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Into the wild

The body bank

One man’s attempt to survive without cash | Page 9

Ignore the CSI effect, says biometric expert Isabelle Moeller | Page 5

Future of

payments

The power behind decisions

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JUNE 2013

Crash for cash 16-page report on the future of payments

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an independent report from lyonsdown, distributed with the sunday telegraph

Business Technology June 2013

2 | Future of payments

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Opening shots Craig Tillotson IMAGINE if it took an email three days to reach its destination. It wouldn’t make sense. In this age of the internet, we rightly expect communication to be instant and it’s only natural that those expectations have extended into other areas of life – and payments are no exception. That’s where the Faster Payments Scheme comes in. Even five years on from launch, the UK is one of only three countries in the world – along with Switzerland and South Africa – with a system that is able to make and receive immediate payments 24 hours a day, 365 days a year. Thanks to our world-leading infrastructure, domestic internet and phone banking payments normally reach their destination in less than a minute, no matter when they are sent. Even in cases where they take longer – for example, to allow for fraud checks to take place – payments are guaranteed to reach their destination within two business hours. The convenience of instant, anytime banking has quickly been embraced by the British public. A survey commissioned to mark the fifth anniversary of Faster Payments revealed that almost two in five internet and phone banking users make payments after 5pm during the week, while one in five generally move money at the weekend. The world-leading 24/7 operation of Faster Payments has even led to a new type of nocturnal banking – one in nine people say they often make payments after midnight. Interestingly, the “Generation Y” age group who have grown up with the internet as part of everyday life are the most likely to understand

Why millions of you support our move to mobile payments the improvements that have been made to the speed of online payments. Six out of ten 25-34year-olds know how long a Faster Payment takes, compared with just over two in ten (22 per cent) over 55s. Encouragingly, approval levels among people who use the service are outstanding – 95 per cent of those surveyed say they are satisfied with the speed of payments. Faster Payments has already driven large scale behaviour change, with 2.5bn payments worth in excess of £1.4tn processed – the equivalent of almost £23,000 for every man, woman and child in the country. In doing so, we’ve managed to satisfy demand for “any time, any account” banking. The advent of the mobile payments scheme will cross another frontier by making it simple to make a payment anywhere. The Payments Council’s mobile service will launch in spring 2014, with Faster Payments – along with the LINK ATM network – providing the payments infrastructure. The new service means that if you are in my phone book, or I know

Craig Tillotson is managing director of Faster Payments Scheme Ltd

your number, I can pay straight from my account to yours, any place or any time, without the need for a sort code or account number. Eight fi nancial institutions – representing 90 per cent of UK current accou nt s – have committed to offering the new service. Faster Payments has come a long way in the five years since May 2008, when the first payment was sent. E-mails and the internet may have been around for a good while longer, but it seems that the future for all three is pointing in one direction – mobile.

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June 2013

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Future of payments | 3

Cash is king, but digital will be heir to payments throne By Dave Baxter

FROM the heavy coins in your pocket to crisp notes from the cash machine, physical cash has a reassuring presence. But at the same time it is under pressure from digital rivals. In 2016 new British bank notes will be introduced bearing the iconic image of wartime leader Winston Churchill. But by this time, mobile payments worldwide will be a market worth a total of $617bn with 448 million users, according to research company Gartner. Mobile payments are just one example. As technology becomes more advanced, consumers are being offered a growing set of alternatives to cash or chip and PIN. The options are varied, from contactless card payments using Near Field Communication (NFC) technology to cloud-based systems and even virtual currencies.

Cope with change This means retailers, banks and phone companies can do more to make consumers happy and get them spending. But none of these systems – many of which are in their early stages – is perfect. And the payments industry still has a lot to do to cope with this change.

Michael Rolph, right, director of financial services company Anthemis Group, argues that this is leading to a much more democratic payments industry, where big institutions no longer hold all the cards. “With things such as financial services, this means the democratisation of knowledge and management that simply could not exist before,” he says. “With payments you can choose to use something like a digital wallet, which separates you from a traditional bank structure. As part of this, people are looking for new ways to think about their fi nancial relationships. “Banks are here to stay, but there will be a new type of bank, and it’s interesting to ask what that would look like.” This means the future of payments could involve a mish mash of old and new systems. As Rolph says: “Things like Mastercard and Discover cards – these infrastructures are the motorways. Digital wallets and other smaller players are creating A-roads that bypass these motorways. “Do we need to integrate this with the existing model?” At the same time, the industry needs to look at what it can do to hone new technologies and win the trust of consumers that are wary about issues

around privacy and security. Neil Brennan, a senior analyst at Gx, an exchange for emerging payments, says: “Retailers are aware of the benefits of new payments technology. “The main issue is in terms of upgrading their current systems. That will come when their current five-year contracts expire. “But it’s a security issue for the consumer. You need to build trust in the application before it gets used, whether that’s NFC or a digital wallet.”

Introducing new methods This could be a series of small steps. Brennan suggests that minor initiatives such as gift card schemes are one way of slowly introducing consumers to new payment methods. “Introducing the consumer to new payment applications will be a continuous thing,” he says. “With new systems such as mobile payments, there’s a lot of use by family and friends of users, and people who have observed others using them. So that and word of mouth are very important.” Beefing up security, ensuring consumer privacy is protected and upgrading to new technology may not be cheap. But as those in the payments industry will know, neither is cash.

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Rolph says: “One of the big considerations is about cost. Cash is something people perceive to be a free value of money, but there are huge costs, from the ATMs to the cost of banking cash itself. “From the consumer perspective cash that’s all free, but it’s not the case for providers.” Coins and notes may be becoming less practical. But as opportunities open up for the alternatives, there is still a long way to go.


an independent report from lyonsdown, distributed with the sunday telegraph

Business Technology June 2013

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4 | Future of payments

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New payments: fighting financial crime Measures need to be put in place to limit risk while embracing innovation INDUSTRY VIEW

T

he flow of money permeates all aspects of financial services and business, from local to global. However, we rarely stop to consider how funds are moved from one person, or business, to another. The way money flows is changing, driven by customer needs and enabled by advancing technology. This brings opportunities as it gives customers more choice and encourages competition. But it also creates challenges: how can transactions be monitored in the face of a borderless, anonymous internet and the fact that financial crime, money laundering and tax evasion are all global activities? There is a need to properly oversee the transactions taking place without smothering technical and business innovation or compromising privacy. Traditionally, payments are processed through financial institutions via a limited number of clearing houses. The participants are covered by regulation and the methods of transferring value – both domestically and cross-border – are clearly understood. This has remained relatively unchanged for years. Anti-money laundering (AML) and sanctionschecking measures are well established and underpinned by ‘Know Your Customer’ rules and requirements around keeping records and screening payments for suspicious transactions. The intention is to guard against organised crime, terrorist funding, violation of sanctions and other criminal activity. Now, changing business models and technology innovations are enabling new entrants to join the payments market, and giving rise to alternative means of transferring value, such as new e-commerce and mobile methods of payment. In some cases payments may be bundled into larger transactions to be cleared which means they are not subjected to traditional monitoring. Some may bypass clearing altogether. This can be further complicated when providers don’t have a physical location in the jurisdiction of the payment, and the value transfer is not in a recognised currency.

