The best time to start investing for retirement is now, but conveying this message to younger adults can be challenging. Many Gen Z and millennial individuals face pressing financial concerns today, making it difficult to prioritize saving for a distant future like retirement.

Because retirement investing is not typically top of mind for younger consumers, many financial institutions fail to engage them in conversations about retirement products.

Disha Bheda, Digital Banking Analyst at Javelin Strategy & Research, highlights in the report, The Key Step on the Bridge to Investing Maturity Path: Helping Customers Think Beyond Today, that failing to focus on future planning can leave institutions at a disadvantage, especially as more financial services firms compete for younger customers’ attention. Once these relationships are established, they can be difficult to break.

Preparing for the Unseen Future

In a previous report, the Javelin digital banking team introduced the Bridge to Investing Maturity Path, a strategy designed to help financial institutions engage and guide the next generation of investors. The path consists of six stages:

1. Build a foundation of products and create an optimized account opening experience.
2. Teach the fundamentals of personal finance to customers.
3. Shift the customer’s mindset to long-term thinking.
4. Leverage pivotal life events as springboards for investment opportunities.
5. Establish a structured coaching plan to guide novice investors.
6. Lay the groundwork for advisory relationships.

One of the greatest challenges in guiding customers through these stages is instilling the belief that completion is attainable. For many young adults, traditional milestones like purchasing a home or starting a family feel far off—or even uncertain.

“On the flip side, many of these customers have ascendant earning potential and, in many cases, are in line for a generational wealth transfer,” Bheda said. “They’re prime candidates to be prepared for a future they might not yet see.”

“To the extent that FIs are engaging prospective investors before they actually have significant assets, most institutions are solidly in Stage 2 of this maturity path,” she said. “They have built smooth account-opening flows; they have a range of financial products; they boast educational materials that seek to guide their customers in the fundamentals of personal finance. But young or inexperienced would-be investors are largely on their own to discover and explore these resources.”

Leading customers beyond Stage 2 is the most difficult leg of the journey, and many financial institutions stall there. However, banks can no longer afford to accept this level of engagement.

“The historic play for FIs has been to wait for when these customers have investable assets before attempting to initiate an advice-driven investing relationship with them—that’s too late,” Bheda said.

“Lurking outside those primary banking relationships are fintechs and specialty apps that do what most traditional banks today do not. They offer easy-to-use interfaces with enviable digital experiences, low fees, and specialized services that target specific consumer needs often overlooked by banks,” she said. “They are threats to erode banks’ ability to establish a long-term advisory relationship if they go unchecked.”

Rewiring the Customer Mindset

To address this, banks can adopt three key principles to rewire customers’ long-term investment habits: education, tracking habits through digital experiences, and setting goals.

“Education should be woven into the experience at appropriate points during customers’ digital interactions with the bank,” Bheda said. “A focus should be on emphasizing the principle of compounding to help young customers and investing novices understand that a lofty long-term goal is possible through small steps.”

Along with education, financial institutions should create digital experiences that resonate with younger consumers and help cultivate consistent financial habits. These experiences should be informed by behavioral finance principles and tailored to individual customer needs.

Even with the right tools, establishing financial discipline is difficult, and participation may be inconsistent. This underscores the importance of streamlined interfaces and gamification techniques to maintain engagement.

Establishing SMART goals—specific, measurable, achievable, relevant, and timebound—is another critical component. Banks must help customers prioritize these objectives, understand trade-offs, and revisit goals regularly to ensure progress.

“Illustrations showing how daily actions of customers build toward or detract from goals, reminders, cost-of-waiting visuals, and positive feedback help customers build a corpus and take the plunge into investing,” Bheda said.

“Prompts built into every digital interaction with the customer and digital nudges to review their progress helps shift the customer mindset into long-term thinking and achieving goals, a key to relationship deepening and cultivating the next generation of investors,” she said.

From Oversight to Foresight

As banks work to broaden customers’ horizons, they must also rethink their retirement strategies.

“Getting customers to adjust their thinking to envision longer-term outcomes is just part of the challenge,” Bheda said. “To reach Stage 3, banks will have to set aside their usual focus on short-term revenue and consider the potential for lifelong customer relationships that prove fruitful again and again.”

“Taking this further step along the Bridge to Investing is both a short-term imperative for FIs and their customers and a longer-term play for customer trust and loyalty,” she said. “For banks, the reward is a lifelong relationship that becomes more lucrative as customers mature and seek out financial products that reflect their changing lives. For customers, it’s gaining the ability to visualize their future and the confidence of knowing they have a pathway to achieving it.”

This urgency is heightened by the rise of fintechs targeting younger demographics. Educational apps like Greenlight and GoHenry, along with teen accounts offered by Venmo and Cash App, embed financial habits at an early age.

While not all provide retirement investing yet, many are evolving into holistic financial services providers. If they are firmly established with younger customers now, they will have inroads with them as they age into retirement. This has made it more important than ever to tread the Bridge to Investing Maturity Path.

“Success in Stage 3 will profoundly alter banking relationships,” Bheda said. “The shift from oversight to foresight will reposition FIs as a proactive advisor, not just a reactive provider of on-demand financial services. Digital banking will continually reinforce the FI’s advice-giving role in achieving future goals.”

The post Young Customers May Not Prioritize Retirement Investing, But Banks Should appeared first on PaymentsJournal.

Real-time payments have yet to become a true retail mainstay in the U.S., but trillions of dollars moved across the FedNow and RTP networks last year. Both networks recently increased their transaction limits to $10 million, dramatically expanding enterprise use cases.

The growing adoption of real-time payments will meaningfully reshape the B2B payments landscape. But it’s only one of several forces converging in what is shaping up to be a watershed year for commercial payments.

As Hugh Thomas, Lead Commercial and Enterprise Analyst at Javelin Strategy & Research, discussed in the 2026 Commercial & Enterprise Trends report, artificial intelligence-driven automation and the rise of more targeted, value-based pricing structures will also play defining roles in the next era of enterprise payments.

An Inflection Year for AI

Optimizing commercial payments flows—whether through automation or outsourcing—has long been a priority for finance leaders. Few technologies, however, offer the promise of AI.

Over the past few years, businesses across industries have invested heavily in AI capabilities. This year represents a critical litmus test: organizations are now expecting measurable returns on those investments.

Expectations have only intensified with the emergence of agentic AI, which has the potential to further accelerate automation.

“You’re looking at something now where so much of that work can be automated, where on initiation of a purchase you could begin to be provisioning an agent to go out and find goods or services that meet the criteria—find price points, look at all the tumblers that need to fall before you say, ‘I’m now ready to pull the trigger and make the payment here,’” Thomas said.

“The data has been around for a long time, the technology is just getting to the point where I think this year will be almost an inflection year in the payables space where you’ll begin to see some big case studies happening,” he said. “I’ve been interviewing people in the receivable space and they’re all talking about how well-suited AI is to managing customer interactions on their AR portals.”

In the past, accounts receivable processes required consistent human intervention—managing credit lines, reviewing invoices, reconciling payments, and handling exceptions. Generative and agentic AI now can substantially reduce time spent on these manual workflows.

That promise is compelling. However, implementing AI securely and responsibly requires strong governance, oversight, and iterative deployment. Progress will likely be incremental rather than instantaneous.

“I don’t know whether we’re going to see paradigm changes, but I think that this is going to be the year that there’s a more ubiquitous perceived need for AI in the payments mix,” Thomas said. “It’s still going to be a learning year, but there are going to be a lot of interesting case studies that happen. This is something where it moves from the theoretical to the practical and the applied.”

A New Real-Time Ballpark

Real-time payments are far more culturally entrenched in markets like India and Brazil than in the U.S., but domestic adoption is accelerating.

For years, RTP—operated by The Clearing House—was the only instant payments network in the U.S., which helped it grow from 60 billion real-time payments in Q2 2024 to around 481 billion in Q2 2025. FedNow, launched nearly three years ago by the Federal Reserve, has not displaced RTP; instead, both systems have expanded in parallel, with FedNow facilitating roughly 246 billion payments in Q2 2025.

“You’re in a different ballpark now, where you’ve got a higher average value and they’re seeing clear use cases where instant transfer of funds is required,” Thomas said. “The one that gets talked about a lot these days is housing down payments—moving from a wire or a cashier’s check to a real-time payment, where both parties can be sitting at their terminals and observe the money move from one account to the other.”

“It’s a great way to avoid a lot of steps versus handing a cashier’s check to a lawyer and having them affirm to the counterparty’s lawyer the funds are on their way,” he said.

Speed introduces new risk considerations, most notably fraud. In traditional payment systems, settlement delays provided time for fraud screening and dispute resolution. With real-time settlement, those buffers largely disappear.

While instant payments introduce unique risk management challenges, they also deliver powerful benefits.

“These observable instant funds movements are going to be where you’re going to see quick take-up,” Thomas said. “And they’ll drive the business case for investing in managing these new risk parameters. As real-time use cases become broadly known, the functionality will be expected of the smaller banks, and you’re seeing companies building out the functionality to offer this to the smaller providers at scale.”

Targeting Price-to-Value

As real-time rails gain momentum in B2B payments, card networks remain formidable competitors.

For years, leading credit card issuers have sought to replicate their consumer-market success in commercial payments. However, translating retail-based pricing models into the B2B environment has proven more complex than expected.  

“There are a million different kinds of consumer, but not much differentiation in how they want to pay for things,” Thomas said. “People either want rewards or access to credit, or they want to be as cheap as possible—and they tend to know the best way to meet their own needs.”

“As a consumer, if you go to a grocery store today, try and pay for it with a check—it’s not The Big Lebowski days, you can either pay with card or cash,” he said. “However, if you’re a business you can pay with ACH, you can pay with real-time payments, you can pay with a check, you can do direct debit, or you can use a card. Rarely would you ever do cash, but some people do. You tend to have a lot more options than consumers, and many of them turn on whether you want to pay now or later, and what sort of discounts or later payment options are available.”

Commercial payments operate under different economics, workflows, and value expectations. As a result, issuers face well-established alternatives and deeply embedded processes within enterprise finance teams.

Still, cards offer significant advantages in B2B contexts. Organizations can authorize one amount and settle for another within defined parameters, and chargeback rights provide strong recourse protections. From both a control and risk-mitigation perspective, cards remain one of the safest payment methods available.  

To gain broader traction in commercial payments, however, issuers will likely need to move beyond retail pricing frameworks and adopt models aligned specifically to B2B value creation.

“The pricing schedule for Visa and Mastercard used to be a six- or seven-page document for the United States and Canada,” Thomas said. “Now, it’s about a 30-page document, and most of the new pages are describing different types of B2B transactions—a page for different flavors of fleet payments, two pages for different flavors of virtual card payments, new tranches of card types and interchange schemes associated with them.”

“So, the networks are getting smarter about pricing, but the problem is they’re not seeing both sides of the transaction. They don’t know the full costs and benefits the counterparties are seeing by using the network, how much rebate the buyer may be getting, and how much it’s costing the supplier to accept cards,” he said. “These new pricing schemes are an attempt to balance the economics of the transaction without actually controlling the final costs; they’re designed to encourage maximum and sustained network use. Given the priority the card networks have been putting on B2B growth, one has to assume they’ll continue to tweak their pricing further to capture specific spend types where they can price to the value their solutions deliver.”

The post From Theory to Application: The Impending Transformation of Commercial Payments appeared first on PaymentsJournal.

While stablecoin usage in payments is expanding quickly, most current activity is still concentrated in internal use cases rather than external payments. Although total stablecoin transaction volume is estimated at roughly $35 trillion annually, the portion tied specifically to payments is closer to $390 billion.

That’s according to data from McKinsey, in collaboration with blockchain analytics provider Artemis Analytics, which found that the vast majority of that transfer volume reflects trading activity, internal treasury movements, and automated blockchain transactions rather than real-world payments.

“They’ve been an outstanding internal product because they let players like exchanges, custodians, market makers, and even protocols rebalance liquidity and settle transactions 24/7 and near instantly,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “No waiting for banks to reopen over night or during the weekend—they’re an ‘always on’ digital cash. This also reduces friction between parties, enables greater capital efficiency, and allows for programmable controls.”

External Use Cases

At the same time, stablecoin payment activity more than doubled between 2024 and 2025. B2B payments dominate the segment, totaling about $226 billion—roughly 60% of global stablecoin payment volume. The study found that B2B usage increased 733% year over year.

Consumer-to-consumer payments accounted for another $77 billion. Stablecoins enable peer-to-peer transfers that can settle almost instantly and often at lower cost than traditional methods.

A comparable amount, about $76 billion, was tied to consumer-to-business payments. Stablecoin-linked cards have played a significant role in this area, allowing consumers to spend stablecoins directly with merchants worldwide without first converting funds through exchanges or banks. Spending via stablecoin-linked cards reached $4.5 billion in 2025, up 673% from the prior year.

Global payroll and remittances conducted in stablecoins now total roughly $90 billion annually.

Further Incentives Needed

They key question is whether these predominantly internal uses will ultimately translate into broader adoption for external payments. For that shift to occur, digital assets will need to offer a more seamless user experience and stronger incentives for both merchants and end users.

“The cost savings and speed with faster settlement are clear advantages, but the incentives aren’t quite there for a multi-trillion-dollar payment landscape to fully make that jump,” said Hugentobler. “But we are seeing compliance efforts and partnerships with wallet and card providers, so things are coming down the pike pushing it in that direction.”

The post Stablecoins Expand in Payments, Yet Most Activity Remains Internal appeared first on PaymentsJournal.

Consumer demand for reloadable prepaid cards has shifted in recent years as payment preferences continue to evolve. From budgeting tools to digital spending options, these products serve a range of financial needs. But how strong is purchase intent today?

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Javelin Strategy & Research’s Report: 22nd Annual U.S. Open-Loop Prepaid Card Market Forecast, 2025-2029

Consumer Intent With Regard to Purchasing Reloadable Prepaid Card Products, 2025

• 26%- More likely to purchase
• 41% – Purchases will stay the same
• 11% – Less likely to purchase
• 15% – Will not purchase any reloadable prepaid cards
• 8% – Don’t know

Source: Javelin Strategy & Research

About Report

Javelin Strategy & Research is continuing its analysis of developments across the open-loop prepaid sector. The firm expects solid expansion across most major prepaid segments, particularly general-purpose reloadable cards, payroll and government benefit cards, and business or expense-related products. As with prior forecasts, broader economic conditions remain a key factor shaping performance, with growth measured against overall economic activity.

