The Current State of the Payments Industry

The word cloud above is a visual representation of the state of the payments industry according to the All Payments Expo Executive Summary. To download the full report, click here.

APEX is the annual meeting place at the intersection of payments innovation, including emerging payments, prepaid, alternative financial services, retail and technology. Join us March 21-23, 2016 in New Orleans for All Payments Expo 2016!

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News from APEX Europe: GPS Appoints Former Head of Issuing at Optimal Payments PLC

London - May 18th, 2015 - Leading global payments processor Global Processing Services (GPS) today announced that Suresh Vaghjiani will be joining their Senior Management team as Executive Vice President of Card Services. Suresh commented, "We have all witnessed the growth of GPS globally in recent years and it is certainly exciting to be part of the team tasked with continuing the expansion of our global footprint".

In his former role as Director of Issuing at Optimal Payments PLC, Suresh successfully established the Issuing and newly formed Card Services division. Previously, as a founding member of Kalixa Payments Group, in his role as Head of Kalixa Pay, Suresh launched the award winning Kalixa prepaid card across international markets. Suresh has a substantial understanding of electronic money, throughout its complete value chain from Issuing to Acquiring, with strategic knowledge on what works and does not work in various international markets.

As a member of the UK Contactless Advisory Committee, Suresh worked with TFL to pilot some of the first contactless prepaid products used on the London transport network. In 2011, Suresh launched the first ever contactless wristwatch in the UK. This is in addition to being responsible for launching the first App controlled NFC solution for i-phone in Europe. Suresh is an elected Advisory Board member for the Emerging Payments Association.

GPS was founded in 2007 by the owners of Flex-e-vouchers (FEV). FEV was one of the pioneers of prepaid Programme Management in Europe and continues to operate successfully today. FEV's founders identified weaknesses in prepaid processor capability and decided to launch a second business (GPS) that would provide the flexibility needed to service prepaid Programme Managers worldwide. GPS is a MasterCard, Visa Inc. and Visa Europe accredited processor. The platform was built in-house from the ground up and is tailored to prepaid card functionality, utilising the multi-year experience gained from operating one of the largest programme management companies in Europe.

Neil Weeks, Chief Commercial Officer at GPS commented, "Suresh is a well-known and respected industry expert. We are delighted to announce his appointment to our senior management team".

Tony Kerr, Chief Executive Officer at GPS added, "Suresh has a depth of product and industry knowledge that is amongst the finest in our sector. We believe that Suresh will strengthen our executive team, further underpinning our global rollout strategy".

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Apple Pay announces partnership with Best Buy

Apple CEO Tim Cook announced on Monday the 27th of April that Best Buy will begin accepting Apple Pay in its iOS app. The announcement also revealed that Apple Pay support will soon after be in Best Buy stores later this year. This means that Best Buy is now the first big-name U.S. retailer that has gone against the trend of retailers who are members of the MCX program.

Barry Blackburn / Shutterstock.com

The MCX program is a group of retailers and food chains that are currently in the process of constructing a payment app named CurrentC that is seen to be a likely rival to Apple Pay. CurrentC, which is expected to be launched later in 2015 will use barcodes rather than NFC for payments and is currently still in the testing phase. MCX CEO Dekkers Davidson has insisted that there are no fines or payments for leaving the program. However due to exclusivity agreements signed by Best Buy, they will not be able to be able to utilise Apple Pay until the agreement has run its course as MCX members cannot use CurrentC and Apple Pay simultaneously.

Despite this recent news, Scott Rankin, the MCX COO, has insisted that Best Buy are still “a strong MCX partner and supporter of the CurrentC initiative.”. He goes onto state that “we are of the firm belief that there need to be at least two to three major players within the mobile payments ecosystem for it to succeed. We remain steadfast and passionate about CurrentC, as well as completely focused on delivering the best mobile commerce solution for our merchant partners and consumers.”A Best Buy spokeswoman however stated that “We remain invested in MCX” but would not commit to accepting CurrentC when it launches to the public.

Denys Prykhodov / Shutterstock.com

The MCX consortium has the goal of creating a mobile wallet that includes payments methods that are less expensive for merchants to process than more traditional big-name credit cards. Apple Pay on the other hand is more favourable toward traditional debit and credit accounts. The system does not support cheaper store-branded cards and bank account hook ups. The system allows people with the newer models of the iPhone to make purchases in stores by placing their Apple Watch or phone near the checkout terminal. This eliminates the need for cash or cards and also is useful for online purchases. It will mean there is no need for the hassle of typing in credit card and shipping info for each online purchase. The phone or watch’s fingerprint identification technology aids in securing the transaction.