Virtual currencies There are examples of new methods that may not be covered by existing measures. These include “virtual currencies”, which enable e-commerce transactions that do not flow through any financial institution and “in game” transactions which enable value transfer with the physical world, by use of “in game” currency to purchase physical products and real money. Outside the virtual world, examples include some pre-paid, multi-currency card products and electronic wallets, and mobile payments using a mobile account rather than a bank – sometimes using mobile minutes as currency. Similarly, the growth of social media and other online activity, from buying and selling goods to gaming and online gambling, create more opportunities for fraud through criminal acquisition of personal details, including financial information such as credit card data. This information can be more easily used in the

virtual world, where there are relatively low requirements to authenticate customers. The proceeds of these virtual transactions can be converted to real currency for a recipient who is unknown and could be anywhere – from sitting at the next desk in an internet café to using a mobile smartphone on another continent. Technical and business innovation is inspiring and should be encouraged. But new ways of making payments can provide options for anonymous movement of funds, in some cases across geographical boundaries, which are open to abuse. This means measures need to be put in place to limit, track or stop these transfers, as is done with traditional methods of money movement.

Regulatory measures Some guidance is being provided, as with that on virtual currencies issued by US government bureau, the Financial Crime Enforcement Network (FinCEN), which combats money laundering. Other regulatory bodies are also beginning to clarify their position in some areas. A European Central Bank paper, published in October 2012, on virtual currency schemes concludes: “Virtual currency schemes, in contrast to traditional payments systems, are not regulated. “The legal uncertainty surrounding these schemes might constitute a challenge for public authorities, as these schemes can be used by criminals, fraudsters and money launderers to perform their illegal activities.” So, it is clear that this is a recognised issue. But as payment methods evolve and in some cases are facilitated by non-financial institutions, a consistent, agreed approach has yet to be defined for applying AML and sanctions rules to new methods of making payment or, more accurately, transferring value. The risk is that the application of controls to limit criminal behaviour will continue to be outpaced by the changing market. This will become an increasingly complex, cross-industry landscape to manage, making ongoing compliance an ever-more time consuming challenge. Participants across industries, governments and regulatory bodies must address pressing questions around regulatory oversight of these new forms of payment. This includes agreeing on who should be responsible for implementing the necessary checks to prevent new methods being abused for criminal enterprise, and to what extent these controls should be applied across the different activities that support the flow of money. Similarly, there is a need to define how newentrants who are not financial institutions, such

as mobile phone, game and app providers ought to be covered by regulation intended to prevent financial crime, as is the case with more traditional and non-financial services businesses, such as lawyers, accountants, auctioneers and casinos. How should these providers show that they are not vehicles for illegal activity? Central to all of these questions is the need to bring about international co-operation to tackle what is a global issue. Crucially, all those involved with new payment methods, whether financial institutions or other bodies, need to look now at what they can do to address these challenges and contribute to the development of regulation. Clarity is needed to enable existing controls to adapt to new circumstances. But given the speed at which technology is moving, those facing these questions must act quickly, in a way that allows legitimate use to flourish without stifling the innovation and competition that is central to the future of payments. Hamish Thomas, director, Ernst & Young LLP Colin Pickard, director, Ernst & Young LLP 020 7951 1955 www.ey.com


an independent report from lyonsdown, distributed with the sunday telegraph

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By Dave Baxter THE payments industry is looking at fi ngerprint scanners and voice recognition technology as a way to tackle crime against consumers. Major retailers have already started to try out innovative new systems such as contactless payments and mobile commerce, but there are fears these could run into security problems. According to trade body the UK Cards Association, online banking fraud losses alone made up £21.6m from January to June 2012 – a 28 per cent increase on the same time for 2011. Just last year companies such as Yahoo and Adobe had passwords leaked, and as these existing defences come under criticism, a number of fi rms are looking at biometrics, which uses biological information as a form of identification, to beef up security. Barclays recently announced that its wealth and investment management arm would be using voice recognition technology to confirm the identity of customers over the phone

“Some people think if you use their fingerprint, someone can hold a gun to their head and tell you to give them access. They think that people could then cut off your finger and use it, but that’s not true” – Moeller

June 2013

Future of payments | 5

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How you can manage your money with the sound of your voice

without having to ask security questions. The FreeSpeech technology, put together by American firm Nuance, checks the caller’s voice during the course of an initial conversation – where the customer is asked if they want to enrol in the authentication system. Barclays says its aim is to speed up work at call centres by helping customers avoid answering a cumbersome list of personal questions. Other giants have also waded in. Last year Apple bought AuthenTec, an American fi rm working on fi ngerprint sensor technology, for a reported total of around $350m. The acquisition sparked rumours that he says. “Passwords can also be weak. the company wanted to beef up its You tend to reuse your password and security by getting hold of AuthenTec’s use a PIN that’s simple. biometrics technology. “The most popular password in Validity, another firm in America, the US is ‘password’. So if you are a is making progress with its “natural hacker or a bad guy, it makes life much ID” programme, which uses fingerprint easier [for you].” sensors, voice and facial recognition He says that, though the payments for use with smartphones and hopes industry is growing, it needs to focus to capitalise on the security gap in on security, especially on mobiles. the market. “I have been working in this area Sebastien Taveau, chief technology for the past few years, and I felt the officer at the firm, believes users are biggest issue was mobile identification. tired of passwords and are looking for “We started looking at how you an alternative. get to give access to the owner at the “You have 25 passwords and you account and not some bad guy. start seeing that it’s an underlying “We then started investigating problem to remember them all,” biometrics, and realised that it was

big ger t ha n payments.” Isabelle Moeller, chief executive of the Biometrics Institute, which has been around since the early 2000s and provides a forum for discussions on the field, says that use of the technology in the payments industry may be on its way. “In the past we have seen most of the discussions about biometrics in the gover nment area Moeller: lots of talk about biometrics in everyday life

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around large-scale identification projects, such as passports. “But over the past year, people in the industry have started talking about biometrics in everyday life. “There has been a lot of ta l k about mobi le phone use a nd v ia the internet with your computer.” She says biometrics cou ld be u sef u l for payments, not only in forms of retail but in more niche areas. “What’s going to happen next is

it’s going to happen at ATM machines. In Asia and in Eastern Europe there are ATMs where you have your hand scanned if you withdraw money. “There are other examples. In schools, children could use it to pay for their lunch.”