Policy changes, program administration improvements, and benefit enhancements are supporting certain prepaid categories, especially general-purpose and benefit cards. These products can serve as alternatives to higher-cost credit or to healthcare spending that offers fewer tax advantages. At the same time, wider macroeconomic pressures, including political uncertainty and smaller cost-of-living increases, are tempering growth in areas such as Temporary Assistance for Needy Families and campus card programs.

Separate consumer research from Javelin indicates that U.S. consumers continue to view prepaid products favorably. Usage levels remain strong, load activity is steady, and purchase intent is trending upward. Spending activity is particularly concentrated in high-volume categories, including gift purchases and cards used for personal spending.

The post How Likely Are Consumers to Buy Reloadable Prepaid Cards? appeared first on PaymentsJournal.

Much like with generative artificial intelligence, the emergence of agentic AI has been accompanied by substantial hoopla. However, as more organizations race to incorporate the next big thing into their operations, many are struggling to plot the road map to agentic commerce.

As Christopher Miller, Lead Emerging Payments Analyst at Javelin Strategy & Research, detailed in the report Making Sense of Agentic Commerce: How Do We Get Started?, businesses and financial institutions can take tangible steps to prepare for agentic commerce. However, depending on the organization, a speedy implementation may not be the best approach.

The Vision Is Real

Agentic commerce has been defined as leveraging an AI agent to automate all aspects of a transaction, including the purchase, with minimal user interaction. However, if this model were implemented, it would create a dramatic shift in the shopping paradigm.

“Depending upon the form that automation takes, it could have substantial impacts on the ways that companies interact with individuals,” Miller said. “This means if you’re interacting with other people’s software instead of them, you have to do different things. You need to build a different type of front door, you need to build a different ecosystem to respond to the needs of agents, and you potentially have to change your advertising models.”

These are important questions, and many organizations are feeling the pressure to provide answers. This pressure has only increased as leading financial services companies like Visa and Mastercard have launched agentic commerce platforms. Additionally, Visa and Google have created protocols designed to be the framework for the future agentic environment.

These launches have prompted many organizations to wonder if, and how, they should proceed with their own agentic commerce initiatives.

“It’s important to say, ‘No, we’re not there,’” Miller said. “There is a vision; the vision is real; the potential impact is not fake, but what is going on this instant is almost nothing—and I can’t overstate that. There are no agents, that is not a thing that exists yet—in terms of a fully capable agent that can do all of this stuff for you. Zero, and not going to happen anytime soon, but there are emerging capabilities that are parts of that vision.”

An Iterative Move

The first step in getting started with agentic commerce is to identify where the technology is in its evolution and map the ways that AI agents could interact with a business’ products.

Currently, AI primarily factors into the shopping experience is by streamlining the search process and providing curated selections. In some instances, the user can even pay for the subsequent purchase within the AI platform.

“You could search in ChatGPT and say, ‘I want to see some shoes,’ and it’ll show you some shoes and then you could click a ‘buy now’ button—but that’s not an agent in anyone’s vision,” Miller said. “That is, architecturally and infrastructurally, an iterative move from a subscribe and save.”

As far as this reality is from the vision of agentic commerce, the current model has many limitations.

For example, Perplexity users can pay through PayPal directly in the AI chat, and ChatGPT users can make purchases at Etsy and Shopify in the app. These partnerships are steps in the right direction, but they also exemplify the barriers to agentic commerce.

“You could buy one thing from one place using a certain card—so there’s a long way to go,” Miller said. “But it gives companies a good way to understand things: What are the capabilities in the market? How are they emerging? What can they actually do? What are they integrated with? What are the limitations?”

Boring, Straightforward, and Infrastructural

Once organizations understand AI agents’ functionalities, they can begin to identify where the technology is headed.

“You can say, ‘I can see where the next stage of that is—we’re going to see an announcement in three months or we’re going to see an announcement in six months,’” Miller said. “Identify where the foreseeable agent capability maturity curve overlaps with those existing capabilities, and those are the places that you want to try to build to.”

This may prove difficult, as the definition of agentic commerce has already been stretched beyond the boundaries in many instances. Organizations will likely have to continue to scrutinize this technology as they map the ways the capabilities intersect with their products.

Additionally, many businesses may find that they have limited use cases for AI agents, or none at all. For those organizations moving forward with agentic commerce, one of the key factors will be to develop a shared language across any agentic capabilities within the business.

In larger organizations, many leaders and teams are likely to be tasked with implementing agentic AI. This means that it will be critical to coordinate agentic commerce projects across the organization to ensure this game-changing technology is deployed in a routine fashion.

“This sounds fancy and new and futuristic, and the reality is it’s mostly crushingly dull,” Miller said. “Automation is not interesting, in and of itself. Agents are just accelerated work, and if it was boring work to start with, it doesn’t become interesting because you automated it. This thing gets handed to people as if it is new and crazy and futuristic, but it must be delivered as something that is boring, straightforward, and infrastructural.”

The Word Agentic

For all the hype around agentic AI, in many ways it is simply a bolt-on, customer-facing layer within the shopping experience.

“The word agentic is doing a lot of work right now,” Miller said. “Agentic is being used to describe this notion of things being done for you, and it is being presented from the perspective of the end of an evolutionary stage where somehow all this stuff magically happens.

“But the software has to tap into other existing infrastructure—there’s no new payment infrastructure. There is payment infrastructure necessary to identify the agent—that bit is new and interesting and challenging—but at the end of the day, there’s a box in a warehouse that has to get on a truck and end up on my front porch, and none of that is new.”

The post How Organizations Can Chart the Course to Agentic Commerce appeared first on PaymentsJournal.

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For years, tech and payments leaders have called for financial institutions to modernize their core banking systems. However, the meteoric rate at which payment technologies have evolved has caused many financial institutions to struggle to identify the optimal components of a modern payment stack.  

In the Unpacking The Modern Payment Stack: What Matters Most for Banks report, Matthew Gaughan, Payments Analyst, and James Wester, Co-Head of Payments at Javelin Strategy & Research, examined the many layers that make up a payment stack and offered financial institutions insights for developing their modernization road map.

The Heartbeat of the New Paradigm

The elements of a modern payment stack are increasingly defined by the technologies that power them. This includes innovations like event-driven architecture and cloud-native infrastructure, but the heartbeat of the new paradigm is the application programming interface (API).

“A modern payment stack should provide the functionality to expose and consume customer-permissioned financial data via standardized restful APIs in a modern payment stack,” Gaughan said. “Banks and financial institutions will utilize these APIs to either build, modify, or launch new products, usually in a more streamlined manner.”

“They might be owned by the bank, or they might be provided by a core banking provider, but they let the bank be more nimble and more able to adjust pricing and use different routing logic and settlement depending on the type of payment rail. It takes a system that was static and makes it more dynamic and able to respond to the emerging payment rails that are on the top of customers’ minds.”

The layers of this modernized system can also be categorized by their function, the vendor ecosystem associated with them, and the value they bring in powering the next generation of payment solutions.

Some of the key characteristics of these technologies are that they are composable, open, and interoperable. This flexibility is critical for banks that are increasingly under pressure to provide instant settlement, and it is one of the elements propelling the emergence of event-driven architecture.

“Event-driven architecture allows banks to respond to real-time triggers and different data flows—as opposed to how it was done in the past, when payments were processed in batches, typically at a much slower pace,” Gaughan said. “It allows the system to asynchronously communicate with all these different systems.

“Batching payments will probably never go away, but this allows for assembling your payment stack in a way that allows for more efficient payments and allows you to respond to emerging types like real-time payments.”

Leading the Charge

Like APIs, cloud computing has been a revolutionary technology for organizations over the past few years, and it is also a critical component of a payment stack. Although many terms are used to describe how cloud technology is deployed, such as cloud-based or cloud-enabled, an optimized payments stack should be cloud-native.

“Cloud-native architecture is built entirely for the cloud, and it’s deployed on a scalable, containerized, and service-oriented infrastructure,” Gaughan said. “Similar to event-driven architecture, I think the through line to all this is to be more dynamic, but it allows banks to better respond to when there’s payment volume spikes across all their different systems.”

This need for adaptable technologies has been driven, in part, by the emergence of real-time payments. Consumers and businesses increasingly expect transactions to settle in real- or near-real-time, 24/7 and 365 days a year. Financial institutions must have technology that allows them to accommodate payments on a rolling basis and provide as seamless a process as possible.

Beyond being cloud-native, banks should also modularly structure their payment stacks, something many legacy core systems could not achieve. Many conventional systems were built using mainframes and monolithic architecture, which is effectively a single large code base for an entire application. This rigid system did not allow for asynchronous communication between disparate systems, even within the same company.

An optimized payment stack is oriented in a composable way that allows different components to be integrated, replaced, or scaled independently. This also makes the system flexible, interoperable, and open.

While creating this type of platform requires many technologies, one of the most important aspects of a modern payment stack is the people who implement it.

“Above all, none of this would be possible without the developers,” Gaughan said. “Banks are becoming more developer-oriented, but this still rings true with payments. Many of those next-generation payment solutions wouldn’t be possible without the developers leading the charge behind them. To create this system, all these layers must be undergirded by a developer-oriented culture.”

Signaling New Opportunities

With so much tech focus, many banking leaders may be inclined to leave payment modernization to their tech teams. However, the benefits of a modernized payments stack can reach much further than a systems upgrade.

“These aren’t just tech things happening in an IT vacuum. They’re directly related to the future business outcomes at these banks,” Gaughan said. “I think making that clear is important, so leaders and decision-makers recognize the benefits of these different parts of the payment technology stack. They’re part of a broader modernization strategy, but they could translate into real returns and help you increase operational efficiency.”

Modern payment stacks can lower costs for institutions because of their ability to scale based on volume. Additionally, they can work in concert with other systems to route payments more efficiently based on certain criteria.

Installing a composable modular core allows a financial institution to handle transactions based on the type of event that is triggered, in the most efficient manner. Once implemented, a streamlined tech stack can have dramatic impacts across the organization.

The operational efficiency gains can be significant, but there can also be key improvements in a bank’s risk and compliance operations. A modern payment stack makes it easier to link fraud, compliance, and risk systems with payments where these processes had previously been siloed.

“APIs can also signal potential growth or revenue opportunities within a business,” Gaughan said. “Banks will monitor the metrics associated, but developers can see which API is getting the most calls and how third-party developers are using them. Banks might be able to further monetize the APIs for other corporate clients or different banking services that are embedded directly into the ecosystems that their partners facilitate.”

Ultimately and Inevitably

Despite the benefits of a modernized payment stack, many financial services leaders have often elected to invest their funds into more customer-facing initiatives. However, an optimized payment stack can have a significant impact on customer retention and growth, especially as real-time payments raise consumer expectations.

“That level of speed and seamlessness in a transaction is becoming table stakes, and banks are going to need to be able to handle this,” Gaughan said. “The banks that modernize their payment stack set themselves up to offer the type of solution that their customers are looking for. It helps banks find their spot as a customer’s primary provider of banking or financial services.”

Many financial institutions have begun to feel the pressure to modernize and are unsure of the next step. However, the benefits of a modern payment stack make moving forward worthwhile.

“Modernization is not about a destination, it’s the journey—which sounds cliché—but these types of investments set you up for the next generation of payment technology, which ultimately and inevitably is going to be something that your customers are expecting of you,” Gaughan said.

The post How Emerging Technologies Are Powering the Modern Payments Stack appeared first on PaymentsJournal.

Artificial intelligence has become embedded in the shopping experience, and new collaborations between OpenAI and Stripe are expanding the technology’s role in payments.

First, ChatGPT’s U.S. users can now make Etsy and Shopify purchases directly on the platform. For example, once a shopper engages with the AI interface to explore a product and refine their search, they can confirm shipping details and pay using Apple Pay, Google Pay, Stripe, or a credit card—without ever leaving ChatGPT.

Second, Stripe and OpenAI are working together on an open-source Agentic Commerce Protocol (ACP). The goal is to build the infrastructure that allows merchants, consumers, and developers to integrate AI agents into the shopping journey.

Continued Advancement

These initiatives highlight the ongoing momentum behind the agentic commerce movement, which has picked up steam in recent months. Perplexity announced its Pro subscribers can now pay directly within its chat using PayPal or Venmo, a model similar to the one ChatGPT and Stripe are rolling out.

Meanwhile, Google introduced Agent Payments Protocol (AP2), an open-source protocol designed as a framework to support agentic AI. The framework accomodates multiple payment types, including debit and credit cards, stablecoin transfers, and real-time payments.

Continued Questions

As agentic commerce platforms continue to emerge, questions have risen about the role of AI and AI agents in the e-commerce landscape. The most pressing question is how these platforms are safeguarding against errors and fraud.

In Google’s AP2, for example, the tech giant uses mandates—digital contracts that verify the AI agent has followed its directives—to help protect payment data. In the ChatGPT and Stripe model, Open AI explained that all orders, payments, and fulfillment are managed directly by merchants through their existing systems, with ChatGPT acting only as an intermediary to relay data between users and merchants. 

Beyond security, there are also questions about how these platforms will leverage the data they collect and whether AI models will remain unbiased and natural in their interactions. For example, if a user consults ChatGPT about a particular item, some may wonder whether the chatbot would steer the shopper to Etsy instead of a competing marketplace.

OpenAI addressed this concern in a blog post, noting that product results are organic, not sponsored, and ranked according to relevance for the user. The company also noted it will charge merchants a nominal fee for completed purchases. 

The post OpenAI and Stripe Launch Agentic Commerce Initiatives appeared first on PaymentsJournal.

Customers signing up for new accounts and services can feel frustrated by the hoops they have to go through, assembling information and entering it in complicated, sometimes multiple forms, whether on paper or online. What they may not realize is that the process can be just as frustrating for the people working at financial institutions, or other businesses performing underwriting functions.

Too often, technology forces both consumers and businesses to adapt to outdated onboarding processes rather than the other way around. In a PaymentsJournal Podcast, Penny Townsend, Chief Product Officer at Qualpay, and Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, discussed how the next generation of onboarding and underwriting procedures could bring greater efficiency and effectiveness for everyone involved.