This partnership is a big one for Apple as MCX gained support from CVS and Rite Aid when they turned off Apple Pay in their stores. It’s not currently clear whether other MCX members may follow the lead of Best Buy and move to Apple Pay and thus not placing their trust in the CurrentC initiative. The test is whether customers embrace the Apple Pay system and can be convinced that paying with a phone or Apple Watch is easier and more convenient than cash and cards.

About the Author: Harry Kempe, a marketing intern at IIR USA, who works on various aspects of the industry including social media, marketing analysis and media. He is a recent graduate of Newcastle University who previously worked for EMAP Ltd. and WGSN as a marketing assistant on events such as the World Architecture Festival, World Retail Congress and Global Fashion Awards. He can be reached at hkempe@IIRUSA.com

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ICICI Bank announce the release of their Tap N Pay payment technology

A recent announcement in the prepaid payment technology world was that ICICI Bank, India’s largest private sector bank, have collaborated with Tech Mahindra Limited, to launch a contactless payment service that is based on the Near Field Communications (NFC) technology. This innovative new payment service which has been named ‘Tap n Pay’ will allow anyone, including non-ICICI Bank account holders to make over the counter purchases, reducing dependency on cash.

The customer will be able to use their NFC enabled mobile phone at the merchant’s point of sale device to make payments. The new innovation is a pre-paid account that allows customers from any bank to register for it and can transfer money online from any account. Customers are also able to top up their ‘Tap n Pay’ accounts by sending an SMS.

Tech Mahindra managing director and chief executive CP Gurnani stated that “The synergies between the two partners (ICICI Bank and Tech Mahindra) will bring about a new payments ecosystem, parallel to, and yet in harmony with, the existing payment networks in the country,".

The service is currently a closed end service and not a universal payment method. The announcement stated that at the moment the new technology is only for large campuses at corporate offices. For example being used at canteens or to buy meal coupons. To me this is advantageous using it less as a universal card but for certain purposes at the start and then maybe expanding. An issue that can come around with universal tap like payment systems can be unwittingly paying for things you didn’t want to.

This was a problem in London, England. The London Underground has a barrier system were the majority of users swipe their Oyster card which has a set amount on, to get through. However, people often kept the Oyster card in their wallet to swipe and their wallet often already had a tap payment card; this meant that money would sometimes be debited off that card whilst trying to swipe through the barriers. This became a serious problem and announcements were having to be made on the Tannoy public speaker systems to warn customers.

This announcement shows the ongoing advances being made in the prepaid payments industry that seeks to increase payment efficiency and to many, signals the lack of need for physical cash. The increase in these types of innovation, many also believe could mean a lack of dependency in banks. Banks will have to come up with innovations of their own to help keep up with the changing times.

About the Author: Harry Kempe, a marketing intern at IIR USA, who works on various aspects of the industry including social media, marketing analysis and media. He is a recent graduate of Newcastle University who previously worked for EMAP Ltd. and WGSN as a marketing assistant on events such as the World Architecture Festival, World Retail Congress and Global Fashion Awards. He can be reached at hkempe@IIRUSA.com

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Will Cashless Payments Cause Us to Spend More?

Contactless payment is widely regarded by many as the future of payments. Many believe that technology such as the Card Case app or Apple Pay will start to dominate the payments world as they are easy and fast forms of payments. In some cases you may not even need a wallet anymore.

Businesses are looking increasingly at giving customers the easiest possible experience in terms of their consumer journey. They want to make sure that at the end of the journey the customer doesn’t have to struggle to part with their hard earned money by waiting in long queues or wondering which credit card has the most on. Many believe it is in the best interests of the customer to be able to swipe something quickly and walk out with your new purchase. However, as easy and convenient as it is, could it mean increased spending for us on a day to day basis?

New research has shown that many people, especially the millennial generation, find that paying with cash is an easier way to not spend as much money. Personally, as someone who is fresh out of University, with student debts and an apartment in a foreign country, I am trying very hard to make every dollar count. This means taking out a certain amount of money in cash at the start of each week and saying to myself, I will spend this much and no more. It is a very simple budgeting technique used by many; however contactless payment threatens it. Waving a phone over a scanner or quickly swiping a card, to me and I’m sure to many others, does not really feel like you are parting with money as it does with cash.

More convenient payment systems will mean even if you have no cash, a consumer will simply spend little bits here and there, especially with credit. Obviously internet statements are a good way of keeping track every now and again but that will not stop when you want that desert at a restaurant instead of having a cash limit.