CSI effect But biometrics systems could have a long way to go. As Moeller says, there are a number of concerns around the technology. “There are a lot of fears people have about biometrics which aren’t realistic – they call it the CSI effect. “For example, some people think if you use their fingerprint, someone can hold a gun to their head and tell you to give them access. “And they think that people could then cut off your finger and use it, but that’s not true. “The same applies for worries about tools that can read your information. Even if someone could read something off a chip, for example, it’s encrypted so they wouldn’t be able to use that.” But other concerns – for example around the costs of installing new technology – may be delaying the widespread roll-out of biometrics.

Build a positive image Taveau of Validity argues that biometrics products need to build up a positive image before they can be more widely introduced. But he thinks Apple’s acquisition of AuthenTec may help here. He says: “If Apple is doing it then the technology is going to be cool and sexy and appealing to everyone. That’s a big shift, and it’s putting companies like ours under a big spotlight. “A lot of it is about perception. When you talk about biometrics, most people think we are going to stick something somewhere. “So we are focusing on the idea of ‘natural ID’ and the benefits it has.”


an independent report from lyonsdown, distributed with the sunday telegraph

Business Technology June 2013

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6 | Future of payments

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There’s nothing ‘alternative’ about alternative payments Removing the barriers consumers face when making online payments is good for business INDUSTRY VIEW

A

ccording to Worldpay’s 2012 report, 11 per cent of all e-commerce in the UK is from alternative payments. Globally, the alternative payments market is expected to grow 13 per cent by 2015. This level of growth suggests two things. First, that alternative payments are anything but “alternative”. They are providing a route to a valuable stream of consumers who simply want more choice about how they pay for goods and services. And second, alternative payments break down geographic barriers. The significant growth already seen in this sector – which includes brands such as PayPal, Google Checkout, Amazon payments, Pay Later and Ukash – also dispels another myth about alternative payments: they are not just for the unbanked and the lower socio-economic sectors of consumers. In fact, analysis has demonstrated that the majority of consumers choosing to use alternative payment channels have reasonable incomes and bank accounts. Ukash customers tell us they choose our alternative payment for a variety of reasons, including the fact that it is easy to use and safe and secure without needing to complete any forms or share bank details. In particular, Ukash appeals to the “digitally nervous” who don’t want to share personal information and to the “digitally excluded” – consumers who don’t have a credit card or bank account. But don’t mistake them for non-spenders! These are just consumers who may be away from their home country and don’t have access to other payment methods, or they may just want more control on their spending.

Tap into the youth market The digitally excluded also include the immensely lucrative under-18’s market. They have huge buying power, but are restricted in how they can spend because they don’t have access to credit or debit cards. Prepaid options such as vouchers or prepaid cards purchased or topped-up in store using cash open up a whole new range of buying options for these valuable new consumers. Prepaid options also ensure parents stay in control without having to hand over their own card details for their teenagers’ online purchases.

Ukash enables e-retailers to tap into a new market: consumers who want to use cash online The personal data security of payment methods that don’t require credit or bank details can also add a powerful sales proposition for brands that want to reach third-age groups. “Silver surfers” are certainly growing in numbers, as the older generations get more and more comfortable with using the internet. But there is still considerable reticence to giving personal financial details online and this immediately excludes a valuable sector of buyers for many brands.

Open for business The importance of alternative payment channels is probably illustrated most succinctly by PayPoint.net’s MD, Michael Norton. He says: “If you had a high street store, you wouldn’t put a sign up saying you don’t accept cash. The same principle should apply for online retailers to allow everyone to shop on their websites. From the merchant’s

About Ukash l Achieved more than 65 per cent growth year-on-year and processes more than £500m e-money transactions throughout the world each year. l Regulated as an Electronic Money Institution (ELMI) by the FCA. l Shortlisted for the Prepaid Innovator of 2013 in the PayExpo Awards. l Won the Queen’s Award for Enterprise for its contribution to international exports three years in succession.

perspective, it’s completely safe, since cash clears instantly. We estimate that the potential size of the market for online cash payment could be up to £2bn.” By making it easy to use cash online without any need to register, retailers can offer local alternative payment methods that will increase conversion rates, enabling them to drive online sales growth. Prepaid cards and online cash payment also gives brands the opportunity to develop in new countries or regions where alternative payments are already well used by consumers – removing a barrier to acceptance. And online cash taps into the profitable low-value purchase segment of the consumer marketplace. In a recent Populus survey commissioned by Ukash, 81 per cent of respondents said they opt for cash on purchases of £10 or less. With many items available on retail sites at this price point, particularly where shipping isn’t required, alternative payments such as Ukash are an excellent solution for incremental sales opportunities.

Overcoming barriers to sale Furthermore, this frictionless way to facilitate payment overcomes one of the key barriers for consumers online – registration and security checks. In another Populus survey commissioned by Ukash, it was found that 39 per cent of customers abandoned their shopping carts when asked for personal information. We think this reveals a real blindspot among e-commerce brands when it comes to reaching consumers who do not feel comfortable

putting their credit or bank card details online, or simply don’t have access to banking or credit facilities. Having the right security measures in place is, of course, vital. But these can become a barrier to sales, if not managed well. Our Populus research found that almost half of online shoppers felt frustrated by security questions asked when transacting on the internet, although they said they did understand why they were asked these questions. The alternative is to offer customers the choice to pay “by cash”. There has been a huge and continuing rise in the number of online cash consumers – those who use cash in a local convenience store to top-up a prepaid card or purchase a voucher that can be spent online. But there is still enormous scope for e-retailers to be tapping into this rapidly expanding market by accepting payment methods which are accessible to cash-only consumers. Online cash payments are shaking up the notion that traditional financial services such as bank accounts and credit cards are essential for buying online. And we firmly believe the number of online cash consumers will continue to snowball as more and more retailers wake up to demand. Chris Dadd, director of product innovation at Ukash, will be sitting on the Prepaid and Emerging Payments panel at PayExpo, discussing the role prepaid plays in the future of advanced payments. 020 7939 0395 www.ukashbusiness.com


an independent report from lyonsdown, distributed with the sunday telegraph

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Future of payments | 7

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Revolutionary service offers marketplace in the cloud A NEW service hopes to revolutionise how the payments industry interacts using the cloud. Alpha Payments Cloud, which launched in May, serves as an app store where users can buy payment tools such as mobile wallets and fraud prevention. Most of these will be

developed by users. The intention is to create a marketplace where organisations including banks and merchants can access tools without certain associated costs. Banks, for example, can find tools to offer their customers, while

merchants can pick and choose different tools without having to sign contracts to try them. Last year, Australian company eWAY launched a pay-asyou-go payment service in the UK using the cloud. Like Alpha Payments

Cloud, it offers people the chance to buy products without signing up to a lengthy contract. Instead, it has hourly billing and set transaction fees. As industries look for reliable and user-friendly payments systems, using the cloud may appeal because of the flexibility it offers.