A Siloed Approach to Onboarding

Onboarding is a financial services company’s first opportunity to build a relationship with its customers, so it’s vital to make the process as painless as possible. Yet too many companies still make it cumbersome. For example:

“When people sign up for a bank account, and want a debit or credit card along with the bank account there are multiple applications they have to fill out,” said Townsend. “If I applied for two or three different services, I likely have to fill in secondary and tertiary applications that don’t copy over the data already fed into it.”

Financial services companies have long been a siloed environment, but many organizations are realizing that by connecting their onboarding processes, they can also streamline their internal systems. For example, it’s possible to combine for a business, a bank account, credit card processing, and ACH transaction processing into one application that flows seamlessly through underwriting.

The key is to templatize the information and present it in a data-driven, no-code way, creating a unified experience across all financial products. The goal should be to shift the effort of customers bending to how the technology, the vendor and the implementation require data to be input to how can we optimize the experience to reduce repetition and breakdown the silos that existing for different financial products. Creating better customer experience and more transparency and integrity in the data used to manage ongoing risk and compliance.

“My team is out there talking to people about how they actually onboard customers,” said Townsend. “Sometimes if some of the data has to change on the application, a new application has to be sent out, creating friction right at the beginning. Some applications are manually underwritten, which means they take the data set, log into the third-party tools, then verify that the data set matches what was on the application. After they’ve done the data verification, they’ll do the physical underwrite, but they’re manually inputting it maybe into two or three different systems for different tracking purposes.

“So if you ask me about how automation helps scale onboarding operations, it’s a game changer,” said Townsend. “Move away from the bespoke applications that people have bought in order to solve problems, and start looking more broadly and more holistically. Ask the question, “how can I delight the consumer when they’re applying for something?” By making the onboarding experience as efficient, effective, and speedy as possible.”

Bundling the Processes

The implications extend beyond onboarding efficiencies. Consolidating multiple workflows into a single system powered by a common dataset not only streamlines operations but also enables businesses to present products together in combinations that align with how consumers prefer to buy them.

“If somebody comes in to open a business DDA, you can ask if they would like to set up merchant services at the same time,” said Apgar. “You’re not making them go through a separate application. And what that does for the customer is that it incorporates multiple products into a single buying decision. With a discrete workflow, after they buy product A, you have to ask, now would you like to buy product B? If you can bundle B with A in the combined onboarding process, that makes the buying decision much easier for the consumer.”

Benefits Throughout the Organization

The onboarding application should be able to accommodate a variety of financial service products, treating each application as structured data that can be validated through automated tools. A simple rules-based engine can then provide a clear red light/green light decision on whether to proceed.

The benefits of this approach cascade throughout the organization. As compliance requirements grow more complex, a transparent workflow becomes invaluable. Without technology that consolidates and supports the process, audits are difficult to manage because data is scattered across disparate systems.

This structure also supports risk management throughout the customer lifecycle. Because underwriting data feeds directly into the risk engine within the same platform, all information remains consistent and accessible. If an underwrite needs to be revisited, the data and tools are already integrated. By simplifying the process, organizations can improve quality while reducing expenses.

“We see that a lot in banking from our clients,” said Apgar. “For whichever product the customer requests, the team gathers the underwriting or risk metrics relevant for that product. If the customer wants a different product, they gather additional data from a different database. Measuring compliance and maintaining viability of the customer relationship requires stringing together a whole chain of information that’s not in an essential spot. There’s a ton of room for increased efficiency.”

Townsend added: “One of my dreams is to make that experience be as transparent as possible. We want people to make that critical decision the same every single time, so we can see how that decision’s been made and know that that if I send the same data set tomorrow, the same decisions are actually going to be made.”

Adding AI Into the Mix

This is where artificial intelligence shines—culling through large amounts of data to find patterns and detect anomalies. It’s challenging to maintain a complete 360-degree view of the customer relationship as it evolves. At this point, any organization that automates underwriting is going to rely on AI and rules-based engines.

Every business engaged in underwriting must have a policy reflected in the system in use. Too often, that policy is separated from the actual underwriting process, and people get caught out because they’re not truly following it. The next generation of platforms has the opportunity to bring that policy to life.

“When you start to use all of that intelligence and let the actual policy breathe life within the platform, now you get transparency and true predictability,” said Townsend.

It’s common for organizations to fall short by expecting underwriters to know everything about the policy and implement it manually. By shifting these elements to the platform, businesses can build greater transparency and predictability while also giving underwriters more space to focus on judgment-based decisions. When AI is introduced as a component, it not only adds options and flexibility but also enables the development of policies that are more adaptive—policies that better serve both customers and underwriters.

The post How to Streamline the Onboarding Process and Speed Up Underwriting appeared first on PaymentsJournal.

Since the 2007-08 financial crisis, all U.S. banks that have been categorized as systemically important have been required to undergo annual stress tests. These tests were detailed under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed after the recession, and have become colloquially known as the DFAST tests.

This objective of the DFAST assessments is to identify significant vulnerabilities in the U.S. financial system before they occur. As Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research, detailed in the report DFAST: Tight Credit Card Risk Controls Ensure Bank Liquidity, top banks may not be in any imminent danger, but credit issuers must consider many factors as they forge ahead into next year.

A Catastrophic Cocktail

The DFAST tests measure how each financial institution would respond to a hypothetical economic downturn. In this worst-case scenario, unemployment rises to 10%—as it did during the COVID-19 pandemic—and housing prices fall by roughly a third. Taken with other factors like plummeting equity and real estate values, the DFAST tests create a catastrophic cocktail for financial institutions.

This year’s tests found that these factors would cause more than $500 billion in total credit losses for the top financial institutions. As with last year, consumer credit card losses would be the most impactful among all lending segments, totaling $157 billion. Excluding trading losses, credit cards would account for roughly a third of all projected losses for financial institutions.

Although these numbers were significant, the projected total losses and credit card losses were down from the year before. However, banks aren’t completely out of the woods.

“I think it showed how resilient banks are right now, which is good,” Riley said. “There are a lot of operational improvements, and the charge-offs have been under control, and that’s a good thing.

“The economy is always the risk. Right now, the trend is that it’s going to be better because some of the charge-offs are down, some of the delinquencies are down, but you still have consumer credit at an all-time high—it’s like $1.3 trillion. In the last 10 years, it’s gone up by over $300 billion, so that’s a lot of bananas. You have to be worried about where this is going to level off.”

A Proof Point

This substantial stress on consumers had direct effects on this year’s DFAST tests. Most notably, Ally Financial is no longer included in the index because the company sold its credit card portfolio last year. Ally Financial’s credit risk simulation was the weakest among all credit card issuers, running at a projected 40% loss rate. 

Ally built a loan portfolio that catered to borrowers with lower-range credit scores. As a result, Ally was at high risk of default and delinquencies as economic factors pressured consumers in these income brackets.

This was evidenced by last year’s DFAST tests, in which Ally Financial was the poorest performer. The assessment found that Ally would face severe losses under the stressed conditions of DFAST, far more than the 16% to 20% range other lenders experienced.

On the other end of the spectrum, American Express and Chase performed the best in last year’s DFAST tests, and they achieved similar success this year. This is largely because they have cultivated a different customer base from Ally’s.

“The big deal is that American Express and Chase, the two top leaders, are still at the best performance level,” Riley said. “It’s an example showing how American Express uses a lot of discretion when they underwrite. It’s typically FICO scores above 720, and that’s a proof point. Chase is diversified in a lot of ways—they were anchored to the consumer households, and they take advantage of that in their marketing. Those are two good signs of what’s going on.”

Balancing Credit Investments

According to Riley, financial institutions should take a page out of the top lenders’ playbooks and prioritize quality over quantity. One aspect of this model is tightening lending criteria to match borrowers’ FICO scores, but attracting and maintaining a quality customer base is more complex.

Financial institutions should also entice potential cardholders with attractive offers and work to build strong relationships with their customers. Banks also must scrutinize all new accounts and take a closer look at their underwriting processes. Another consideration for lenders is keeping their portfolios balanced to ensure they aren’t over-exposed to one client segment in the event of a downturn.

One of the most important lessons from the DFAST tests is that credit cards play a significant role in the operations of financial institutions and consumer households. Although all of the top-tier institutions passed this year’s assessments, significant risks are in play for smaller issuers.

Credit cards offer high returns for issuers, but they can quickly become a high risk if there is an economic mishap. This means that smaller issuers shouldn’t become overly dependent on their credit card portfolio.

The Party Isn’t Over

Concerns remain about the state of the economy, as inflation and interest rates are still high, and the impacts of tariffs loom. However, if this year’s DFAST tests are any indication, most financial institutions are prepared to weather the storm.

“I think we have to thank our lucky stars that many of the metrics did not deteriorate—that’s important,” Riley said. “There are mixed feelings on why it hasn’t. There’s a lot of talk on interest rates going down right now; they’re relatively high. In Canada, they’re significantly lower. Which one’s better? A lot of it depends on who you ask.

“The takeaway is that things are better, but everybody is walking on eggshells because debt is higher and prices are higher. Even though there are mixed levels of optimism, things do look better in a lot of ways. I wouldn’t say the party’s over because you have indicators like the rising amount of debt.”

The post DFAST Tests Indicate U.S. Financial Institutions Are Braced for an Economic Downturn appeared first on PaymentsJournal.

As more financial services-oriented blockchains emerge, Google plans to launch a neutral, global blockchain for the industry.

In a LinkedIn post, Rich Widmann, Head of Web3 Strategy at Google Cloud, provided details on the new offering, dubbed the Google Cloud Universal Ledger (GCUL), noting that the layer-1 blockchain has been years in the making. He said its credibly neutral infrastructure would support Python-based smart contracts.

Although Widmann mentioned that further technical details about GCUL would be shared in the future, he underscored neutrality and scalability as key differentiators for the platform. Unlike other blockchains, which have been built around a specific cryptocurrency or company, GCUL is designed as an agnostic blockchain capable of connecting the billions of users in Google’s ecosystem.

The Blockchain Race

Google’s announcement follows news that some of the world’s largest payments companies are developing proprietary blockchains. Circle—best known for issuing the stablecoin USDC—recently unveiled Arc, its financial services blockchain.

Naturally, USDC will play a primary role in Arc, and Circle noted that the blockchain is optimized for stablecoin payments. However, Arc was designed to support all forms of digital currencies and tokenized assets.

Payments firm Stripe has also been developing a blockchain called Tempo, which would leverage its extensive global network of businesses. While Stripe has largely kept its blockchain plans under wraps, it has been transparent about its digital asset ambitions through recent high-profile acquisitions of stablecoin company Bridge and crypto wallet provider Privy.

Standing Out

Although the launches of Stripe and Circle are significant, these are far from the first financial services blockchains on the market.

In addition to Coinbase’s Base and Robinhood’s Artritum, there are also well-established, dominant digital asset blockchains like Ethereum and Solana. In particular, the speed and efficiency of Solana has attracted many of the largest financial services companies, including PayPal, Visa, and Franklin Templeton, to the blockchain.

The emergence of these options is a testament to the powerful capabilities of blockchain, which offers security, transparency, and efficiency in financial operations. However, this rapid proliferation has also created a fragmented landscape.

Widmann referenced this fragmentation in his post, noting that Circle’s stablecoin rival Tether was unlikely to use Arc, just as Stripe’s competitors were unlikely to adopt Tempo. He further observed that Google’s position as a neutral infrastructure provider could help GCUL stand out.

The post Google Is Building a Universal Blockchain for Financial Institutions appeared first on PaymentsJournal.

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Digital cards saw a significant boost in adoption during the pandemic, initially driven by necessity. However, it quickly became clear that hygiene was just one of many benefits—and not even the most compelling one. Both consumers and retailers have found digital to be faster, more cost-effective, and more efficient than traditional physical options.

In a PaymentsJournal podcast, Fiserv’s Wesley Suter, Senior Director of Product, and Kush Patel, Senior Product Advisor, as well as Brian Riley, Co-Head of Payments at Javelin Strategy & Research, discussed the advantages digital cards offer over their physical counterparts, and how banks can tap into those strengths.

The Card-Not-Present World

Post-pandemic, the world has shifted from predominantly card-present to card-not-present transactions. Consumers can now order groceries from the comfort of their couch, then drive to the store where someone loads them into the car. There’s also been growth in digital acceptance at the point of sale, as merchants adopt tap-to-pay systems.

“Roughly 30% of in-person transactions are click-to-pay or digital wallet transactions, and that’s going to grow to over 50% in the next couple of years,” said Patel. “Anecdotally speaking, I live in a neighborhood where our restaurant association has gone completely cashless. Tap-to-pay and digital wallet transactions are very important to cardholders, not just at home but when they’re shopping in stores and at restaurants.”

Beyond shopping, businesses are working to make it easier for cardholders to digitally complete tasks that were traditionally done through human interaction. That can include something as simple as activating a card or more complex and curated experiences like disputing a transaction.

Ultimately, it’s not just about making cardholders’ lives easier, but making it easier for them to do business with issuers. Engaging customers to the point where incorporating digital tools becomes a part of their routine sets the stage for stickier relationships, cross-selling opportunities, and deeper engagement.

“When you see the throughput that the integrated experience has with the debit and credit card portfolios, you start to think about the foundational aspects of card management,” said Suter. “How do we get those cards not only in their hands, but active and used. With the integrated model, we have seen digital banking platforms increase 5% to 7% month over month in activation and usage.”

Integrating Debit and Credit

One area in which digital platforms have made a difference is in integrating credit and debit accounts. Issuers used to treat debit card holders differently from credit card holders. They might ask a debit card holder to download an app to manage their card, but if that same user had a credit card from the issuer, they could be directed to a third-party website to make a payment or view statements.

“It’s not the consumer’s problem how the silos might exist in different companies,” said Riley. “To them, it’s a card that they want to use to conduct a transaction. Whether they want the money to come out of a bank account with a debit card or to use a credit line, making that whole process seamless is important.”  

By unifying debit and credit accounts, digital platforms make it easier for cardholders to do business with their issuer. It also better positions the bank to cross-sell between the two accounts.

Creating More Engaged Customers

Another advantage for issuers is that cardholders who can quickly access their funds tend to transact more frequently than those who are less digitally engaged. Credit card transactions were once primarily for big-ticket items, but thanks to digital cards, we’re now seeing an increase in smaller transactions across debit and credit. This results in greater engagement in terms of transaction volume and overall portfolio spend.

