesses who want to efficiently move money more rapidly directly between bank accounts,” says Estep. “It can serve as an important step in meeting the needs of today and providing a building block for the innovations of tomorrow.”
About NACHA — The Electronic Payments Association For 40 years, NACHA – The Electronic Payments Association has served as trustee of the ACH Network, managing the development, administration and rules for the payment network that universally connects all 12,000 financial institutions in the U.S. The network, which moves money and information directly from one bank account to another, supports more than 90 per cent of the total value of all electronic payments in the U.S. Through its collaborative, self-governing model, education, and inclusive engagement of ACH network participants, NACHA facilitates the expansion and diversification of electronic payments, supporting Direct Deposit and Direct Payment via ACH transactions, including ACH credit and debit payments, recurring and one-time payments; government, consumer and business transactions; international payments, and payments plus payment-related information. Through NACHA’s expertise and leadership, the ACH Network is now one of the largest, safest, and most reliable systems in the world, creating value and enabling innovation for all participants.
The payment brand Canadians trust across all customer touchpoints - in-store, online, and mobile.