I have a horrible history of being able to pay in UK VIEW By Keil Hubert

M-Pesa: The new face of banking in Africa

MY family are huge fans of the Horrible Histories books. We discovered them by accident on our first trip to London during a museum tour. Ever since then, we’ve made it a point to buy the new ones every time we stumble upon them. We also make it a point to only buy them in an actual bookstore. Sure, we could get them online. That would be cheaper – and faster, too, since we only buy them when we’re visiting the UK. But that’s the point: my family choose to go out of our way to spend our saved-up holiday money in local shops wherever we visit, to demonstrate our support for small business owners. The same goes for food, drink, clothing and everything else we can manage. It’s not easy to spend our money, though. Downright frustrating, even. Despite sharing a language, we can’t seem to make money flow efficiently from one country to the other.

Banking bother Every time we travel to the UK we have trouble. Bank machines will only allow us to withdraw £100 per visit. Roughly 40 per cent of merchants we visit won’t accept our credit cards because the USA can’t be bothered to implement chip & PIN. I have a credit card stolen every other time we visit – in 2011, the thief started buying things with my card between when we left the register at duty free and when we boarded the plane for home. We manage...but we shouldn’t have to. Similar problems plague businesses, too. When a client of mine in the UK wanted to send me £100 for a service rendered, we discovered that my American bank charges

By Dave Baxter

A SYSTEM of mobile payments that help some of the poorest people in the world is expanding to new countries. M-Pesa is a mobile-based money transfer system allowing users to deposit, withdraw or send money using just a phone. Through M-Pesa, people in countries such as Kenya, where the system began four years ago, are able to carry out “branchless” banking. This means they go to a local agent – often a retailer – where they can buy pre-paid e-money, which can then be used to send funds to friends or pay bills. This means that in areas where poverty is rife, things such as sending money back to your family is efficient and safe. It also means managing funds is easier in places where banking isn’t commonly available. Now Vodafone, which has a stake in Safaricom, the company behind M-Pesa in Kenya, has launched an equivalent system in eastern India. Like Kenya, India has a large number of mobile phone numbers, a market for personal remittances and a banking system which is inaccessible to a large swathe of the population. In Kenya, M-Pesa has been a huge success. As early as March 2010, a report by Ignacio Mas and Dan Radcliffe of the Bill and Melinda Gates Foundation noted that the scheme had nine million registered customers, which accounted for 23 per cent of the entire population. But one aspect, which proved useful in Kenya, is missing. Unlike the original scheme, the Indian M-Pesa system will be regulated by the central bank. So

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‘We must get our act together and normalise digital payment solutions’ $40 for the privilege of receiving an electronic payment. It’d be cheaper to mail pound coins through the post. These examples demonstrate why we must get our act together and normalise digital payment solutions. There should be no surprises, no ridiculous fees and no drama about consumers hopping across the pond to stimulate one another’s economies. We need each other’s business to thrive. We have consumers that genuinely want to part with hard-earned cash to get desirable goods and services. The M-Pesa scheme in Kenya has nine million registered customers

mobile-to-mobile transfers will not be able to bypass banks, and Vodafone’s partner in the scheme, India’s ICICI Bank

India’s mobile service penetration rate will reach 72 per cent by 2016 will screen customers before they can use the system. But India is a good country to target. It needs to work towards more inclusive banking, and mobile phones are a good way to achieve this: research firm Gartner predicts that India’s mobile

service penetration rate – the number of mobile connections to a service, divided by the population – will reach 72 per cent by 2016. For now, the service will cover eastern parts of the country including Kolkata, West Bengal, Bihar and Jharkhand, and a population of around 200 million people. Vodafone claims it will roll out across the rest of the country in a “phased approach”. Residents are likely to benefit. While apps, scanners and other innovations dominate conversation in the developed world, mobile transfers are continuing to make a difference elsewhere.

Consumers need security We, the people, need a secure way to authenticate, log and validate legitimate payments from buyer to seller. The smartphone is probably the right platform to make it happen. With Near Field Communication, biometrics at the point of sale and even digital signatures, we can make it safe (enough) for any traveller to make a purchase at nearly any retail establishment on the fly. No need to save cash, no worries about card theft. I know I’ll gladly pay a premium for such a service, so who’s offering? We’re coming back this summer, and I’d like it to be drama-free. I need to buy a half-dozen new Horrible Histories for my boys.


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an independent report from lyonsdown, distributed with the sunday telegraph

June 2013

8 | Future of payments

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Report by Dave Baxter INVESTORS are cautiously watching virtual currency Bitcoin after it was hit by a round of dramatic price spikes and falls in the same day. There has been a major fallout for existing currencies and commodities recently because of uncertainty in Europe, particularly in April, after Cyprus was plunged into economic turmoil. This has brought big dividends for Bitcoin, as investors hunt for alternatives to traditional currencies and commodities. But its greatest high was both dramatic and fleeting.

HOW BITCOIN’S HIGHS AND LOWS HAVE SHAKEN THE MARKET

Shaken investor confidence

Q&A

The economic crisis in Cyprus has done a lot to shake investor confidence. The Cypriot economy was downgraded to junk status by international ratings agencies in March because of fears that the country’s banks were too exposed to Greek debt. This made the country’s borrowing more expensive, with Cyprus needing a bailout from the European Commission, the European Central Bank and the International Monetary Fund. Though it got the money – around €10 billion – Cyprus had to take aggressive measures to stop a run on its banks. They were closed for a number of days, and limits were placed on how much money account-holders could withdraw. In Europe, this knocked confidence in currencies. Gold and silver – which usually act as safe havens for frightened investors – should have enjoyed highs, but Cyprus had sold its excess gold and other factors, such as slowing production in China, also made an impact. Because of this, both slumped in value. Bitcoin then enjoyed the biggest high in its history. The digital currency spiked at $266 (£176) on April 10, though it fell down to $105 (£69) a few hours later, partly because of technical problems encountered by MtGox, one of the exchanges that trades it. By the end of that day Bitcoin’s value had risen back to about $130 (£86). Two months earlier, a single Bitcoin had been worth just $20 (£13). But the currency is still prone to volatility. MtGox, one of the main exchanges selling Bitcoins, admitted that the April 10 fall was, in part, due to increased demand causing its trade engine to freeze.