They also give cardholders more uninterrupted access to their funds. When a card is lost or stolen and not promptly replaced, 40% of affected cardholders are likely to switch to another issuer or card, leaving the original one behind.

Similar to merchant-specific cards hosted on their own portals, issuers are now beginning to offer digital-only solutions as well, like the Apple Card. Additionally, virtual cards are being rapidly adopted by commercial and small businesses to enable better expense management, faster transaction settlement, and greater control over overall spend.

This trend may also carry into the consumer space as online transactions become more common. Increased online activity exposes cardholders to higher risk and privacy concerns, prompting consumers to adopt virtual cards—whether one-time or merchant-specific—as a way to protect themselves.

Fighting Fraud

Digital transaction also makes it easier to fight fraud. Fiserv’s technology, for instance, can provide contextual evidence around the purchase transaction. Issuers that have adopted this technology at a rate of 75% or higher have seen a reduction in fraud of over 20%. Those with lower levels of engagement are seeing a more modest 5% to 6% reduction in fraud.

“I can tell a layman cardholder right off the street that this is where your transaction was conducted, how much it was for, and where the message came from,” said Suter. “They immediately understand whether it is a legitimate transaction or potentially illegitimate. That deputizes the cardholder, allowing them to understand with pure context whether they performed that transaction or not.”

Behind the scenes, Fiserv leverages neural networks, insights and machine learning not only to fight fraud but also accelerate customization—such as personalized offers based on geolocation. These elements can drive increased spend on those cards.

Steering Them to Digital

We live in a digital-first ecosystem. We can manage our thermostats, do our grocery shopping, and call a rideshare—all from our phones. Our digital banking and finance experiences are a natural extension of that. It’s important to have digitally integrated engagements that accommodate the shift in how consumers interact with their financial institutions.

“Over half of consumers would like to engage with their banking institutions via digital channels rather than going into a branch,” said Patel. “Younger generations expect this at a much higher rate, but more than half of baby boomers and Gen Xers also expect to engage via their mobile channels.”

Every consumer is at a different stage in their lifecycle. Fiserv continues to iterate on its platform to help guide both consumers and businesses in tokenizing their cards into digital wallets.

“Anything that I can do on the phone or in branch now needs to be steered towards that digital component, from disputing a transaction to more engaged relationships around rewards and fulfillment,” said Suter. “At some point the card has to be reissued or replaced. True digital card management is the ability to manage the entire lifecycle relationship of that card and that consumer.”

The post Beyond Plastic: Why Digital Cards Are the Future appeared first on PaymentsJournal.

When Chase and American Express unveiled plans to enhance rewards for their luxury credit cards—and raise their fees—it seemed that these lenders were focusing on the most rock-solid customer base amid economic upheaval.

Though macroeconomic factors have played a part in the renewed focus on affluent customers, these moves involve much more than is apparent at first glance.

As Brian Riley, Director of Credit Payments at Javelin Strategy & Research, detailed in the report Amex and Chase Face Off on Credit Cards, but the Backstory Is More Interesting, smaller credit card issuers can take critical cues from the top issuers’ strategies.

The Timing Is Perfect

In addition to the economic backdrop, the credit card industry is approaching one of the most important shifts in dynamics in decades.

“You have the biggest merger in the history of credit cards going on right now with Capital One and Discover,” Riley said. “The timing of doing this is good because they’ve got to integrate this portfolio, and all of a sudden Chase is going to lose its position as top issuer—it’s now going to be the new Capital One. With all the chaos, the timing is right for Chase and Amex to readjust this piece.”

The issuers are recalibrating by addressing the three best segments in the credit card market.

First are the big spenders, who can afford to make the substantial investment in a product that others receive for free. Next are the strategic buyers, who are willing to pay a high fee for the potential to reap high rewards. The final segment is responsible cardholders, those who have FICO credit scores above 720.

Another attractive trait about the premium segment is that Discover doesn’t have an offering in this space. Capital One does—with its Venture X card—but the$395 annual fee card doesn’t deliver the same caliber of rewards as the Chase and Amex products do.

“Capital One and Discover are middle-market players, but they do have some great accounts,” Riley said. “So here the two biggest players on the premium side aim directly at the top-end segment, so that’s a big deal.

“There are subsegments within that, because you also have the smaller banks in the mix. Here, you are taking on little community banks; you’re marching into their area. You’re presumably going to be taking the top of all their customers and leaving the middle-market stuff there, so the portfolios become less sound outside of Chase and Amex.”

Safeguarding the Segments

Smaller banks won’t be the only institutions affected as Amex and Chase duke it out over premium cards. Other top issuers, such as Bank of America, Citi, and Wells Fargo, will have to shift to defend their top customers.

However, the affluent cardholder base isn’t the only segment that these institutions must safeguard.

“Another big thing here is that—for the first time—Chase is adding their small-business card into the mix,” Riley said. “Now, Amex has always done that in the Platinum card, but it shows you how Chase is addressing the market. That is a real big focus, and it’s a great time to be in the market because with small businesses—yes, some will fail—but many will succeed, and it’s a good choice.”

Investing in the small to medium-sized enterprise market is a strong strategy because typical card spending ranges from $20,000 to $50,000 per month. The arrival of Chase means other issuers must reevaluate their offerings to this sought-after segment.

Betting Against Regulation

Additionally, the moves by Chase and Amex are revealing about the regulatory environment. The credit card industry has come under the microscope in the past few years because of the fees charged to merchants and consumers.

While the Dodd-Frank Act reduced interchange fees on debit cards many years ago, it did not affect credit cards, because credit cards are an independent product not governed by the FDIC.

Some regulators have attempted to remedy this with the Credit Card Competition Act (CCCA), which sought to force price controls on credit card interchange.

“The CCCA has been looming out there, but it is far from being the law of the land,” Riley said. “Here, we’ve got the two of the largest credit card organizations who are really mature—Amex and Chase have been strong players in the U.S. credit card market literally from Day 1. Their bet is the CCCA is not going to happen when you see these premium cards enter the market, or else the revenue dynamics could not support the reward offers.”

Because two of the strongest credit card issuers are enhancing their premier reward programs, other issuers should consider following suit. However, this should be done only if the issuer’s business allows for it. Adding 100 basis points to a card might make it more competitive but also makes it less profitable.

Another area where smaller institutions can follow in the footsteps of top issuers is by benchmarking their card data. Companies like Chase and Amex are constantly adjusting their products based on market conditions, as evidenced by data from Javelin’s Card Bench,  a competitive intelligence card acquisitions tool.

“Offers get honed through the year,” Riley said. “We tracked that there were more than 1,200 different offer changes on just the 200 cards provided by the top 10 issuers. It shows you that when Chase does something, Citi reacts.  Or when Amex amps up an offer, Bank of America antes up. You take the United Airlines Card from Chase and they compete against the Delta card from American Express—when one adds 10,000 points, the other adds 12,000 points.”

Protecting Against an Unbalanced Market

In addition to fine-tuning their offerings, issuers should also constantly reevaluate their relationships with their customers, across all segments. Many of the top banks, such as Wells Fargo, have long been focused on cross-selling other financial products to their existing customers.

“You just don’t have one Wells Fargo product, you have a few others,” Riley said. “Chase is very strong with in cross-selling their financial products. They’ll solicit you for a credit card, and once you get in there, they’ll see how you are, and they’ll go for your deposits. That’s a really healthy way to do this.

“There are some banks that do that better than others. Bank of America has a great program for that, and it’s a good time for issuers to be doing that.  So does U.S. Bank. Nobody knows what unemployment is going to be, and new tariffs are still funky. The timing is interesting, but you have to keep in mind the whole risk of credit cards is still unbalanced right now.”

The post What Premium Card Overhauls by Chase and Amex Reveal About the Credit Card Market appeared first on PaymentsJournal.

As trade wars escalate globally, an African payment system is accelerating its efforts to enable businesses across the continent to conduct cross-border transactions in local currencies.

The Pan-African Payments and Settlements System (PAPSS) allows companies in different African nations to trade without relying on the dollar. Amid ongoing tariff disputes involving the U.S., China, and other countries, PAPSS says many African nations are ramping up their use of alternative global currencies to reduce trade costs and minimize the exposure to dollar volatility.

Lower Costs, Faster Speeds

PAPSS’ internal estimates show that a $200 million intra-African trade transaction would typically incur 10% to 30% in costs through dollar settlements. By using local currencies such as the Nigerian naira, Ghanaian cedi, or South African rand, these fees could be reduced to just 1% per transaction.

As a result, the potential savings for Africa are substantial. PAPSS estimates that Africa could retain up to $5 billion annually in hard currency by adopting regional currency settlements.

Payments are completed in near real time, typically processing within 120 seconds. To meet these settlement times, PAPSS must ensure that funds are available to complete the originator’s transaction before transferring funds between the buyers and sellers’ accounts. Participants are therefore required to agree to a pre-funding arrangement, maintaining balances with PAPSS.

Towards the World’s Largest Free Trade Zone

PAPSS launched commercially in January 2022. The system was developed by Afreximbank as one of the foundational components toward the full realization of the African Continental Free Trade Area, an agreement reached in 2018 among African Union nations.

Expected to be fully operational by 2030, the continent-wide trade zone would be the world’s largest free trade area by land area, encompassing a potential market of 1.2 billion people and a combined gross domestic product of $2.5 trillion. PAPSS is currently operational in 15 African countries, including Kenya, Malawi, Tunisia, and Zambia, with over 150 commercial banks now participating.

Tariff wars have significantly impacted Africa. According to the Carnegie Endowment for International Peace, 20 African countries are currently facing elevated tariffs from the Trump administration, ranging from 11% on imports from Cameroon and the Congo to 50% on goods from Lesotho. Another 29 African countries are subject to the baseline tariff of 10%, including Egypt, Ethiopia, and Kenya.

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One of the main apprehensions with faster payments is the potential for faster fraud, but artificial intelligence could help mitigate these concerns.

A study from the Bank for International Settlements (BIS) and the Bank of England gauged AI’s ability to detect the sophisticated fraud activity perpetrated by cybercriminals.

The experiments were conducted in a simulation based on data gleaned from millions of bank accounts and transactions, designed to be indicative of real-time retail payments.

The study, dubbed Project Hertha, found that AI models are a valuable fraud detection tool, excelling at identifying novel patters of financial crime. BIS reported that AI was 26% more effective at detecting suspicious activity than traditional fraud defenses.

Additionally, AI analytics helped financial institutions uncover 12% more fraudulent accounts than they would have identified otherwise.

A Powerful Evolution

AI’s potency in fraud protection was underscored by separate data from FIS, where 78% of respondents reported that artificial intelligence has improved their company’s fraud detection and risk management strategies.

Nearly half of the business and tech leaders surveyed said they plan to increase their investment in AI over the next two years, with many indicating they intend to delegate more complex tasks to it.

One of the most powerful evolutions of artificial intelligence is agentic AI, where AI agents can handle many tasks autonomously. While AI agents have the potential to be a formidable tool against fraud, many experts increasingly view them as a double-edged sword.

Meanwhile, research from SailPoint found that 96% of tech professionals consider AI agents a growing security threat. Yet, nearly all respondents said they plan to expand their use of agentic AI in the coming year.

A Supplement, not a Solution

As organizations take steps toward incorporating AI, cybercriminals have already deployed both generative and agentic AI at scale, using them in fraud efforts ranging from deepfakes to ransomware attacks. One of the main reasons cybercriminals have gained such significant advantage is that they aren’t hindered by concerns around privacy or reputation.

While Project Hertha may be proof that AI is a powerful tool, there is still the chance that artificial intelligence models could make mistakes—either missing instances of fraud or generating false positives.

These limitations led BIS to conclude that AI tools should be seen as a supplement to fraud defenses, not a complete solution. Since organizations cannot fully rely on AI, they will need to think outside the box and innovate new approaches to keep pace with cybercriminals who have a substantial head start.

The post AI Can Uncover Novel Fraud, Even in Real-Time Payments appeared first on PaymentsJournal.

The latest available data from the Federal Reserve found that there were roughly $1.6 quadrillion in payments in the United States alone. However, because this data includes financial economy transactions like company acquisitions and stock sales, as well as consumer payments, quantifying the total addressable market for B2B payments—much less share shift that is happening between different payment instruments—can be difficult.

This is exactly what Hugh Thomas, Lead Commercial & Enterprise Payments Analyst at Javelin Strategy & Research, set out to do in the Commercial Payments Factbook. His report examines the commercial payments market, identifies growth rates on a product-by-product basis, and details how financial institutions can make an impact with business customers.

Defining the Addressable Market

Out of the total volume of payments reported by the Fed (the most recent data was from 2021), there was roughly $1.4 quadrillion in wire transfers. Although wire transfers may be a base competency for financial institutions, they typically aren’t a growth driver for payments.

“Wires tend to be something that you use to execute at the end of events that are not necessarily in any way payments-focused,” Thomas said. “They are more just, ‘Here’s this stock getting traded, and we move the funds using a wire transfer.’ It doesn’t tend to drive treasury businesses.”

“You use it for high-value, very low-volume transactions, and so we don’t look at that as addressable when you talk about total addressable market in the wholesale payments business,” he said.

Leaving out wire transfers, there was more than $200 trillion in payments value. Once customer payments are removed from the equation, roughly $175 trillion was identified as the total addressable market for commercial payments.

The lion’s share of these payments was ACH credit transfers, where the initiator pushes funds to a payee. The next most prevalent payment type was ACH debit, whereby the payer has an arrangement with the payee where they can pull funds from an account, such as in bill pay or loan payments.

“Still hanging in there with a decent-sized share of B2B payments is check,” Thomas said. “Check payments are hanging in there primarily because they’ve become more of an exception solution. Basically, checks almost doubled in terms of average transaction size and almost halved in terms of volume of transactions between 2015 and 2024.

“They’re effectively becoming a solution where either your payee is not set up to receive ACH credit transfers or direct debit, is unwilling to receive, or it’s just not worth it—it’s a one-time payout where doing a wire would be unnecessary or too expensive, It’s no longer as much of a high-volume, low-value payment system as it has been. That’s how checks are hanging in there is they’re becoming an exception management solution.”