So much of the excitement surrounding the rise of contactless payments is focused on how much it is for the customer without looking so closely about the benefits for businesses. An interesting development for me would be a form of inbuilt budgeting system within the app or form of payment. As contactless payment develops, as does the internet of things, meaning more interconnection. This could mean a weekly budget for those millennials trying hard to make the pennies count that is on a payment app which is connected to a calendar which may warn of upcoming events that could stop you getting that pair of jeans that may not strictly be necessary. In a world where businesses need to increasingly think about the consumer’s experience, helping them with little things like that could ultimately mean the difference between gaining or losing a customer.

About the Author: Harry Kempe, a marketing intern at IIR USA, who works on various aspects of the industry including social media, marketing analysis and media. He is a recent graduate of Newcastle University who previously worked for EMAP Ltd. and WGSN as a marketing assistant on events such as the World Architecture Festival, World Retail Congress and Global Fashion Awards. He can be reached at hkempe@IIRUSA.com

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Are Disruptive Innovations Undermining Traditional Payment Processes?

The recent upsurge of disruptive innovations in the payment world have caused many to predict a fall in the importance and in some cases, extinction of banks. Clayton Christensen, who came up with the theory of disruption, predicts that "Banks, many of them, won’t exist ten years from now. Their functionality will be taken over by IT companies who don’t have the same assets and income statement challenges".  Banking hasn’t really changed that much over the last 100 years; the only real disruptive innovation that has come about was probably the introduction of the credit card. Apart from that banks have gradually changed and adapted with the times without having to deal with much competition.

However the recent rise in mobile payments are causing a real threat to traditional banking. Smartphones and mobile platforms operate in real-time, making payments straight away whereas traditionally banks process payments overnight or a couple of working days. Customers do not want to see one balance on a statement, another at the ATM and another online. Mobile payments create an easier and faster way of paying.


Below are three revolutionary payment innovations:

• Card Case app – This app is a payments system that could spell the end of even needing a wallet. It’s not an app where you have to pay with your phone but simply with your name. The app connects with the stores location and so when you go to the cashier, you say your name, your picture and name comes up and the cashier clicks it. A receipt gets sent instantly to your account and the payment is made. Obviously not every shop in the world has the payment system but after one year since its creation in 2010, 800,000 readers were sent out and the number is rising rapidly. https://squareup.com/

• TransferWise – This peer-to-peer payment system enables international transfers by acting as a middle man between parties for much lower costs than doing the transfer with a bank. Whereas with many big banks the cost for a transfer of around $1000 dollars could cost around $40; TransferWise will do the same from peer-to-peer for around $1. It is no surprise it has had interest from huge names such as Richard Branson and Facebook.  https://transferwise.com/us

• Uber – Uber, now worth over $18 billion, is a perfect example of frictionless payment as everything is done via mobile. The taxi is booked and paid for using the Uber app and the taxi comes to your exact GPS location. It negates any need for cash or trying to hail a cab in the street. https://www.uber.com/

Banks need to begin to understand the needs of their customers; Cisco carried out a survey that found "43 percent of U.S. customers believe their primary bank does not understand their needs; 31 percent feel their bank is not helping them reach their primary financial goals".

The three payment innovations shown above negate the need for banks and their ATM’s; banks need to start to revolutionize their approaches to payments or customers will simply use them as a place to store money.

Join us at the All Payments Expo February 23-25 at the Caesars Palace in Las Vegas. New to APEX 'The Disruptive Technology Forum' a devoted meeting place for mainstream payments and FIs to meet and discuss new business models and innovative ideas with new, disruptive technologies. Companies looking to invest, partner, white-label or acquire new platforms and technologies will hear from the most provocative and intelligent disruptors.

New payments and banking alternative companies are disrupting the very future of financial services and payments. Get a leg up on competition by hearing from the leading technologies. Meet potential partners who can help you achieve scale faster.

Download the full agenda here.

Register now and save $100 - Use the code XU2848BLOG


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Sources:
Forbes - http://www.forbes.com/sites/stevedenning/2014/12/05/innotribeswift-can-banks-master-disruptive-innovation/ 
Cisco - http://www.cisco.com/c/dam/en/us/solutions/collateral/executive-perspectives/Internet-of-Everything-executive-summary.pdf

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Your Holiday Gift from All Payments Expo | Register by Friday 12/19 & Save $300

Register by December 19th and save $300 - Use the code XU2848BLOG | Register.

Find Your Next Buyer at APEX

With more than 1,300 global payments players on the hunt for new technologies and partners, APEX is the best place to kick off 2015 with meaningful meetings and new business opportunities.

 

 Meet the executives with buying power to take your business to the next level. 

 

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Weekly Payments Round Up

The APEX team brings you your weekly payments round up. Below you will find recent industry news that we found compelling and felt that we needed to share with our readers! Enjoy.