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$1

L A U T R I V

Everything you’ve ever needed to know about Bitcoin What is Bitcoin? Bitcoin is a decentralised digital currency. This means that, unlike conventional currencies like Sterling, it isn’t issued by a central bank and there is no central authority which oversees or controls it. Instead, is it underpinned by a peer-to-peer computer network made of its users’ machines. This is similar to the networks underpinning systems such as chat service Skype and filesharing system BitTorrent. Bitcoins are generated by a complicated number-crunching procedure known as “mining”, which is done by the computers

in the network. They can be sold or transferred, and are available to buy on some exchanges.

Where does it come from? All people know is that Bitcoin was launched in 2009 by a person – or a group – with the pseudonym Satoshi Nakamoto. This figure has since disappeared. As Bitcoin’s website states: “Towards the end of 2010 Satoshi left the project, saying he had moved on to other things. Bitcoin doesn’t have official representatives as such, but in 2012 the Bitcoin Foundation was created to “standardise, protect and promote” the currency.

How do I get, and use, Bitcoin? Bitcoins, or fractions of Bitcoins, can be traded for conventional currency or a number of currencies including MtGox. They can also be transferred online from one user of the Bitcoin network to another person using Bitcoin software. A number of Bitcoin transactions are free, though some have small fees. Bitcoin can also be used to pay for some internet services, such as online gambling. Its digital wallet, which can be downloaded to a smartphone, can be used to pay for a limited number of services.

Hackers attack And as the currency enjoys a higher profile, MtGox and other Bitcoinrelated exchanges have been targeted by attacks, causing concerns about

the currency’s security and stability. On April 21, MtGox was taken down for around four hours by what it described in a press release as a

If you mean business, you need

“strong” Distributed Denial of Service (DDoS) attack. A few days earlier BitFloor, another exchange, had announced that it

was stopping all trading operations indefinitely because of “circumstances outside of our control”. Though the reason for the closure

is unclear, BitFloor had been hacked in the past. In September last year, around $250,000 in Bitcoins was stolen after a hacker gained access to some of the BitFloor servers. And Instawallet, a service for storing Bitcoins, suspended its activities in early April after being “fraudulently accessed”. As Robert Courtneidge, right, global head of cards and payments at legal firm Locke Lord, says, Bitcoin may be growing in size and popularity but it remains unpredictable. “There’s over $8bn of Bitcoins, which is the size of the economy of a small country,” he says. “But it’s still very volatile. If someone gambles on a horse race and it comes in at 100/1, the Bitcoins can alter in price before the bookie has paid out. “It’s had issues with the DDoS attacks, and that has really hit its value. “It has a completely anarchic life. But some would say that’s the point, and the appeal is that it’s not governed by any country.”

To catch up on what we have done so far this year, go to business-reporter.co.uk


an independent report from lyonsdown, distributed with the sunday telegraph

1 n

Y M O N O C LE Michael Rolph, director of Anthemis Group, a company focusing on new developments in fi nancial services, says security will be vital to Bitcoin’s future survival. “Bitcoin’s interesting, but it all depends on how secure it is. “If people don’t trust it because there’s been an attack on [its] service then it won’t work. “So it’s hard to tell whether it will be here in the long term.”

a money service business and you will need your customer and terrorism and fi nancial checks. “But they can’t regulate Bitcoin

Regulation needed

‘If people dont trust Bitcoin because there’s been an attack on [its] service then it won’t work’ – Rolph

At the same time, Bitcoin may have to deal with an increasing amount of regulation. In America, government body the Financial Crimes Enforcement Network clarified the defi nitions around some of its regulations to include virtual currencies such as Bitcoin. And in May, the Commodity Futures Trading Commission revea led t hat it was considering regulating it. Courtneidge says: “In the US, you will be required to be

per se, because that would add validation to the currency itself.” For the time being, Bitcoin will continue to grow in popularity. MtGox claims it has already enjoyed a boost this year, with 60,000 new accounts opened in March, 75,000 more in just the first few days of April, and now around 20,000 new accounts opening every day. With Bitcoin worth around $130 toward the end of May, things were looking steadier. But highs and lows could be on the horizon.

Underworld banking service is shut down LIBERTY Reserve, a Costa Rica-based centralised digital currency service, was last week shut down by US federal prosecutors after an investigation across 17 countries. Experts say the company

became one of the criminal underworld’s best-known electronic currency systems, used to move large sums of money across borders. The firm, which conducted its transactions in dollars, euros and roubles, operated as

an anonymous, no-questionsasked alternative to the global banking system. Aditya Sood, a computer science expert, explains: “You don’t need to provide your full details, or personal information. There’s no way to trace an account.”

Business Technology

Future of payments | 9

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Case CaseStudy

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‘We have become consumers rather than participants’ Dave Baxter talks to the man who chose to live a life without money for two years LOOKING surprisingly well kept in some smart jeans and a jumper, Mark Boyle sniggers through a mouthful of food. “I didn’t start in a field, buttnaked,” he laughs. “I couldn’t add an element of ridicule at the beginning.” It’s a warm evening in south London and Boyle, who is packing in some grub at a Whole Foods café after urgent discussions in the city, is telling me about his thoughts on money and the two and a half years he spent without it. In a world of digital payments, Boyle is harking back to a more basic lifestyle. In 2008, after working in organic foods and taking issue with the problems of modern life, from depleted world resources to the anonymity of urban society, he decided to see if he could survive without cash. This led him to rustic ways – living in a caravan, parked first in an orchard between Brighton and Bath and later in a Sussex wood where he now resides. “It started as a one-year experiment to see if I could live without money around 2008, and then I did it until 2011,” he explains. Boyle says his money-free experiment – which involved him using a wood burner and foraging for food, as well as growing his own – has made him happier as well as helping his conscience. He says: “Living without money became more long term. It does have social and ethical benefits, but it also helps personally.” And he is looking to push the cause. He has written a book, The Moneyless Manifesto, on the subject, as well as setting up the Freeconomy Community, an initiative based around sharing resources in local communities. Boyle’s problem with money is simple: what he describes as “the blood of globalisation” is enabling a worldwide economy where people have no connection to what they buy, and therefore don’t realise the impact of producing a particular item. He says: “If you buy a non-organic apple in a nice package, you aren’t thinking of the field which has been sprayed with pesticides to produce it because you have no immediate connection to it. I think the solution is localisation. If the human society wants to exist in the medium term, it will have to localise.” By this, Boyle means small