Water Finding Its Level

As paper checks fade, there has been speculation that real-time payments through FedNow or the RTP network could be pushed into the limelight. This hasn’t yet been the case because the established financial infrastructure in the United States has been sufficient enough for commercial use cases.

However, there has been some growth in Same Day ACH, especially since the transaction limit was raised a few years ago. Still, the payment mechanism accounts for only roughly a 3% share of total ACH.

Although card-based transactions are ubiquitous among U.S. consumers, this is not the case in B2B, where card payments represent less than 2% of total value. Because B2B spending typically dwarfs consumer payments by a roughly 10-to-1 ratio, commercial payments represent a significant opportunity for card companies. Visa and Mastercard have acknowledged this in recent announcements¹.

Cards are gaining more traction, with substantial growth seen in many types of commercial cards, from fleet to prepaid to small-business credit.

There was also demonstrable growth in small-business debit, as more smaller enterprises have recognized that the payment mechanism is an effective and inexpensive way to pay suppliers.

Beyond these areas, one of the most promising payment types for B2B transactions is virtual cards.

“We think there are a ton of possible use cases for virtual cards, and our forecast is that virtual card spend will overtake purchasing card spend in the next two years, though it may have already done so,” Thomas said. “We think this is the growth engine, something that can help with automation, make payments more secure and reliable, offer the sort of fungibility that’s useful in a number of circumstances, and potentially provide working-capital acceleration.

“Water has far from found its level at this point with that product, so every possibility that growth comes even faster, particularly as you see the networks moving into things like making hashed card number and virtual card number solutions for agentic AI spend,” he said. “There could be some serious force multipliers there, depending on how quickly people come to embrace those sorts of emerging technologies.”

The 5 Sectors

In addition to evaluating the most prevalent products, the study also broke down B2B spending by sector and segment. It showed that there are five segments dominating real-economy spending: wholesaling, manufacturing, retail, healthcare, and social assistance instruction.

Delving deeper, the study examined which sectors were dominated by large-market, mid-market, and small- to medium-sized enterprises, and how much each of these sectors purchase. Although roughly a third of all spending comes from manufacturing, healthcare comprises a substantial amount of business payments because of its multiplier effect.

“You pay your insurance company, and if you go to see your doctor, you pay a copay, your insurer pays an HMO,” Thomas said. “The HMO maybe pays somebody who manages the wages of doctors. That entity pays the doctor’s company, then the doctor’s company pays the doctor. There’s just a giant multiplier effect as a consequence of the structure of that industry.”

A Resource at Your Fingertips

Understanding the total addressable market, the predominant payment types, and the breakdown of each sector is crucial for financial institutions as they build strategies to reach business customers.

For example, identifying slower-paying industries could help organizations improve cash management.

“We looked at the businesses with the highest days payable outstanding who may want things like supply chain finance or other ways to get their suppliers paid faster if they want to hold on to their cash longer,” Thomas said. “Which industries have the higher day sales outstanding? Who waits the longest to get paid? Businesses in these industries may need bridging solutions, so the document helps providers as they decide which industries to focus on and what solutions and messages to emphasize

With so much supply chain disruption and uncertainty in recent months, many organizations are revisiting their supply chain strategies, a great opportunity for providers to have a conversation about solutions that is informed by the exigencies of specific industries.

“It’s a good perspective in terms of where to weigh in with your financial solutions,” Thomas said. “It’s a good primer for anyone who wants to be able to say in 2025, ‘My boss is going to ask me X, Y, or Z question about where the market is, or the size of X, Y, or Z, the sector percentage,’ or whatever the case might be. It’s just a good resource to have at your fingertips.”

¹ Visa 2024 Annual Report, Mastercard 4^th Quarter Earnings Call, January 30, 2025

The post A Definitional Discussion: Exploring the Shape and Trajectory of the U.S. Commercial Payments Ecosystem appeared first on PaymentsJournal.

For busy business owners, the constant stream of push notifications can quickly become overwhelming. As a result, many financial institutions haven’t seen value in trying to elbow in amid notifications about orders, industry news, and social media updates—especially when there are other ways to reach their business customers.

However, as Ian Benton, Senior Digital Banking Analyst at Javelin Strategy & Research, detailed in the report How to Turn Push Notifications into a Powerful Engagement Tool in Business Banking, many businesses are open to receiving relevant updates from their bank through push notifications. Even more, this underutilized channel has use cases that can strengthen a financial institution’s communications.

Benefits That Stand Out

Although push notifications may not be top of mind for banks, they offer an open channel to business owners. The study found that roughly two-thirds of mobile banking users have enabled push notifications, a rate that outpaces the monthly adoption rates of SMS and email.

Many financial institutions have shied away from push notifications amid concerns that they could be intrusive, but that largely isn’t the case. Benton’s study found that only 18% of business owners said they received too many alerts from their bank.

Additionally, most respondents said they would be comfortable with automatic enrollment in alerts designed to improve their organization’s financial health.

Despite this receptiveness from business owners, push notifications haven’t been an effective communication mechanism for banks for one main reason: They are mostly used to report routine information like account balances or suspicious purchases.

According to the Javelin survey, this is not what most business owners want. When the respondents were asked how they would like to receive messages like “We noticed an unusual transaction” or “Your monthly statement is ready,” they overwhelmingly chose channels other than push notifications.

Financial institutions are not only using push notification for the wrong type of messages but also failing to take advantage of the format’s full potential.

“Push notifications have certain benefits that email and SMS don’t have,” Benton said. “You can deep-link; you can put actions directly within the notification. The notification can go to any device type. You can control their timing a little bit better. There are some definite benefits of using push notifications, but the problem is that business owners and people in general receive dozens of them on a daily basis.”

“If you really want to use them, you have to stand out,” he said.

Rethinking the Banking Experience

The expanded capabilities of push notifications also include adding rich media like images, progress bars, and graphs. This gives financial institutions a much more powerful way to personalize the content they send.

Benton identified five ways that banks can optimize this content, each directly correlating to the major day-to-day areas of business management. These include cash-flow analysis, accounts receivable, accounts payable, spending oversight, and business performance.

“With cash flow analysis, it’s letting people know, ‘Hey, you have a shortfall upcoming’ or ‘Payroll’s going to be due in the next few days and here’s what you need to do to run that,’” Benton said. “It’s ‘You’ve got a large bill upcoming, but you might not need to make a transfer.’ That’s something that’s going to be proactive, and it’s going to demonstrate that the bank is on the side of the business owner.”

A few other examples:

Accounts receivable: The bank could remind the business owner that they have outstanding invoices that need collection and offer assistance.

Accounts payable: The institution could remind the business owner that a quarterly tax payment is due and offer to schedule it.

Spending oversight: The bank could send a notification when a company has exceeded budgetary constraints in a specific area. A push notification regarding performance insights could be generated when a company reduces its debt or expenses.

“You do have to build the back-end capabilities behind that to be able to even generate those types of insights, but it’s not just about the messaging capability itself,” Benton said. “It’s about rethinking the banking experience in general.”

Tactical Relevance

Beyond better content, financial institutions can tactically use push notifications to reach their customers. The onboarding process can often be complex, but enrollment for notifications is often more intensive, often with a series of menus rife with dozens of on-off toggles that a customer has to wade through to select their notifications.

This complexity often daunts business owners, and many will stick with default configurations and rarely adjust them.

However, financial institutions can take the onus off the user and make push notifications more relevant. One of the most effective methods is to bundle notifications.

“Let’s say you have a delegated user like an accountant,” Benton said. “You could pre-enroll folks like that in a set of bundle notifications that are going to be useful for them, versus a business owner who might need to make approvals and things like that.

“It’s thinking about who the user is and prompting people—not just during onboarding, but if they’re making a payment or creating an invoice—and asking if they would like to set up alerts for this, and taking them to the right setting. There are opportunities to make it easier for folks to enroll in push notifications.”

Associating with Action

Though email and SMS are well-designed for many of the most common alerts, financial institutions should also incorporate push notifications. These messages can be a highly effective avenue for banks to engage with their customers—once they find the sweet spot.

“It has to be contextual,” Benton said. “It has to have an action associated with it, but it can’t be super urgent. It has to be something like, ‘You probably want to act on this now, but we’re not going to pull you out of a meeting to act on it.’”

The post From Bland to Beneficial: Using Push Notifications to Reach Business Customers appeared first on PaymentsJournal.

The pace of innovation in cross-border payments is relentless, with regular announcements of new technologies and partnerships. Yet even as the ecosystem evolves, adoption of these solutions by commercial users remains slow and uneven. As shifting tariffs force global businesses to reconfigure supply chains, financial institutions have an opportunity to step in with guidance and solutions tailored to meet rapidly changing cross-border payment needs.

In the Tech Meets Tariffs: Cross Border Payments in 2025 report, Hugh Thomas, Lead Commercial Payments Analyst at Javelin Strategy & Research, examines the impact of tariffs across multiple industries, explores how financial institutions can offset a potential decline in cross-border revenue, and highlights the opportunity for a new way forward.

Weathering the Tariff Storm

Many cross-border payments providers likely serve customers who are considering re-shoring their supplier base to domestic partners to avoid tariffs. For example, a U.S. company with an established Canadian partner may now be weighing whether it is worth absorbing a 10% cost increase to continue this relationship or switch to a stateside supplier.

Since tariffs affect each industry differently, these decisions can quickly become complex.

“In the U.S. oil and gas industry, probably 30% of oil and gas inputs come from Canada,” Thomas said. “The supply chain for refining is designed to take Canadian oil sands, and where else can you get that from? Argentina is the only place that produces that sort of crude, and they’re not online right now to send that stuff up, so the chance to change the supply chain for that industry is very low.”

Conversely, the grocery industry sources much of its produce from Mexico. In this case, companies face fewer barriers when switching to a U.S. supplier, offering different fruit products, or pivoting to entirely new ones.

Another aspect that comes into play is which industries maintain higher days of inventory. For example, the top 10% of the construction industry’s inputs come from cross-border sources. However, many builders carry roughly 130 days worth of inventory on their books.

“They can weather the storm on these tariffs if they wind up being something temporary, which Trump tries to negotiate away on an industry-by-industry or even a company-by-company basis,” Thomas said. “Providers should be thinking about the industries that they bank, and how they’re going to support them to weather the storm.”

Making the Donuts

If tariffs linger and cause more U.S. companies to switch to domestic suppliers, financial institutions could potentially lose revenue from cross-border payments. However, there are several ways that these institutions can adapt.

“One way is if the business needs to bring on new suppliers, maybe there’s an escrow play in there where your first six months of payments are contingent on delivery of goods, particularly for big strategic buys,” Thomas said. “There is also the opportunity to move some customers to commercial cards because that’s a quick way to avoid Know Your Supplier (KYS) expenses, and maybe get a little bit of rebate revenue from your card provider. “

Another approach is to make cross-border payments more efficient. For years, these transactions have been plagued by issues such as high transaction fees, slow settlement times, fraud, currency conversions, and regulatory barriers.

Recently, there has been a flood of systems and solutions designed to make cross-border payments easier, cheaper, more automated, and more transparent. These range from programs managed by credit card networks to projects driven by a consortium of central banks.

Some speculate that connecting real-time payments systems globally could offer the most effective cross-border solution.

Digital assets like crypto and stablecoins have also been presented as the ideal solution for cross-border payments, due to their decentralized nature and blockchain-based security.

While each solution offers unique benefits—and some have gained more traction than others—widespread cross-border payments implementation continues to lag.

“Adopting these technologies is moving at about the same pace as getting rid of checks is moving—glacial is the best way to describe it,” Thomas said. “That’s because the people who are in the business of managing business payments, be they domestic or cross-border, have most of their days spent making the donuts, they don’t have a lot of time to tweak the recipe.”

Two Forces Driving a Reckoning

Because operations take precedence for many enterprises, financial services providers must offer products that deliver impact from day one, without requiring significant build-out or customization on the customer’s end. Additionally, the business use case for any cross-border solution must be both vital and practical.

Once financial institutions identify the use case and the right solution, they will be well positioned to support their commercial customers at a time where many could face a seismic shift in their supply chains.

“These crisis moments have the potential to drive things forward if they make everybody have a reckoning, in terms of how they’re doing things today from a process perspective,” Thomas said. “You have this unprecedented situation of a potential supply chain reevaluation—which is a huge force at work right now—and you’ve got a broader move to go more global, which is still persistent despite the fact that people are putting their tariffs up.”

“There are those two forces at work and then there are all these technologies waiting for someone to look at them more seriously,” he said. “Maybe all this disruption can get people to the point of saying, how we did business yesterday is not how we will do business tomorrow.”

The post As Businesses Reevaluate Cross-Border Relationships, Financial Institutions Can Help appeared first on PaymentsJournal.

Australia has proposed new rules to govern the widespread implementation of technologies like crypto, CBDCs, and tokenization as part of its efforts to modernize the economy with digital assets.

In a whitepaper, the Australian Treasury noted that it would work with the Australian Securities and Investment Commission and the Reserve Bank of Australia to pilot programs using tokenized money, such as stablecoins, to settle transactions.

The regulators also proposed a licensing structure for crypto exchanges, called Digital Asset Platforms (DAPs). DAPS will be required to meet certain financial services standards, including capital levels and privacy disclosures, and must use third-party custodians to store customer assets.

A Clear Crypto Framework

This news follows the launch of the Markets in Crypto Assets (MiCA) regulations by the European Union. MiCA is a comprehensive legal framework for the issuance, investment, and trading of crypto assets across the EU, and it has been viewed by many as a global benchmark for crypto regulation.

Establishing a transparent regulatory framework creates an environment with clear boundaries, allowing companies to build new products without fear of legal repercussions. The lack of a clear crypto framework in the U.S. has often been criticized as a hindrance to innovation.

Paying Crypto Dividends

This assertion is supported by Singapore’s approach to digital assets. The country has strived to be a leader in financial technology, and in 2019, Singapore rolled out its cryptocurrency regulations framework known as the Payment Services Act (PSA).

This framework gives the Monetary Authority of Singapore jurisdiction over companies offering digital payment token (DPT) services, including activities like operating exchanges, trading DPTs, and facilitating wallets.

The early groundwork laid by Singapore is paying dividends. According to Cointelegraph, the country has become a key destination for Web3 companies, with Singapore issuing twice as many crypto licenses in 2024 as it did in 2023.