Top Stories:

American Eagle Outfitters Banks On Store Consolidation And Omni-Channel To Improve Store Productivity
With e-commerce not turning into a big business for many retailers despite continued robust growth, the need for omni-channel retailing has emerged. The entire apparel industry is gradually shifting towards this concept, which appears to be the future of retailing. Over the past 15 months, American Eagle has taken several steps towards the development of its omni-channel platform and all of them have shown good promise so far. Its “buy online and ship from the store” pilot program has helped it attract those customers, who could have shied away from the retailer if the inventory pool wasn’t integrated across all the channels. The initial roll out was slow, but the company soon went aggressive on its deployment. In its Q1 earnings call, American Eagle had stated that this service would be available in 100 stores by the back-to-school season. However, it had 255 stores offering this service at the end of Q2.

Lamassu: Bitcoin ATM Owners Earning Up to $36,000 Per Year
Lamassu has reported its bitcoin ATM operators now process an average of $20,000-worth of bitcoin each month, while units placed in prime locations receive as much as $40,000–$60,000 in monthly transactions. Lamassu's survey estimated that its operators earn between $1,000–$3,000 each month on an average commission of 5.5%. This equates to annual earnings for ATM operators of between $12,000 and $36,000 per unit.

Hackers exploit NFC phone payment technology
Several bugs in Near Field Communication (NFC) payment systems have been found by security experts. NFC allows people to pay for goods and services by touching their handset to a payment terminal. But the inclusion of the technology on phones has proved useful to hackers seeking a stealthy way to take over a mobile phone. In most cases the bugs would give an attacker complete access to a device's data.

Snapchat introduces Snapcash for P2P payments
The question "how do you monetize Snapchat" has finally been answered and it's going to open up a lot of possibilities for users. Snapchat has introduced Snapcash, a way to send mobile payments to friends using the image sending-then-destroying service.


Have a great weekend!

- The APEX Team

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20% of U.S. Smartphone Owners Used a Mobile Wallet in 2013

One-fifth of U.S. smartphone owners – 40 million Americans – used a mobile wallet in 2013, according to Parks Associates. The firm goes deeper and forecasts that the number of mobile wallet users will continue to grow 183% to 113 million by 2017 – that is 43% of the U.S. smartphone owners.

The significant increase in mobile wallet adoption is projected due to the surge in new payment technologies. These new technologies have a much broader application than mobile wallet technologies of old – mobile loyalty programs along with in-store marketing, will give smartphone users and merchants a greater incentive to start using/accepting mobile wallets.

When thinking of mobile wallets, one often thinks NFC. However, the most used mobile wallet apps actually use barcodes/QR codes – for these apps there is no need for merchants to replace their POS hardware, a simple upgrade allows for adoption (unlike NFC wallets that require a new POS system).

At All Payments Expo this March, find partners to expand your commerce capabilities and determine how new devices are reshaping the payments business model. This is the only event that attracts the highest volume and caliber of decision makers from across the payments ecosystem. Attendees span every link of the value chain - allowing you to take your business to the next level, and solidify relationships with existing clients and customers.

Our mission is to catalyze the partnerships necessary to build the next generation of payments, from the mobile environment to the brick-and-mortar POS.

This is a MUST attend event – Register Today!

See you in Las Vegas!



Read the full article here.

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The Future of Payment Processing

By Marc Putman, SVP, First Data Prepaid Solutions

"As technology advances and becomes simpler to use, modern tools are being transformed into smart business solutions. In a world where people turn to smart devices for entertainment, engagement and life management, businesses are obligated to do the same.

Luckily, merchants can get the most for their money by investing in technology that consolidates payments and business management. Investing in new payment processing technologies gives business owners the time to do what they do best: run their business.

Next generation point-of-sale (POS) systems can help. Packaged as a tablet or mobile app, these systems can accept cash, contactless and mobile payments, and barcodes, enabling customers to pay how they want…"

To continue reading, please download the full PDF here.

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Partnering Round Up: 12/9 - 12/13

All Payments Expo is committed to catalyzing value add partnerships for the betterment of the ecosystem. Here’s the weekly roundup of partnership news:

• “Lemon, a digital wallet platform which allows users to store their ID, payment, loyalty cards and more on their smartphone, has been acquired by identity theft protection service LifeLock for approximately $42.6 million, the companies [announced.] LifeLock is also now launching a new application called “LifeLock Wallet,” which is based on Lemon Wallet Plus technology.” To learn more about this partnership, click here.
• “Barclays Accepting Applications for New UK Fintech Accelerator – Barclays announced Monday a partnership with Techstars to launch a three-month accelerator program in the UK next year.” To learn more about this partnership, click here.
• “Wells Fargo & Company and Isis, the mobile commerce joint venture created by AT&T Mobility, T-Mobile USA, Inc. and Verizon Wireless, has announced the first phase of an agreement that allows Wells Fargo Visa consumer credit card holders to load their cards into the Isis Mobile Wallet.” To learn more about this partnership, click here.
• “Payment processing firm Dwolla on Thursday announced the launch of a partnership with online service marketplace Fiverr in a move to help spur adoption of its payment option.” To learn more about this partnership, click here.
• “Coda Payments scores $2.3 million to make mobile payments without credit cards a cinch” To read more click here.
• “MasterCard is partnering with Samsung to bring tap-to-pay functionality to Australian shoppers who own a Samsung Galaxy S4 and have the Commonwealth Bank of Australia app loaded on their phone.” To read more click here.

Click here for more information on partnering and how you can guarantee ROI at All Payments Expo.

See you in Las Vegas!

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The NFC Solution for the iPhone

The iPhone may not be NFC-enabled, but some payment players are trying to change that. U.S. Bancorp has been testing a touch-to-pay technology for iPhone users. The NFC-enabling technology is built into the smartphone case. This is big news for iPhone users, especially as the iPhone has not yet been equipped with NFC technology.

For iPhone customers, this opens up a new form of tap-and-go payment. Niti Badarinath, U.S. Bank's digital strategy and mobile banking head, said in an interview last year that he views mobile payments as "the next frontier."

NFC has been under fire from several players in the payments ecosystem, includingPayPal. But this latest move shows that there are many industry players who believe in NFC. With the market share for iPhones in the U.S. at 32%, will this NFC-equipped case change the game for NFC proponents?

Join us at the Prepaid Expo in March where industry experts from Giftango, Visa, Blackhawk, Oberthur Technologies and many others will be discussing the future of NFC, mobile wallets and other emerging technologies.




ABOUT THE AUTHOR

Ryan Geswell is a New Media Analyst in the Finance Division at IIR USA with a background in Marketing and Media. He can be reached at rgeswell@iirusa.com.

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Fixture or Fad – What’s YOUR Vision for Future of Payments?

Earlier this month, we reached out to some of our esteemed Prepaid Expo alumni to explore the future of prepaid and payments with us.

Here's what David Parker, Director, Polymath Consulting, foresees:

 

What’s your vision for the future of payments? 

How do you think NFC, EMV, mobile technologies, apps and wallets will impact prepaid?      

Mobile enablement – the access of your desired payment solution through mobile – is now a must-have.  On the other hand, payments through NFC off a phone will grow, but will remain a growing niche based on where you live, and who you are.  

What’s a fluke – and what will become a fixture?            

The vision of payments is one where I will still have a card, but it may also be contactless. Will I pay off my phone? Possibly, for some things such as transit. But the vast majority of my payments will be on the plastic card in my physical wallet for the next five years.  

Sure, online, I will have a nice one-click wallet solution backed up by my card of choice. But too many global mobile operators are blinkered and looking at closed-loop, agent-led solutions. They all quote M-PESA in Africa as a great example, but it had unique circumstances.  

Try naming five, or even one, other market globally where this model has over a 20% market share of payments.  What we are seeing is closed-loop wallet led solutions attaching prepaid cards to themselves for a variety of reasons:  Neteller, Skrill, Paypal, Hyperwallet and MPesa!

The challenge here that telcos need to consider how open and closed loop will sit side by side from the start, and not look to implement these solutions later on.  Only in this way can they ensure that the best solution is implemented on Day 1, not a mixture of systems bolted together later on. Is there a role for closed-loop models? Certainly. 

But, I would argue that open-loop is complementary to the closed-loop part. After all, a very large number of withdrawal requests from M-PESA small agents are rejected due to the agent not having available funds.

Meanwhile, the growth of Mobile POS is here to stay.  Post-Square, we have seen a number of other companies launching in Europe and more are planned for Africa. This growth in a merchant acceptance base will fly in the face of those that believe everything will be NFC and Mobile within a few years.  

In my view, the plastic in your wallet will be there for a long time, especially if you travel/do business across a large number of markets. While some  Mobile/NFC based solutions may gain traction in certain jurisdictions, the old piece of plastic - Mag Stripe or Chip and Pin – still has the widest acceptance of any digital format.    

What technology will consumers choose?           

Consumers will choose technology based on a number of factors. First is availability.  Many pieces of 'technology' are talked about, but in reality are only offered in a small number of locations/markets.  The exception to this is NFC, which we will continue to see increasingly rolled out not just in the first world but also in developing markets, such as Africa. (Note: the recent announcement of 1 million prepaid contactless MasterCard Cards in Kenya.)