Mark Boyle foraging for berries

communities – of up to 150 – which are self-sufficient and also more socially connected. Boyle – whose few indulgences include a laptop powered by a solar panel and using his old clothes rather than growing fibres – has had mixed reactions since beginning his experiment. “I have had tons of criticisms and because of being in the news, I have had people come up to me in the street and say weird things,” he says. “The longer it has gone on, the more supportive people have become. People get in touch saying they need to save, so they try out new things.” Now, Boyle seems set on living the rustic life as a way to greater happiness, and a way of knowing the world around him. “We are brought up to be independent and support ourselves financially,” he says. “But we are never independent. We go from being dependent on our family to being dependent on strangers. You can’t drink a cup of coffee in the modern world without depending on someone who made it in another country.” And he hopes to bring about social benefits through his localised world. “When I went moneyless, one of the hardest things to go without was music. But then you can get round a campfire and sing. One of the things about specialised skills is people can get so good that it makes you feel inadequate. I could pick up the guitar, but then think against it because I’m not Hendrix. We have become consumers rather than participants.” Beyond the lack of Hendrix, Boyle seems content with life. He finishes his food and prepares to return to the Sussex caravan he now calls home.


Business Technology

June 2013

10 | Future of payments – Industry view

an independent report from lyonsdown, distributed with the sunday telegraph

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an independent report from lyonsdown, distributed with the sunday telegraph

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June 2013

Business Technology

Future of payments – Industry view | 11


an independent report from lyonsdown, distributed with the sunday telegraph

Business Technology June 2013

12 | Future of payments

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News bytes Contactless payment is a hit in M&S stores Barclays Pingit

FREE

You don’t have to be a Barclays customer to use this handy app. It handles payments between mobiles.

PayPal InStore

FREE

The smartphone app generates a bar code each time you spend which is scanned by the store assistant.

Last month Marks & Spencer completed the roll-out of its Near Field Communications (NFC) payment system to 644 of its UK stores, and claims it is processing more than 230,000 contactless transactions every week. The technology lets customers touch a reader with their NFCenabled, contactless bank cards – or enabled smart phones – to pay for purchases under £20 without having to enter a PIN. NFC has generated some momentum, but progress is not as fast as the industry may want.

While contactless bank cards are becoming more common, the use of NFC in smartphones has been troubled. Apple dealt NFC’s reputation a blow by not including it in the iPhone 5, for example, and take-up of digital wallets such as Google Wallet have been slow.

Facebook hops on the virtual bandwagon Social network Facebook made a move in the payments world this year, when it introduced a tangible gift card for users.

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The Facebook Card stands out from other gift cards in that it lets users keep monetary balances for four different retailers on the same card. After choosing a gift for a friend from Facebook’s gift cards and digital section, you can choose a value and make your purchase. The friend will then get the gift card in the post a few days later, and can use it at the relevant retailer. Gift balances can be checked on their Facebook account. According to the official Facebook blog, the card will gradually be introduced in America.

Squaring up to cash registers A payments firm is looking to put the cash register out of business with its latest innovation.

American company Square unveiled the Square Stand in May. This accessory can hold a tablet device but also has an in-built card reader, meaning it can serve as a digital point-of-sale system. It can serve this function with the help of the company’s mobile app, Square Register, which can give an Apple or Android device payment system functionality. For the time being it is only compatible with second and third-generation iPads. The cost for the stand may put off these not committed to making a serious investment and making some money using the gadget. At the moment it sells for $299.

Do you have access to an emerging payments platform? Since 1995 The Hub Company has owned and managed a multi-channel ecommerce platform. A software platform that sells products and services, provides location based promotions and also processes established and emerging payments. There may be no universal definition for emerging payments, but most agree it relates to payments that leverage new technologies, new approaches or simply new business models. Increasingly, it appears to be in relation to every day purchases, of which the key drivers are seen to be mobile, online and contactless ‘smart’ devices. The Hub Company recently launched their latest EMV and PCI DSS compliant ‘over the air’ emerging payments platform. It not only accepts unattended payments but was also chosen by MasterCard to instantly issue emerging payment devices in any form, anywhere. That means any issuer or any payment processor can access this open platform for any potential customer. If your business does not have access to an emerging payments platform and is looking to future proof what you do have, we are in a position to help.

The Hub contact details are: www: thehub.co.uk | email: enquiry@thehub.co.uk | telephone: 020 3008 6260


an independent report from lyonsdown, distributed with the sunday telegraph

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s people look at instant messaging, social media and everyday conversation as a means of getting in touch, email has started to look threatened as a medium. But Google believes email is the latest weapon in the war over future payments. The firm has already been using its Google Wallet, which lets consumers store bank cards on their smartphone and make payments by tapping it on an NFC-enabled terminal at a shop.

Buying behaviour could be used to verify identity

ExpertInsight

Through scanning fingerprints or memorising passwords, being secure is never easy. But one card provider thinks it could learn to identify people by their personal quirks. In a new report on the future of technology and payments released in April, Visa argues that companies could spot and verify customers by their actions alone. The report reads: “The payment industry

Dave Baxter

But since its introduction in 2012, Google Wallet has been dogged by setbacks including launch delays and security worries. In an effort to improve its fortunes, the company has now added features that can turn an email into a payment, from peer to peer, using Gmail. Google Wallet integra-

has long used scoring systems to spot suspicious or out-of-pattern transactions. “In the era of big data, we can realistically expect these detection systems to evolve into true behavioural monitoring systems. Your behaviours, interactions or transactions – in and of themselves – could become a means of confirming your identity.” The idea may cause some discomfort, but users could prefer it to forgetting their password, mid-shop.

tion into email is significant, and is appealing in its simplicity. Users will see a dollar sign next to the attachment paperclip icon in Gmail, and can use this to ping money to friends. The service is free for those who have already connected their bank account to Google Wallet, and people can pay with their credit and debit cards for a fee of 2.9 per cent per transaction. According to Gmail’s blog, US users will receive the feature “over the coming months”.

Business Technology

Future of payments | 13

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Business Technology

Diary

June 2013

Digital innovations are making it simpler to be generous. As fans of Pudsey Bear may be happy to hear, a number of different schemes now aim to get hold of donations the easy way. This can cover the big spenders and those with just a little cash left over. People looking to provide loans to those without access to traditional banking can do so via sites such as Kiva, while schemes like Pennies, an “electronic charity box”, allow shoppers to donate an amount of their choosing, either using a chip & PIN machine or online. Charity may begin at home, but it could soon be going digital.

Is this the end of the line for cash on London’s public transport? As other Oyster card owners may agree, I find nothing worse than digging for loose change as I scramble to catch the last bus home. And, like me, those in the UK capital may be cheered to hear that Transport for London (TfL) is considering abolishing cash payments on its buses. TfL, which has introduced a “wave and pay” system for its buses, insists that a dwindling crowd of passengers uses notes and coins to pay. TfL also hopes dropping the pound will cut queuing and administration costs. Some fear that abandoning cash could confuse those still using money. But on the bright side, they may spend less time waiting in line.