Research from ApeX Protocol found that Singapore is home to 1,600 blockchain patents, 2,433 jobs in the industry, and 81 crypto exchanges, which—as Cointelegraph pointed out—are impressive numbers for a country with a population of less than 6 million people.

The post Australia Proposes Ambitious Regulatory Framework for Crypto and Digital Assets appeared first on PaymentsJournal.

E-commerce giants such as Amazon and Shopify use data to create highly personalized customer experiences. Yet, bill payment remains largely untouched by this transformation, leading to friction, higher costs, and customer frustration. Despite the wealth of payments data available, many organizations fail to leverage it to enhance customer interactions and reduce costs.

This gap presents a major opportunity: by applying data-driven insights, businesses can not only improve the payment experience but also drive efficiency, reduce costs, and boost customer satisfaction.

In a recent PaymentsJournal podcast, PayNearMe’s John Minor, Head of Product and Gustavo Jordao, Product Manager, joined Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, to discuss how payments data can help organizations deliver better payment experiences.

Unlocking the Power of Payments Data

Payments data provides organizations with deeper insights into consumer behavior, extending beyond transaction details. It captures factors such as time of day, device used, and payment method, offering an in-depth understanding of consumer interactions.     

These data points can be synthesized to create a comprehensive view of the customer’s mindset and context during payment, enabling billers to turn transactions into personalized interactions that improve the overall customer experience. 

Beyond improving customer experiences, payments data plays a key role in operational efficiency, helping businesses reduce operational costs. Businesses that embrace automation and data-driven decision-making can streamline processes and lower their total cost of acceptance.

“One of our clients in the lending space was able to save $44,000 a month just by leveraging automation,” added Jordao. “By triggering specific rules based on transaction data, they streamlined payments and significantly cut costs.”

The Importance of Clean Data

Any discussion of data inevitably leads to artificial intelligence (AI). However, success with AI or machine learning depends on clean, structured data.     

“There’s so much buzz about AI, but we put in our 2025 forecast that it’s going to be the second adopters of AI that will really reap the benefits, as opposed to the first movers and early adopters,” Apgar said. “So many companies are rushing to find so many applications for AI that I think it’s too easy to stub your toe, especially in a customer-facing or risk-facing application.”

AI depends on high-quality data. Poor data can lead to unreliable insights. To ensure accuracy, organizations must prioritize data cleanliness, implement strong monitoring systems, and maintain transparency in AI decision-making.

“It’s about understanding the interactions and making sure you’re instrumenting the transactions you rely on to create good datasets,” Jordao said. “That’s one of the key things about AI—making sure that you have a way to trace and audit how it’s being used, because it’s a very complex tool. You should be able to control its application and drive it toward      performance and a better experience for consumers.”

AI and Fraud Prevention

Fraud detection is an area where AI excels, analyzing vast amounts of data to identify anomalies and automate responses—a costly and time-consuming task. Fraudsters are becoming more sophisticated, making it more difficult to flag fraudulent transactions based on isolated data points. 

“Risk is a highly complex interaction—there’s no single red flag for fraud. That’s where machine learning takes the spotlight as a tool to be used,” said Jordao. “One of our gaming clients reduced fraud by 60% just by leveraging AI to analyze transactions in real-time—something that would be impossible to do manually.”

ML models excel at recognizing patterns and triggering automated actions. Unfortunately, few organizations have fully leveraged the power of AI and machine learning to enhance the bill pay experience.

“As it relates to bill payment, generative AI could be used to replace or automate several aspects,” Minor said. “Automated bots could handle outbound and inbound calling, messaging, and communication using generative natural language processing. That could help lower the costs required to collect the payment.”

Enhancing Personalization in Bill Pay

E-commerce has set the standard for data-driven personalization and the bill pay industry must follow-suit. “In e-commerce, data is being used to personalize what you see, how you can pay, and what items belong together, which varies by consumer,” Minor said.

“Those insights are gained by leveraging clean data like past purchases, browser history, and location. Bill pay is no different. Consumers need access to different content and options beyond just completed transactions. They want to complete what they’re there to do at a given point in time.”

For example, a customer logging into their bill pay account may not intend to make a payment immediately. If their bill isn’t due yet, they may be looking for information such as their payoff date or account details. A personalized experience can anticipate this and present relevant options.

Additionally, payment experiences should adapt based on the access point. If a customer pays through a mobile device, the system could suggest payment methods optimized for mobile transactions.

Despite these possibilities, many organizations have not prioritized personalization in bill pay.

“What you see sometimes in bill pay is that organizations haven’t given the process the same amount of focus as they have on the product they’re selling to the consumer,” Minor said. “Unfortunately, they are often using fragmented platforms that aren’t able to ensure the consumer is able to complete the thing that they’re there to do at a given period of time.”

With Data Comes Greater Responsibility

Data offers significant advantages; it is not just an asset—it’s the foundation of growth and innovation. However, the true power lies in how organizations interpret and apply their data. 

Leveraging data gives businesses the ability to better understand customer behaviors, preferences, pain points, and purchase drivers. To maximize value, businesses should seek partners who provide actionable insights that drive measurable results. Clean, structured data not only improves efficiency, but also serves as a springboard for delivering exceptional payment experiences.   

“We’ve heard a lot in the news about payments orchestration,” Apgar said. “That’s been the buzzword in the payments business for the last couple of years. That is also data-driven, but I think the way that we’re talking about using data in this context takes the payment experience to the next level of payment orchestration, not only from the data that is being captured, but the way it’s being applied.”

As AI continues to shape the future of payments, organizations must carefully evaluate potential partners, ensuring AI is used responsibly and critical data remains protected. “With great data comes great responsibility,” Minor said.

The future of payments isn’t just about adding new technology—it’s about creating an experience that is seamless, secure and deeply personalized. True, sustainable innovation requires more than just ‘bolting on’ the latest shiny object; it demands a strategic approach that drives real value.

“Data is behind everything we do. If you’re not thinking about data, you’re already behind. Our job is to democratize it, make it actionable, and help our clients lower their total cost of acceptance,” said Minor. 

The post The Untapped Power of Payments Data in Bill Pay appeared first on PaymentsJournal.

A malfunction in a critical system at the European Central Bank (ECB) left more than three trillion euros up in the air for hours.

The Target 2 (T2) system settles $3.12 trillion in payments from businesses and consumers, as well as investment trades. The ECB stated that a “hardware defect” in T2 caused a system-wide outage, clarifying that the incident was not the result of nefarious activities.

According to Reuters, the disruption lasted roughly seven hours, but a person familiar with the breakdown suggested the system could remain in disarray for days. In a statement, the ECB said T2 was functioning normally again, but all deadlines for settling the day’s payment flows had been postponed for several hours.

Uncertain Ramifications

Though the outage has been resolved, the ramifications of the event are still unclear. The ECB is one of the world’s leading central banks, and this disruption raises questions about the infrastructure supporting it.  

A spokesperson for Germany’s central bank, the Bundesbank, told Reuters that the outage meant paychecks, pension payments, and government assistance transfers were delayed and could take several more hours to arrive.

A similar scenario was reported by Deutsche Boerse’s Clearstream, which processes roughly 500,000 securities trades per day.

A Series of Outages

The issues at the ECB follow a series of service outages at major British financial institutions earlier this month that caused payment delays for hundreds of customers. In one incident, the Lloyds and Halifax banking apps were down for hours, preventing customers from transferring funds and accessing mobile and online banking.

There was a separate interruption at Barclays, where over 600 customers reported failed payments and incorrect account balances. While no reason was provided for the outages in any of these cases, no malicious activity was suspected either.

These incidents drew comparisons to the CrowdStrike outage, where a software glitch led to the largest internet outage in history. Though the ECB and UK bank outages are nowhere near that level, there’s been increased speculation that banks are struggling to keep up with the evolving technologies they depend on for critical functions.

The post Seven-Hour ECB Outage Leaves Trillions of Euros in Limbo appeared first on PaymentsJournal.

Consumers have become increasingly aware of the benefits of emerging payment methods and are accustomed to using different payment mechanisms in various scenarios. Gen Z, in particular, is especially payments-savvy—one of the reasons Mastercard is launching its One Credential platform.

One Credential allows customers to choose from multiple payment methods like debit, credit, buy now, pay later (BNPL), and prepaid, all within a single interface. Users can manage their selection of payment options through Mastercard’s online platform or app.

The payments giant believes this solution will appeal to younger consumers, who are digital natives and prioritize personalized experiences. This preference for experiences has fueled a resurgence in shopping at physical malls among younger consumers. However, Gen Z hasn’t abandoned e-commerce; instead, they are blending aspects of in-store and online shopping to create a hybrid shopping experience.

Structuring Credit

Another key aspect of One Credential is that it will provide structured credit solutions aimed at helping Gen Z build their credit scores and improve their creditworthiness.

Gen Z consumers haven’t been hesitant to embrace credit cards. A recent study by the Federal Reserve of Dallas found that younger consumers in Texas are more likely to own credit cards than previous generations at the same age and tend to use them more frequently.

Roughly 60% of Gen Z respondents reported having at least one credit card in their early 20s, with nearly a third saying they had a credit card that was 75% or more of its credit limit.

Filling a Role

Mastercard’s latest effort represents a growing trend in the financial services industry, where organizations are adapting their models to align with Gen Z’s preferences. Just as Gen Z adults are becoming more active with credit cards at an earlier age, younger consumers are also starting their investment journeys sooner. The digital-first mindsert of Gen Z investors has driven a shift toward AI tools and self-directed platforms.

Gen Z is also influencing a shift toward mobile and digital banking solutions at traditional financial institutions. While technology solutions are important, many younger consumers are also looking for guidance—an opportunity that financial institutions can seize.

“Gen Z consumers often have to rely on free financial education and advisors because they don’t have any alternative,” Gregory Magana, Digital Banking Analyst at Javelin Strategy & Research told PaymentsJournal. “Older generations, which are more financially established, have an easier time getting in-person help. There could be a significant return on investment from offering Gen Z consumers Finance 101, so they can boost their financial confidence.”

The post Mastercard Launches One Credential in Play for Gen Z Consumers appeared first on PaymentsJournal.

Recent technological breakthroughs have given merchants more payment optimization options than ever before. However, the increasing complexity of the landscape makes it challenging to identify value and create opportunities while keeping expenses down.

In a recent Javelin Strategy & Research report, 2025 Merchant Payment Trends, Don Apgar, Director of Merchant Payments, and James Wester, Co-Head of Payments, examined the impact of three emerging trends shaping the merchant experience: artificial intelligence, the fintech bubble, and the shift toward value over cost.

Saving a Dime

Merchants are increasingly focused on payments performance, constantly seeking ways to optimize their payments operations. They closely track their organization’s metrics and often employ dedicated staff or vendors to monitor payments activities.

In pursuit of lower costs, many merchants have turned to payment orchestrations platforms. However, in some cases, the expense of these solutions outweighs the intended savings.

“If you’re running on a payment-orchestrated platform and you’ve got two or three processors, you may have somebody on the finance team whose job title is analyst, but in reality, they spend 100% of their time working on payments-related reconciliation and cost allocation,” Apgar said. “Also, you may have added a vendor who does loyalty or risk reduction or some other ancillary process that only applies when a transaction has certain characteristics.”

When multiple processors and vendors are introduced, the added complexity makes it difficult for merchants to ascertain the true cost of payments.

“It’s the old adage: ‘I saved a dime, but it cost me a dollar to do it,’” Apgar said. “I optimized authorization, and I sold an extra $100 in goods, but it cost me $1,000. I think there’s going to be a focus on drilling down in the merchant organization and asking, ‘What is the real cost?’ The answer is always somewhere in the middle of a completely deconstructed operation with multiple vendors, versus doing everything on your own.”

A Historic Bubble

The vendors that become an integral part of many merchants’ operations are often fintech companies that have sprung up in the past few years. However, these firms face stumbling blocks of their own, and an overreliance on fintech partners could create risks for merchants in the long run.

“I think we’re seeing another fintech bubble,” Apgar said. “History is repeating itself, like the dotcom bubble in the early 2000s. Investors were throwing money at every business plan that didn’t have a typo on it, and it didn’t have to make money, it just had to get market share. We’re seeing a lot of that in fintech, too. We have so many business plans that don’t have a navigable path to positive revenue, but it’s being obscured by all the headlines and the buzz.”

Some of these challenges became evident last year, exemplified by the collapse of Synapse, a fintech whose documentation lapses left banking customers unable to access $85 million of their funds.

The fallout from Synapse’s failure prompted regulators to scrutinize the role of fintechs in the modern financial system—an oversight that is set to intensify this year.

“We’ve seen a blizzard, not even a flurry, a blizzard of compliance fines come down from the Federal Trade Commission, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Commission,” Apgar said. “Everybody is worried about compliance, fraud, and money laundering. Banks can contract these things out to a fintech, but at the end of the day, the bank owns the responsibility for them.”

As regulators increase their focus on fintechs, pressure will mount on the organizations that don’t have a durable value proposition. Under this heightened scrutiny, some firms may consolidate, others may be acquired, and some may be forced to shut down entirely.

Second Movers

Despite these hurdles, financial technology has irrevocably altered the banking model, and its impact will only intensify as more financial services firms integrate AI. However, this adoption faces obstacles. While artificial intelligence is one of the most powerful and transformative technologies ever developed, it still has many imperfections.

For example, Google faced backlash after its Gemini AI engine provided inaccurate feedback on multiple occasions. There have also been instances where AI has “hallucinated,” generating fictitious information.

As organizations race to capitalize on AI’s advantages, they should be cautious about entrusting critical functions entirely to to artificial intelligence. For example, a financial institution may deploy AI to sift through millions of transactions as part of its compliance efforts—a task for which artificial intelligence is generally well-suited.

However, if AI overlooks something, fails to report an issue, or malfunctions, the bank will still be held accountable for any compliance failures.

“There’s another old adage: ‘You can spot the pioneers—they’re the ones with the arrows in their backs,’” Apgar said. “Our prediction for this year is there is going to be a second-mover advantage. I think that the folks that jump on the bandwagon early and are the first to roll out AI-driven chatbots on their website, they’re going to get a black eye because it’s not going to work.”

While there are still too many gaps to fully rely on AI, companies can’t afford to ignore it. In the coming years, organizations—and the world—will effectively help train the language learning models that power AI. As time goes on, AI will learn from its mistakes, and the technology will improve significantly  in the long run.