So what will consumers choose to adopt? A mixture of what they are offered which adds real benefits to their lives, and has a real value-add proposition.  The easy answer is of course mobile, but only where specific value propositions are identified and offered.  

Sometimes these will only be for a small group of people.  The key to adoption by consumers is perceived value.  It is no good for a bank to say, “Wow look what we can do for you!”  It is all about what consumers value.

About the Author:

David Parker is Founder and Chief Executive Officer at U.K.-based, internationally working consulting and research firm, Polymath Consulting Ltd.   

Editor's Note: 

For 2013, Prepaid Expo is focused on the future of prepaid and payments. We want YOU to be a part of the conversation. Give us your answer – and we’ll publish the best submissions! 

 

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Cashless Food Trucks

Have you ever wished that whenever you get something to eat at a stand or a truck on the side of the road, you wouldn't need cash to pay for your purchase? Wouldn’t you love to just use your debit or credit cards to pay for that two-dollar frank or fifteen-dollar lobster roll? 

Well, gourmet food trucks are now allowing the use of debit and credit cards. They are now equipped with tablets and smartphones for credit card payments and email receipts to paying customers. 

Red Hook Lobster Pound truck (Photo: mediageek)

Global transaction will increase from $241 billion in 2011 to $1 trillion in 2015. Gourmet trucks used to be a cash only operation but with the prices and the times changing, it was only a matter of time for the use of credit cards. 

Gourmet trucks are using Square and with that attachment, the business can then accept the payment. The other fact that works with the usage of credit cards is that the business can adjust the state taxes accordingly. 

Red Hook Lobster Pound Truck is one of the trucks that are utilizing this aspect of card transactions. This allows the trucks to travel through each state and adjust the taxes. 

But one of the problems with accepting electronic payments is the wireless connection. The hope for trucks to combat the connectivity disadvantage is that carriers continue to improve 4G LTE networks. Even though NFC seems to have a bright future in the way people receive payments, there are downsides to it. A merchant must acquire NFC readers and consumers have to buy NFC-enabled phones. 

The efficiency of mobile payments is still improving but there is something there. Businesses can integrate their mobile-payment transactions with QuickBooks, which unifies bookkeeping. Of all the innovations that are moving from cash to plastic cards, who would've thought the last item that would be on the list would be a food truck?

The food truck concept is already a great convenience for someone who does not want to pay a whole lot of money (unless you want lobster rolls) and keep on going. But now that some truck owners are going to use modern devices so that you can now use your cards it is even better. 

About the Author

Adam Wells studies English at Pace University.

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Live from Prepaid Expo: The Future of Prepaid & Mobile

We wrapped up our last day at Prepaid Expo 2012 by looking ahead at Prepaid in the Future: The Consumers, Products, and Technology in 5, 10, 15 Years, and Mobile - how to do it, Uncovering Mobile Payment Opportunities in Developed and Developing Markets, and the Mobile Wallet and NFC at the Point of Sale: How It Has Been Introduced and Where It Is Heading.

There will be a huge opportunity to do more in Prepaid in the future. 

Prepaid sits at the vanguard of mobile and has had a big role in innovation in the past. There's a lot of room to grow, mobile will be the forefront of innovation. We've just started to scratch the surface - from cash to electronic vehicles for payments. $2.3 trillion still done in cash. Prepaid sits at the center of all of the new mobile applications being developed.

Prepaid has been shouldering its way in terms of other payment forms. There are still a lot problems to be solved, especially in terms of Prepaid. It's still in it's infancy.

There will be a movement toward moving financial literacy and education toward mobile platforms, SMS, social media, etc., Being as inclusive as possible, allowing consumers to experience the brand as a whole.

The global current trends are certainly in this industry's favor, it seems.

The barriers to Prepaid: Do consumers get what we are, what we do, how we can help them? Along with the baggage, the image/reputation. Social media will be a key media to do deliver these messages. The threat to prepaid growth: execution. How can we deliver value and use prepaid to solve real world problems?

Analytics and data insights will be key to understanding our consumers and identifying how to help them and what their needs are - to increase the value of Prepaid in their lives and deliver on this. Our products will have to better and smarter, mobile allows a lot to be done from this framework.

A cashless society will eliminate many of the pain points consumers are currently experiencing. Prepaid cards will have more rewards in the future.In mature markets, we have to accelerate the opportunity. In emerging markets, it's about enabling.

So how exactly can the Prepaid space leverage mobile?

Incorporate mobile into every touch point, have different options/device options, mediums, along with specific user experience for each environment. There are many opportunities for each. For example, 62% of holiday shoppers started on one device, moved to another to complete purchase.