By Matt Smith, web administrator u Editor’s pick MasterCard Insights insights.mastercard.com/blog This blog offers regular posts on the customer service experience, along with the balance between convenience and security when it comes to online payments, and global economic developments resulting from the development of new technologies – in terms of both your digital and physical cash.

Sage Pay’s Official Blog

The VeriFone Blog

Covering both payment news, hints and general retail tips, the Sage Pay blog offers an insight into how the European payment service provider views developments in the payments industry and its technologies.

The point of sale equipment manufacturer offers a couple of posts each month spanning the mobilisation of payments in Europe to best practice for keeping your business’ payments secure for you and your customers.

Payments Cards & Mobile

Servebase Blog

This blog from the specialist publication focuses on the technologies driving changes in payments and features posts on topics from fraud prevention to retailers’ reactions to expectations that they upgrade their equipment.

Payment technology company Servebase offers this frequently updated blog that tackles issues affected the way payments are made alongside more general retailrelated musings, including occasional guest posts from business figures.

sagepay.wordpress.com

paymentscardsandmobile.com/blog

blog.verifone.com

servebase.com/blog

We’re paying too much for payments Ed Chandler, CEO of Kalixa Group on the future of payments INDUSTRY VIEW How is the way we shop changing? We live in a world of smart devices and near-ubiquitous connectivity, where consumers want to shop using different devices across different channels. To meet demand, a plethora of new and innovative services are being made available to help consumers browse and buy online, on the high street and via their mobile phones. What is the importance of payments? Payments are the critical enabler of

commerce for businesses. If you can’t pay, you can’t buy. Smarter ways to pay means a better customer service. And a better customer experience means more happy customers willing to spend their money with that business. It is therefore paramount for businesses to meet consumer demand and embrace the next generation payment services, or risk being left behind. For example, 67 per cent of consumers in the UK abandon an online sale at checkout due to payment issues. Put simply – without the right payment offering, retailers and merchants can’t turn browsers into buyers.

What is the biggest obstacle to enabling next-generation payments? Consumers and businesses are being exploited by a greedy and complex “value” chain. Most don’t realise but there can be up to 10 different players involved in a single transaction, with every party taking a cut and expecting a return. Each extra link in the value chain increases the cost and the complexity of payment services. What is the solution to this problem? Kalixa is a new breed of payment company disrupting this scenario. Because we

67 per cent of consumers in the UK abandon an online sale at checkout due to payment issues own our ecosystem we can remove the excess links in the chain to make payments simple, seamless and secure. By unshackling consumers and businesses we can reduce cost and foster the innovation that will make customer’s lives easier, and help businesses and economies to grow. 0207 255 3170 www.kalixa.com


an independent report from lyonsdown, distributed with the sunday telegraph

Business Technology June 2013

BizTech Zone

14 | Future of payments

Oscar Wilde

When I was young I thought that money was the most important thing in life; now that I am old I know that it is

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The future

What’s next for mobile payments?

NFC payment

Tim Jefferson, managing director of The Human Chain

Helixion looks at the challenges of mass adoption

T

echnology moves fast. It’s not that long ago – in the 1980s – when owning a mobile phone was the prerequisite of the “yuppie”. Fastforward to the noughties where virtually everyone has a mobile and our day-today lives are increasingly incorporated into the device. Now it appears that we will soon be able to make payments with a simple tap of our phone. Will this be the point you can leave home with nothing more than your phone in your pocket? At Helixion, we think so. Helixion, the NFC payment expert company, has been working with payment schemes, banks and financial institutions since the early days of NFC mobile payments. We believe that some of the biggest challenges and rewards will come from creating payment products that are truly mass market, but there are obstacles. For those businesses creating contactless payment services, the challenge is to ensure that their customers enjoy a consistent and reliable experience. After all, that’s what the customer really wants; they are not interested in the intricacies of the technology behind it all, it just needs to work. The challenges faced include a complex and ever changing mobile eco-system, different mobile wallets, different payment

Neal Michie, technical business development director for Helixion schemes and different handsets. Helixion believes that by addressing the “four As” – Any Mobile Wallet, Any Payment Scheme, Any Mobile Phone, Any Secure Element – is the only way that mobile payments can be successful in the long term. To address this we have developed a unique and innovative platform called lok-MPL, which provides a consistent platform to develop mobile payment products that deliver across these four As. lok-MPL can help to overcome these challenges by allowing contactless service providers to create solutions for the market that are not affected by their customer choices, such as which handset they decide to buy. The technology

has already been trialled by a number of financial institutions across Europe and beyond, with two commercial roll-outs scheduled for later this year. For those businesses looking to develop mobile payment products, using our proven technology platform – and, if required, our consultancy expertise – will provide tangible benefits in saving significant time and development costs. For the end user, the use of lok-MPL technology will simply allow them to enjoy a seamless payment experience in their day-to-day lives using their mobile phone to tap and pay as they go. info@helixion.com www.helixion.com

In focus: Prepaid cards with Kalixa Prepaid is changing the way we pay. The idea behind prepaid is a simple one: you load the wallet with money, and use it to withdraw cash or purchase goods and services both online and on the high street. Prepaid offers consumers total security and control, as customers can only spend what they load. Kalixa Pay is a unique prepaid service that makes payments smart, simple and secure. It provides consumers with a prepaid e-wallet linked to a contactless enabled MasterCard, which is accepted at 32m retail locations and 1.2m ATMs around the world. Kalixa Pay allows

consumers to pay for things in any currency, wherever they travel, all with one card. It’s simple. Unlike other cards, consumers get the best rates available on the market and don’t pay any foreign

exchange fees, transaction charges or commission on any purchases made abroad – whether online or in store. With Kalixa Pay there’s no need to have the hassle of carrying multiple currencies.