Therefore, organizations that take a slower, more measured approach to AI implementation will be in the best position to reap the rewards when the technology is fully optimized.

“It’s certainly not too early to start mapping out how a highly functioning model could create efficiencies and potential savings,” Apgar said. “Once the technology becomes more accurate and reliable, then you’ve already got a plan. You will have a framework to evaluate the progress of the technology and say, ‘I think this model is at a point where it’s suitable for this function.’”

“When you look at it in that light, when you do implement AI, you’ve got a much higher probability of success,” he said. “Success being defined as it didn’t blow up and cost me anything.”

The post Merchants Are Searching for Value in an Increasingly Complex Environment appeared first on PaymentsJournal.

The institutional adoption of crypto and digital assets is at a higher level than ever. According to Ripple’s 2024 New Value Survey, the overwhelming sentiment among North American respondents is that digital assets and crypto will have a dramatic impact on business, finance, and society.

That being said, there is still some reticence, especially among North American organizations. Concerns about the lack of regulatory clarity and the potential for fraud, coupled with a reliance on legacy systems, have kept many of those institutions from adopting a modernized payments infrastructure that incorporates digital assets.

Key insights from the report are below, including the payments challenges that organizations face and the ways they’re leveraging blockchain-based solutions to overcome these challenges.

Digital Assets Will Impact Organizations Considerably

Ripple polled roughly 1,800 financial leaders across a spectrum of roles, including financial institution executives, fintech leaders, and commercial treasury management professionals.

Over 85% of respondents said that digital assets will have either a massive or significant impact on the business world. An even higher percentage anticipated that these effects would be even more substantial in the finance sector.

North American leaders’ expectations regarding the impact of digital assets on finance align closely with their European counterparts and are slightly higher than those from Asia Pacific. However, respondents from the Middle East, Africa, and Latin America expressed greater expectations for the influence of digital assets.

Blockchain was highlighted as a potential gamechanger across the board. Roughly 89% of respondents said they either use or plan to use blockchain-native currencies for payments, including stablecoins, central bank digital currencies (CBDCs), and cryptocurrencies. Use cases identified include the buying, selling, and trading of digital assets, payment acceptance, and cross-border payments.

Over half of North American participants believe that faster payment and settlement is the primary benefit of incorporating blockchain-based currencies, and that particularly applies to cross-border payments. The next most cited benefit was the always-on availability digital assets provide, followed by the cost savings they deliver. 

There is Still Payments Progress to be Made

While organizations recognize the benefits of adopting digital assets technologies, there is still progress to be made in implementing the necessary technology and infrastructure to support crypto.

Approximately 70% of commercial leaders reported still using bank transfers, such as wire and ACH, for cross-border payments. Additionally, they relied more heavily on digital wallets and credit cards compared to their global counterparts.

The technologies they use to manage their cross-border money flows are bank platforms, payment providers, and enterprise resource planning systems, in that order. Treasury management systems like Kyriba ranked as the fourth most popular option.

Credit cards remain a fixture in the U.S. and may be one reason the country lags behind global peers in adopting emerging innovations like open banking, digital wallets, and other payment alternatives. The convenience and processing of credit cards—compared to ACH—are likely reasons why payment leaders rely on them, even in spite of higher fees. 

As a result, the most frequently reported cross-border payments challenge for North American financial leaders is the high cost and fee structure associated with these transactions. When asked about the types of fees their business incurs most often in cross-border transactions, organizations cited foreign exchange fees, transfer fees, and platform fees as the top three.

Challenges with Cross-Border Payments Persist

After fees, respondents identified poor data security as their next biggest challenge with cross-border payments. This includes risks associated with incorporating digital assets, where many cited the security of the technology and price volatility as the most pressing concerns.

Personal career risk was another significant concern among respondents in North America, where it was notably higher than among peers in other regions. Enterprise finance professionals, in particular, expressed greater concern about reputational risks.

The fact that financial professionals are concerned that crypto advocacy could jeopardize their career indicates there still isn’t an overarching comfort level with digital assets and crypto in this region. This could be due to the lack of a clear regulatory framework for digital assets, or bad press about crypto fraud and other bad actors.

Blockchain-Based Benefits

While the concerns are genuine, financial leaders are hopeful that stablecoins, crypto, and CBDCs can ease several pain points for businesses. The top four issues that digital assets can help resolve are a lack of financial transparency, limited global payment network reach, poor data quality, and long settlement times.

These issues can be mitigated with blockchain-based solutions. For example, blockchain and distributed ledger technologies could reduce cross-border payment fees by minimizing the number of intermediaries involved in the payment flow.

This is particularly relevant for organizations sending payments in more exotic fiat currencies or in hard-to-reach regions. Blockchain can also eliminate the lack of liquidity and the settlement delays that can arise from processing through central or intermediary banks.

The transparent nature of blockchain can allay concerns about poor data quality by helping transaction parties verify payment details and reduce the potential for errors or fraud. In addition, the distributed nature of blockchain helps prevent unauthorized access and safeguards transaction data.

While there may always be price volatility concerns with certain cryptocurrencies, some cross-border payments platforms ensure customers are not subject to price fluctuations. For instance, Ripple Payments uses digital assets and stablecoins as a bridge between fiat currencies in a cross-border transaction.

With Ripple Payments, there is no need for additional intermediaries or correspondent banks, settlement is nearly instant, and customers aren’t required to hold crypto on their balance sheet.

Clear Payments Needs

Payments are fundamental to any organization’s success, and there will be increasing demand for convenient, secure, and instant transactions, especially in cross-border use cases. Though not all financial services companies suffer from many of the tech integration and maintenance issues that some of their global peers do, they are still hindered by legacy systems that come with increased fees and poor liquidity.

Overall, the sentiment of Ripple’s survey substantiates the assertion that digital assets technologies will continue to gain traction in North America. The main reason is there are clear payment pain points that crypto and digital assets can solve.

More companies will begin to centralize their business strategies around digital assets and the blockchain-based movement will gain momentum. Though there may be concerns around crypto now, as more financial leaders realize that crypto-based payment solutions are faster, more efficient, and less expensive ways to move funds around the world, these concerns will fade into the background. 

The post Digital Assets in North America: Trends, Use Cases and Challenges appeared first on PaymentsJournal.

In 2021, the Government of Canada passed the Retail Payments Activities Act, which required the Bank of Canada, the nation’s central bank, to begin overseeing payment service providers (PSPs). Under the legislation, Canadian PSPs—along with any entities involved in the electronic transfer or storage of funds—must register between November 1 and 15.

In preparation of these new regulations, Ron Morrow, Executive Director of Payments, Supervision and Oversight at the Bank of Canada, spoke with Brian Riley, Co-Head of Payments at Javelin Strategy & Research in a recent PaymentsJournal podcast. They discussed how and why PSPs should ensure they are ready to comply with the upcoming requirements.

Embracing the Regime

After the legislation was passed, the Bank of Canada worked with the Department of Finance to develop regulations for supervising PSPs. The focus is primarily on two key requirements for PSPs. First, they need to establish an operational risk framework to effectively manage business continuity, cyber threats, and other related operational risks. Second, if they hold funds on behalf of end users, they must ensure those funds are adequately safeguarded. In the event that a PSP holding client funds goes out of business, those funds would be considered bankruptcy-remote and could be returned to the end users.

“Many of the PSPs we’ve talked to actually embraced the regime,” Morrow said. “PSPs are largely unregulated in Canada, but coming into the regulatory fold will help their interactions with other regulated financial sector entities like banks and credit unions.”

Once payment service providers come under the supervision of the Bank of Canada, they will be eligible to become members of Payments Canada after the government passes some necessary legal amendments. This will enable PSPs who meet eligibility requirements to directly connect to Canada’s national payments infrastructure. As a result, eligible PSPs will be able to participate directly in Canada’s real-time payment system, which is currently being developed by Payments Canada and other payment infrastructure providers.

“The PSP, one way or another, is going to be dealing with regulated entities,” said Riley. “If they are not compliant with this, they’re going to have some downstream issues. If they are compliant, it sets the stage for being able to move into other markets and going deeper within Canada.”

Worldwide Standards

When it was building out the regime, the Bank of Canada examined the approaches taken by other jurisdictions regarding payment regulation.

“Wherever possible, we align our standards with what is already out there in the world,” said Morrow. “If there was a standard that was becoming common practice or best practice, and it made sense for Canada, we incorporated it into our own rules.”

This should help PSPs in two key ways. First, domestic PSPs will be well positioned to conduct business in other jurisdictions due to the consistency of the rules with those implemented elsewhere. Second, it will alleviate the burden on PSPs that already operate in multiple jurisdictions, as the requirements from the Bank of Canada will align broadly with regulations in other parts of the world.

Inside the Process

Every year, PSPs will be required to submit a standardized template of information to the Bank of Canada, including details about the volume and value of payments. They will also need to report any significant risk events that occurred throughout the year. Additionally, each year, the Bank of Canada will select a group of PSPs for a deep dive into their operational risk frameworks.  

“We’ll be digging into the details about how they’re complying with the act, with a view toward whether or not there any gaps with the approach the PSPs are taking,” Morrow said. “If there are no gaps, great. If there are gaps, then we’ll have a conversation with the PSP around whether or not they agree. If there’s disagreement on the gaps or the PSP doesn’t feel they need to take action, we might move the issue to our enforcement division, but our enforcement is really based around ensuring compliance. We want people to comply with the act. We don’t want to be punitive or punish people.”

The Bank of Canada has identified over 3,000 entities that are expected to fall under the scope of the Act. Once the registration window closes, they will follow up with those they believe are PSPs but did not register, informing them that failure to register will result in enforcement actions. 

For More Information

The Bank of Canda’s website outlines the scope of the regime and the organizations to which it applies. If a PSP is performing one of five payment functions outlined on the site, they are potentially subject to being overseen by the regime.

The website offers guidance on both the safeguarding of end user funds and what PSPs need to take into account as they’re developing their operational risk framework.

“We have a number of scenarios on our website that highlight particular use cases or business models to help them help people get their heads around whether or not the regime applies to them,’” Morrow said. “If you’re in the business of moving people’s money electronically or holding their money electronically, and you’re not already prudentially regulated like a bank, it’s very likely that you’re subject to this regime.”

The post Bank of Canada Takes Oversight of Payment Service Providers appeared first on PaymentsJournal.

What’s the best reloadable card? That depends on the user.

Javelin Strategy & Research named the Serve Cash Back card as the best in its ranking of 10 popular card programs in the new 2024 General-Purpose Reloadable Card Program Scorecard.

However, the Serve card didn’t finish first in any of the three evaluated categories. Its consistency as a top three card in each category boosted its overall score. This highlights—as the study emphasizes—that there are many different ways people use and evaluate reloadable cards.

Javelin conducts a consumer sentiment survey on prepaid cards every year. Since general-purpose reloadable cards are a huge segment of the prepaid market, the survey consistently provides valuable data on how these cards are purchased and used.

“We wanted the scorecard to reflect the desires of those people who use the cards to make sure that the intended audience is getting the product that they value,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research, and author of the study. “There is a plethora of good options for whatever the consumers need.”

A Card for Every Use

Each of the cards evaluated brings unique benefits to the table.

“Out of the 10 cards we evaluated, six different cards were recognized in one way or another,” Hirschfield said. “So 60% of the market is doing something really well, and that doesn’t mean the other 40% aren’t doing things well too. That goes back to the idea that consumers’ needs are going to be different.”

“Just because one card is better at ongoing experience, some consumers may value the cost process more and really will want to look at that,” he said.

Simple and Secure

Fraud and security issues are critical concerns for users of reloadable cards. For instance, users want the ability turn a gift card on and off if they misplace it, much like with a debit card or a credit card.

“When people go to that display of cards right next to the gift cards, they want to make sure that it’s a brand that they trust,” said Hirschfield. “They want to know that the packaging is safe, that they’re taking every precaution, both the brand of card that’s being offered as well as the retailer that’s selling it to make sure that the card is safe and secure.”

Evaluating the security of a card is often easier for those who sign up online because they can much more readily compare and contrast different options.

“That really empowers the consumer to do that research,” said Hirschfield. “Am I getting the card that fits me? Am I getting a card from someone that I trust that has the benefits that match what I need?”

Another benefit is that online cards are often free of charge, unlike the fees that are frequently incurred at retail stores. Indeed, low costs for setting up a card were found to be the most important feature when choosing a reloadable card.

Stop to Reload

The biggest concern among reloadable card buyers—the primary reason they may hesitate to purchase a specific card—is the difficulty of reloading it. Many issuers are addressing this by encouraging direct deposit, which not only automates  the loading process but can also reduce monthly or periodic charges.

Another vital aspect of convenience is the mobile app. When users can deposit a check through the app, much like with a bank account, they find access to be much easier.

Issuers like Target, Walmart, and Western Union, which have physical locations, make reloading much easier for their users. “That’s part of what makes those cards a little more identifiable to the consumers who want them,” Hirschfield said. “If you are someone who frequents one of those retail outlets, you know that it will be easy to deposit money in a physical location.”

The variety of card options is fueling the growth and popularity of this category, which represented a total load value of $234 billion in 2023.

“One card may be better at ongoing experience, while some consumers may value the cost process more and really will want to look at that,” Hirschfield said. “It comes down to the consumers educating themselves on what is the most valuable criteria to them.”

The post Exploring Reloadable Cards: Tailored Options for Every Consumer appeared first on PaymentsJournal.

More than half of global consumers have made instant cross-border payments for goods and services, and that market is projected to grow.

Approximately 63% of consumers have used instant payments systems to send funds across borders to friends and family, according to a recent report by GlobalData. The study also estimated that European cross-border payments alone would experience nearly the same level of growth in the next few years.

“We’re seeing the dramatic use of instant payments in India, Brazil, and Asia, and it’s picking up steam in the European Union,” said Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, in an earlier conversation with PaymentsJournal. “The real tipping point is going to be when we see the cross-continent and cross-ocean payments influx, and I don’t think we’re too far away from that happening.”

Prime Candidates

Instant payments are considered the future because they are fast, accurate, and less expensive. They are also a prime candidate for cross-border payments, which often face issues with slow settlement times, regulatory hurdles, and fraud.

There have already been cross-border expansion efforts by some of the largest instant payments players. After India’s success with UPI, the National Payments Corporation of India’s international branch entered talks to explore expanding the UPI model to countries in South America and Africa.