We also need to develop standards for the industry. Albeit no one can control it, except for the consumer.
Although 55 ways of doing something - one way is easier and leads to mainstream adoption. We need to focus on infrastructure too: Privacy..., will lead to innovation. Push to cloud makes it much easier to manage infrastructure

Think about user experience and how to make to make it fun for the user. From a solution/design enhancement angle, mobile will become more nimble and cloud-based. A successful app will start from scratch, with a dedicated focus but who build by consensus. NFC payments are the future, but we need to address the needs of the consumer too. Right now, we are that HD/Blu-ray/DVD phase except with 18 formats?

Things to consider:
What will be frictionless in your environment?
What will bring the greatest value?
What will be the best authentication?
What's the best way to reduce cost?
How do you make prepaid product more relevant and valuable to cardholder before, during, after the payment transaction?

The future: Expect lots of transformation in the next 5 years. "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten."--Bill Gates

We can't call the winners, but we can call the huge opportunities that lay ahead.

Mobile Payment Opportunities in Developed and Developing Markets?

India, china and Africa have virtually no infrastructure for cashless payments but everyone has a cellphone. A revolution will happen in these markets in the next 5 years.

Give consumers super-easy apps to get them used to payment apps in the future. Imagine mobile/digital goods or services that can also be utilized in a brick and mortar store.

Mobile Payments: 2012 & Beyond:

There's been too much association between NFC and wallets.

User behavior online is directly connected to user behavior offline, in-store.

Wallets will live on the cloud and be accessible from your desktop and connected to your networked profiles. There is still a need to create a seamless, integrated experience between offline and online. At the end of the day, consumers will adopt the most ubiquitous, easiest, intuitive wallet available.

Valerie M. Russo is a Senior Social Media Strategist at IIR USA with a technology, anthropology, marketing and publishing business acumen.  She will be attending Prepaid Expo USA 2012 and covering the event live via Twitter and the Prepaid Expo Blog. She is a published poet and also maintains a literary blog. She may be reached atvrusso@iirusa.com. Follow her @Literanista. 

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Will credit card trends of 2011 apply to general purpose prepaid cards in 2012?

The year 2011 was nothing less than a roller coaster for the payments industry, which saw a lot of changes and new initiatives. Some notable developments were the Durbin Amendment, creation of CFPB, NFC initiatives from the likes of Google, Visa, Verizon, AT&T and others, a slew of mobile apps for payments and digital wallets, Square’s dongle taking off and several others following suit, an increase in credit card spending and a fall in delinquencies. 

From amongst these developments, MyBankTracker^TM identified five key trends in credit cards. 

Let us look at these trends and see if they will spill over into the world of prepaid cards, which had a growth story of its own in 2011 (Eight Annual Prepaid Forecast Report from Mercator):

Credit Card Trend 5: Mobile Rewards Redemption

As mobile banking applications evolve to offer the same capabilities as the online account interfaces, rewards redemption is making its way to smartphones.

Discover upgraded its mobile apps so that customers can redeem their cash back balance through direct deposit, statement credit, or eCertificates. An eCertificate is an electronic gift code that can instantly be used to make purchases at participating brand partners.

Citibank released an app dedicated to its ThankYou Rewards program which lets customers redeem reward points on-the-go. In collaboration with Best Buy, the app allows users to scan merchandise with their phones to see the cost in terms of points. Purchased items can be picked up at the store or shipped to an address.

Will this trend spill over into prepaid cards?

Historically, prepaid cards have not been associated with rewards and loyalty, let alone rewards redemption through mobile phones. This is because prepaid cards were considered to be for the unbanked and less credit worthy customers. Those who needed them bought them despite heavy fees and the card issuing companies did not feel a need to attract customers with rewards. None of the top five prepaid cards advertised at prepaid101.com have rewards associated with them; only two of top 10 have some kind of rewards. 

But a lot has changed in the last few years: people are avoiding credit to stay credit worthy, debit fees have risen significantly and revenue from debit (interchange) has been capped at about half of what they had been. Traditional credit card issuers such as American Express, Citi Bank and Discover have jumped into prepaid cards to acquire new customers and revenue streams, intensifying the competition in this field and creating a need for some kind of incentive to retain the customer. Also, now prepaid cards are being issued to the non-needy customer (budget planner, traveler, debit fee avoider) who needs a little more than the immediate tangible benefits of the card to be attracted to a prepaid card offer. 

For the prepaid card issuing companies and retailers, getting customer behavior data from rewards and redemption can be very useful in selling them the right kind of products as well.

Rewards redemption through mobile is more effective because many customers have their phone with them always and the devices are location aware, making rewards more targeted and redemption more feasible.