Concerns about theft and fraud can dampen some trips abroad. But Kalixa Pay provides peace of mind. The wallet isn’t directly connected to a bank account, which means there is no danger of someone getting access to a consumer’s funds, and the only balance available is the amount loaded onto the card. With free transfers between wallets, free SMS and email alerts, and the ability to manage the account online and via mobile, Kalixa Pay is a prepaid wallet that puts consumers in control of their money. 0207 255 3170 www.kalixa.com

With the latest mobile devices you can make payments both physically and virtually, using the mobile web browser. But payment is only one part of the changing face of commerce; where we shop, buy and consume very differently in the digital connected world. Other factors such as comparisons, social media, offers, coupons, loyalty, personalisation, location and delivery options are increasingly critical. These all combine to create the evolving commerce experience, where you can pay with a card just as you would via an online browser, which is a very familiar customer experience. You can pay at a store using a contactless (NFC) payment chip built into the mobile device – which is a new customer experience, but similar to using a contactless payment card. You could be browsing for some goods and services on your mobile, and you are offered a time-limited discounted price and local availability direct to your mobile, which is a new customer experience – and a real step change. All of these methods are already commercially available, along with a range of other mobile payment options such as stored value card services, prepaid cards and mobile POS (point of sale). They are driving real interest, but also confusion and market fragmentation. To achieve mass adoption, mobile payments have to be simple for end users to understand, have a clear value to them and also provide them with something better than they have already have. They also need to provide the same level of security that consumers are used to when using traditional cards or online payment services. Using your mobile to make payments is going to be central in the new commerce experience. www.thehuman chain.com


an independent report from lyonsdown, distributed with the sunday telegraph

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Future of payments | 15

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The debate

Will a cashless society be a reality? Charles Weir Founder and technical director Penrillian

Ed Chandler Chief executive Kalixa Group

Tim Jefferson Managing director The Human Chain

Isabelle Moeller Chief executive Biometrics Institute

Ian Marsh UK managing director Payleven

Implementing a payments solution is tricky, but manageable. Penrillian has implemented smartphone payment solutions, and we know the technology and security techniques are understood and dependable. So technology is not an issue – more than 50 per cent of UK transactions are already cashless. But there are barriers to getting to 100 per cent. Legal and security concerns prevent children from having debit cards. So as they grow up, they’ll continue to expect to use cash. By depriving children of mobile payment we could delay the “cashless society” by a generation. Meanwhile, many small merchants won’t accept low value payments, because networks impose disproportionately high minimum fees per transaction. And there’ll always be reasons, both good and bad, for people to want anonymity for their payments. To reach a cashless society we need creative business models to support small transactions, and creative financial and legal engineering to support anonymous payments and children’s cash. Penrillian will be pushing for them all we can.

We have been talking about a cashless society for the past decade. The next decade will see talk turn into action as the cashless society starts to become a reality. Cash is costly, inconvenient and insecure for consumers, businesses and the wider economy. This has led to an increase in electronic transactions. In Europe, card payments comprised 41 per cent of all transactions in 2011, with the number of non-cash payments increasing by nearly 5 per cent compared with 2010. Electronic payment volumes will continue to grow over the next decade. Emerging payment technology standards will aid accessibility and drive consumer uptake. The UK-wide mobile payment service launching in 2014 is a good example of this. Meanwhile, the government will step up its efforts to accelerate the digital economy – at the cost of cash – to capture new tax revenue. Consumer behaviour, technology innovation and macro-economic factors will spur the development of a cashless society that is smarter, simpler and more secure for everyone.

With so many new innovative ways to pay, such as with your phone via a stored account in the cloud, and contactless in cards and phones, you would think that cash is on the way out. While these new payment methods are seen as “cool” and some even truly innovative, most of them do not do what customers want. They want basic things from a payment method – universal acceptance, interoperability, to be free of charge or at a very low cost, and some degree of consumer choice. This drive to remove cash from society, driven by the financial services and mobile industries and some merchants, has to be set within the context of the changing world of commerce. The way we shop, buy and consume both physical and digital goods is changing in our increasingly digital world. New products and services over time will reduce cash usage, but unless all of the core customer requirements are met, cash will remain king for a long time.

A cashless society is almost here. Imagine a world where we don’t use keys, PIN codes, credit cards or passports, except in exceptional cases. Your identity is ubiquitous and machines recognise you to make your life easier and safer. Could biometric technologies lead to a freer, safer and fairer society? The answer has to be: only if the technology is implemented responsibly and in consultation with those affected by it. With consumers increasingly deciding what technology needs to offer them, it will be even more important to shape the industry by informing users and vendors about the responsible use of biometrics in order to make the right decision about when biometrics are proportionate. These and other issues will be discussed at the Biometrics Technology Showcase – Identity, Security and Integrity: Trust at Every Level, to be held in London on the June 27, 2013.

Our society is increasingly moving towards being cashless. Last year was the first time that card spending exceeded cash in the economy. This trend has been limited by smaller businesses’ inability to accept cards, given the high monthly rental fees, setup charges and endless paperwork of traditional card machine providers. Innovation is the key to allowing more businesses to accept card payments, by enabling easy access and lowering costs. At Payleven we have developed a low-cost mobile chip-and-PIN solution for only £99, with no contract or monthly fees. We have improved access – with a simple, paperless online signup – and have innovatively converted our solution into the world’s first retailed, off-the-shelf chip-and-PIN device, exclusively stocked in Apple Stores across Europe. In a world where anyone can buy a card payments device in an Apple Store for under £100, register it and start taking payments in less than five minutes, the days of cash are clearly numbered.

ExpertInsight

01768 214400 www.penrillian.com

0207 255 3170 contact@kalixa.com

0207 581 4827 www.biometricsinstitute.org

tim.jefferson@ thehumanchain.com www.thehumanchain.com

Turn data into useful insight How to build a relationship with your customers INDUSTRY VIEW

A

s a merchant or bank, promoting loyalty among your customer base is the key challenge you’ll face. Consumers need to feel like they’ve had a special experience if they’re going to become long-term, loyal customers. Most merchants aren’t getting the maximum value from the first transaction a customer makes with them. The data created by this transaction is the first piece of a profile of that customer – what they buy, at what time, for example – that will ultimately give the merchant the power to create highly targeted and personalised offers. However, few merchants are using the data to do this. But creating personalised offers

for customers is a worthless exercise if you don’t have a way of getting in touch with the customer once they’ve made their purchase. In a bricks-andmortar store, the only thing that the customer is taking away with them is a paper receipt that’ll probably get lost or disintegrate in their pocket. Equally, banks can get huge benefits from their customers’ transactional data, using the insights this data offers to create value-added products for customers. However – like many merchants – they’re limited by legacy IT systems and simply can’t gather all of this data together in a way that makes it easy to analyse. But a solution to this problem doesn’t have to involve overhauling the entire infrastructure of a bank or merchant.

Looop, the cloudbased SaaS platform created by ERN, can sit alongside the existing back-end systems to capture, store, and cleanse the data, presenting it for analysis, and controlling the delivery of offers direct to a consumer’s smartphone. This system is designed to ensure that everyone in the payment ecosystem can get the maximum value from transactional data by turning the data into insights and insights into action. 0203 192 5660 www.ernglobal.com

queries@payleven.co.uk www.payleven.co.uk



Futureofpayments