So, yes, we will see rewards being generally offered with prepaid cards and also see mobile apps for rewards redemption.

Credit Card Trend 4: No preset spending limit

The invention of the “no preset spending limit” feature is being highlighted as a so-called “perk” that may actually pose danger to the consumer.

Many cash back/rewards credit cards will offer this feature to customers who have better credit histories. Examples include Bank of America’s BankAmericard Cash Rewards card and Citi’s ThankYou cards.

It lets customers spend past their assigned credit lines without incurring over-the-limit fees. Consumer advocates warn against the allure of “no preset spending limit” due to the increased possibility of overspending.

Will this trend spill over into prepaid cards?

Prepaid cards by definition can spend only the funds that have been added to them. So this trend does not apply to prepaid cards.

Credit Card Trend 3: No Foreign Transaction Fees

The average credit card will charge a 2-3% fee on purchases made outside of the United States. For the frequent international traveler, this foreign transaction fee can represent a significant expense. But, many card issuers are tossing out this fee on certain cards.

In November, Discover stopped charging foreign transaction fees on all of its cards – like Capital One. Citi, American Express, and Chase have eliminated foreign transaction fees on their more prestigious cards.

It wouldn’t be surprising to see less of this fee, especially on cards for frequent international travelers.

Will this trend spill over into prepaid cards?

A per event fee is the main source of revenue from prepaid cards and a foreign transaction is too attractive an event for the card issuers and processors to not charge the fee. So, no, this trend will not carry over to mainstream prepaid cards.

Credit Card Trend 2: EMV

Throughout the year, the five biggest U.S. banks have begun issuing credit cards that carry EMV chip technology. The cards are currently only available to corporate and more affluent customers but the technology will be making its way to every U.S. credit card.

EMV chips are regarded as a more secure way to process transaction data compared to magnetic strips. It has also become the standard in many foreign nations due to rampant card fraud. The U.S. has been considered a laggard in adopting EMV.

In August, Visa announced plans that give merchants an incentive to accept EMV cards by October 2015.

Will this trend spill over into prepaid cards?

The key driver behind EMV is fraud reduction. Prepaid cards are a more likely candidate for misuse and fraud because they are offered to anonymous customers or to identifiable customers without any credit checks. The target customers for prepaid are more likely to use public, unsecure networks and lose their card information to fraudsters, who can use the information to recreate and misuse the card. Or a financial criminal might buy a prepaid card with the intention of committing a fraud. EMV technology makes duplicating cards difficult and also makes offline and card not present transactions more secure. 

In addition, EMV based prepaid cards for use in retail or in transit offer a strong business case for issuers as discussed in an Aconite White Paper.    

For these reasons, main stream general purpose reloadable prepaid cards are likely to adopt EMV technology in the very near future.

Credit Card Trend 1: Mobile Payment Functionality

Taking center stage is mobile payments. Consumers who’ve been quickly adapting to financial management on their mobile devices are eagerly awaiting the day they don’t need to carry a credit card to use it.

Google Wallet launched with Citi MasterCard customers using near-field communications technology for contactless payments.

ISIS, a joint venture by the nation’s largest mobile carriers, has locked in major phone manufacturers and major payment processors that will begin promoting NFC technology on mobile devices in early 2012.

Apple is yet to mention NFC for the iPhone but the technology was on the wish list for consumers who waited to purchase the recently released 4S model.

Will this trend spill over into prepaid cards?

The most notable NFC mobile payment initiative in 2011 was Google Wallet and the cards that currently can be provisioned on the phone are Citi® MasterCard®, the Google Prepaid Card or Store gift cards from participating merchants. It’s not hard to notice that the scale is tilted in favor of prepaid cards already as far as Google Wallet is concerned. The biggest problem (not technology related) is that credit card issuers/banks, network operators and mobile wallet providers are all fighting over who owns the mobile wallet customer and who bags the proceeds from the card use. An unintentional fall-out of this situation will be that mobile wallet providers (Google or ISIS) will issue their own prepaid cards to be provisioned on NFC phones.

So, yes, this trend is very likely to carry over to prepaid; in fact, I believe that prepaid cards will lead this trend. 

About the Author

Manish Gupta is a Marketing Product Manager at 

CoreCard Software Inc. 

CoreCard Software is a leading provider of card management systems for prepaid, revolving credit, complex accounts receivable, payday loans, fleet cards and more. CoreCard provides a feature-rich and flexible platform for all prepaid programs, either as licensed software or processing services (SaaS or PaaS).  For more information visit www.corecard.com or stop by  CoreCard at Prepaid Expo 2012, booth #622. 

   

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