UPI is also set to connect with instant payments services from Malaysia, Thailand, Singapore, and the Philippines over the next few years in a venture called Project Nexus. UPI had already linked with Singapore’s PayNow last year.

Cross-Border Powerhouse

Project Nexus is facilitated by the Bank of International Settlements, a consortium of seven major central banks. BIS has also initiated Project Agora, a collaboration with public and private financial organizations to explore how tokenized commercial bank deposits can be integrated with central bank digital currencies on a single platform.

One participant in Project Agora is the Society for Worldwide Interbank Financial Telecommunication (SWIFT) which has the potential to be a cross-border powerhouse in its own right. SWIFT operates a global messaging network that it has already used to transfer tokenized assets. The organization is moving forward with digital asset transaction trials next year.

Although there are many cross-border payment solutions in development, it’s still unclear which one will scale to become the standard for instant cross-border payments. Last year’s failure of the P27 project in Europe proved that a common standard isn’t the only issue hindering cross-border payments—banks and regulators also have to buy in.

The post Instant Cross-Border Payments Gain Traction Amid Scaling Challenges appeared first on PaymentsJournal.

Since Elon Musk announced X’s intention to become a payments platform, the company has made significant strides. The social media platform secured licenses to transmit money in 25 states and has licenses pending approval in several others.

Initial expectations for the platform are that X users will be able to tip each other and send peer-to-peer (P2P) payments in-app. But a recent X post by Chief Information Security Officer Christopher Stanley makes it clear that X’s aspirations for the platform go far beyond P2P payments.

“I can pull money into X and store it in my X Wallet and send money to any X Payments user,” Stanley wrote. “Think Venmo at first. Then, as things evolve, you can gain interest, buy products, eventually use it to buy things in stores (think Apple Pay).”

One-Stop Shop

Musk has been very transparent about his ambitions to expand the app into a one-stop shop, a la Alipay. What hasn’t been clear is just how quickly he can transform the social media platform into a full-fledged financial institution.

In December, Musk announced X would support payments, and since then, the company has taken critical steps toward reaching its planned mid-2024 launch. Tennessee recently granted the company a money transmitter license, with several more states still pending license approvals.  

Making Banking Obsolete

Cryptocurrency owners anticipated the platform’s launch because of Musk’s well-documented fondness for crypto. But at this point there’s no word on when crypto transactions will be supported by X Payments.

While X will likely leave the door open to future crypto expansion, the company is more focused on making bank accounts obsolete for X users. It’s still unclear how willing users will be to share their financial data with the often controversial company. Regardless, Musk wants X Payments to encompass “someone’s entire financial life,” a sentiment Stanley echoed.

“The end goal is if you ever have any incentive to take money out of our system, then we have failed, you shouldn’t ever need to take money out because you should be able to do anything you need on our platform,” Stanley wrote.

The post X Payments Platform Aspires to More Than P2P appeared first on PaymentsJournal.

Apple has been at the center of a regulatory debate in the European Union (EU) for years. EU antitrust regulators launched an investigation following claims by the company’s rivals that Apple hindered their access to its tap-and-go contactless payment technology.

The iPhone maker appears to have secured a significant victory in a case that could have cost Apple as much as 10% of its global annual turnover. After the company implemented mandated changes to its mobile payments platform, EU regulators signaled their intent to approve Apple’s tap-and-go-tech in May.

To secure the approval, Apple had to prove that it had given competitors access to its near-field communication (NFC) technology, which powers the tap-and-go platform. The company’s proposal grants competitors access to Apple’s NFC tech for 10 years, without any fees or obligations to use Apple Pay.

Avoiding Catastrophe

While the company is no doubt happy about its increased market penetration, Apple is likely more relieved to have avoided further penalties. The EU recently fined the company $2 billion in March after it received allegations from Spotify.

The music streaming service claimed that Apple charged an excessive 30% commission on its sales and alleged that Apple prevented Spotify and others from advertising discounted subscription rates and promotions, while also diverting users away from the Apple ecosystem.

Mounting Concerns

Apprehensions about the company’s practices haven’t been limited to the EU. The Consumer Financial Protection Bureau (CFPB) also expressed concerns about the market dominance held by Apple and Google in the mobile payments space.

Tap-to-pay technology was at the center of the CFPB’s concerns, because regulators worry mobile wallets are just another tool big tech companies use to keep consumers locked into their ecosystem.

The CFPB estimated that 130 million Americans use an iPhone at least once a month, and over 75% having Apple Pay installed. In April 2023 alone, the CFPB estimated that 55.8 million users made an Apple Pay purchase in-store. The surging popularity of the technology only amplifies concerns about Apple’s tight grip on it.

The CFPB also noted that Apple actively thwarts innovation because Apple Pay doesn’t integrate with other banking apps, or with payment apps like Venmo. Apple and Google pushed back, stating the CFPB had a vested interest in keeping tech out of banking.

While the fight between governments and big tech persists, the EU win is critical to keep Apple’s plans for its mobile wallet platform on track.

The post Apple Tap-And-Go Tech Set to Pass Crucial EU Hurdle appeared first on PaymentsJournal.

The rise of digital wallets, or e-wallets, is undeniable. Whether it’s paying for groceries with Apple Pay by tapping your phone to a screen or paying the babysitter with a peer-to-peer (P2P) app like Venmo, cashless, cardless transactions are everywhere.

According to McKinsey, digital wallet penetration has reached at least 89%; one Forbes study suggests that a majority of Americans use e-wallets more often than traditional payment methods. It continues to be the fastest-growing payment method, as it has been gaining popularity for the last few years, and by some estimates it is projected to reach a market size of nearly $16 trillion by 2028.

Why is it that people are increasingly opting for digital wallet payment? As is the case with many new technologies, it comes down to convenience. Research shows that American consumers crave more and more streamlining of their payment experiences, and digital wallets make paying for all sorts of products and services simple and convenient, while providing robust protection of sensitive financial information.

Clearly, the trend of using digital wallets for in-person and P2P payments isn’t going anywhere. But what about your utility bills? Insurance premiums? Local taxes? It may seem odd or incongruent to some to use something as novel as e-wallets for something as staid as a water bill. But when you get down to it, using digital wallets to pay for your utilities is as natural a choice as using them to pay for your coffee.

Convenience Reimagined

It used to be that the phrase “paying the bills” would call to mind the image of a kitchen table strewn with envelopes, a personal checkbook, and a book of stamps. Of course, things have evolved since then: many Americans choose to receive bills in their email inboxes and pay online, with credit cards or e-checks.

Digital wallets make paying bills even less of a production. When billing organizations offer digital wallet payment options, their customers can take care of their monthly utility bills or insurance premiums with a few taps on their smartphones. “Paying the bills” goes from a time-consuming chore to check off the list to a task you can take care of while commuting to work.

Enhanced Security

A hallmark of digital wallets are their extensive and robust security protections that ensure the financial data within is safeguarded, and a prime example is the use of tokenization to protect credit card and bank information. Tokenization is a process of more or less anonymizing digital transactions: a credit card number, for instance, is replaced or represented by a one-time use token that represents it. If hackers or bad actors are able to access the token, they’ll have just that—a token that can only be accepted in one transaction—and not an actual credit card number.

Tokenization is often associated with e-commerce, where an individual transaction may involve the use of tokens in the place of credit card numbers. But there’s no reason this security measure can’t be applied to utility payments or even tax payments.

And tokenization is just one of the increased security measures digital wallet users benefit from. From advanced encryption to biometric protections like fingerprint- or face-ID programs, the safeguards around data used in e-wallet transactions is lightyears beyond what’s possible for more traditional payment methods like writing a check or verbally providing credit card information. Whether customers choose to pay their bills via credit card or directly from their bank, digital wallet payments provide added peace of mind at the cutting edge of cybersecurity.

Modernized Customer Experiences

Convenience and robust security are important elements of the customer experience, but digital wallets also open up a whole new world of customer engagement. When billers offer e-wallet payment options, they are also offering their customers the ability to track their bill payments in real time. Moreover, digital wallets allow payers to keep track of all their financial activities in one centralized location. Rather than switching between different billing platforms for different bills, utility customers can corral all these payments into one place when digital wallets are on offer. This streamlines the bill-payment experience further and empowers customers to manage their finances—how much their electricity bill has gone up in the past few months, for example—in one place with more oversight. This enhanced customer experience can foster loyalty and positive sentiment, which can be invaluable for industries with reputations for being behind the times.

Utility companies and municipal services aren’t necessarily the first areas people think of when they think of tech innovations, but that doesn’t have to be the case. There’s no good reason why people should only use e-wallets for some transactions—grabbing a slice of pizza or paying the plumber. The advent and proliferation of digital wallets are proof that the digital revolution is still in full swing for the payments industry. Offering digital wallet payment opinions can help ensure legacy institutions aren’t left behind.

The post Digital Wallets Bring Legacy Institutions into the 21st Century appeared first on PaymentsJournal.

Application programming interfaces (APIs) continue to pose significant security risks to all businesses. High-profile security breaches are happening constantly, and nearly all of them trace back to an API as the point of entry.

According to The API Security Disconnect 2023, 78% of cybersecurity professionals say they have experienced an API security incident in the last 12 months.

Twitter (now X) fell victim to an API breach in 2021 that exposed the private information of 5.4 million of its users. The following year, Dropbox experienced a breach as the result of a phishing scam, in which hackers gained access to its GitHub internal code repositories, as well as customer and employee information.

Countless other examples of API-enabled data breaches and cyberattacks just like these exist. These types of incidents will continue to dominate headlines and create financial and reputational damage for organizations until they sufficiently address API security. Organizations are accumulating financial assets with more sensitive information by the day, and robust API security plays a critical function in keeping it safe.

Thankfully, companies have taken notice, and API security is more of a priority than it was a year ago for many security professionals and IT decision-makers. Many view API security as a key business enabler.

This recognition and heightened awareness come at an opportune time. API security incidents are increasing year-over-year across many key industries, including healthcare, financial services, retail and ecommerce, and the government and public sector. This raises the question: What are the effects of this rise in API-related security incidents? The report found that it is causing problems like customer churn, loss of productivity, and incurred fees.

Let’s explore what makes securing APIs challenging, as well as tips and strategies any business can implement to better protect its banking data.

API Security: An ongoing Challenge

It’s no secret that modern enterprises heavily rely on APIs; they’ve become indispensable. In fact, API traffic now represents more than 80% of the current internet traffic. APIs serve as intermediaries, facilitating interactions between software components, whether within the same application, on the same device, or over a network. Unfortunately, APIs also act as both  gateways and getaway cars for hackers aiming to steal private information, including critical corporate data.

Safeguarding APIs is challenging due to their pervasiveness. Data from 451 Research revealed that companies have an average of 15,564 APIs in use at any given time. For large enterprises with more than 10,000 employees, that number jumps to a staggering 25,592 APIs. Attack surfaces have expanded dramatically in recent years due to factors like digital transformation initiatives, the internet of things (IoT), and the shift towards remote work. As a result, most organizations are simply unaware of the extent of their APIs

Safeguarding Financial Data from API-Related Threats

1. Close the API gap with real-time testing

One effective strategy to bolster API security is to ensure that APIs are secure from the outset. Most API defects—including security issues—are introduced during development, typically in the initial coding phase. It is far more cost-effective to identify and address vulnerabilities during the testing phase rather than after deployment, underscoring the importance of  conducting real-time testing.

Financial organizations are increasingly adopting real-time vulnerability testing, with some conducting tests at least once per day. While this represents progress in closing the API gap, continuous testing will be critical for ongoing vulnerability elimination, particularly as attack surfaces continue to expand. Fortunately, modern tools have emerged to facilitate fast, efficient, and scalable API testing without adding undue burden on developers.

2. Gain visibility into your API footprint

Many organizations struggle with a lack of visibility into their API footprint. Some admit to  having only a partial view of their inventory, while others have a full inventory but lack insight into which APIs handle sensitive data. At its core, every organization requires visibility into its APIs to accurately assess risk and exposure levels.

The most effective approach is to leverage tools that create a comprehensive catalog of an organization’s APIs. This enables companies to identify APIs that interact with sensitive data and ensure they’re properly secured and monitored. Understanding the flow of sensitive data through APIs also aids in compliance with regulations such as PCI DSS, GDPR, and HIPAA.

3. Designate an API champion

Determining responsibility for API security within an organization can be challenging. Is it the developers’ responsibility? Security teams? Product teams? Or perhaps a combination of these roles? Without a clear answer, oversights and suboptimal security measures may occur. Unfortunately, many organizations only address API security after experiencing the consequences of a breach.

Designating API champions or Centers of Excellence clarifies responsibility and empowers organizations to take a strategic and proactive approach to security. These designated individuals can assess the organization’s current security posture, identify vulnerabilities, and create a preemptive strategy. Additionally, they can serve as advocates, educating other teams on best practices to ensure that API security is integrated into every stage of the application development process.

As cybercriminals become increasingly sophisticated and attack surfaces continue to grow, API breaches are likely to become more prevalent. Therefore, it’s important for companies to prioritize API security now to safeguard banking and financial data. By implementing the strategies outlined above, businesses can effectively secure their attack surface and drive positive business outcomes.

The post Protecting Corporate Financial Data with API Security appeared first on PaymentsJournal.

Ralph Danglemaier, CEO at BlueSnap and Daniel Keyes, Sr. Analyst of Merchant Services at Javelin Strategy & Research delve into global payment orchestration and what it can mean for you.

The post Demystifying Payment Orchestration appeared first on PaymentsJournal.

You may have noticed (with dismay) new credit card processing fees and convenience fees on bills at restaurants and other businesses.

In the past, it was standard practice for businesses to absorb these fees, and in many states it is illegal to add a charge specifically for credit card processing. But that is changing, even in states where it is ostensibly illegal, according to Ben Danner, Senior Analyst at Javelin Strategy & Research.

“Around 56% of consumers have encountered such fees in the past year, according to Javelin’s North American PaymentsInsights survey,” Danner said. “That includes convenience fees that can be used to bypass surcharge rules.”

According to Visa, adding a credit card surcharge is illegal in four states: Connecticut, Maine, Massachusetts, and Oklahoma. In all other states, surcharging is allowed, but only on credit card transactions, and the charge can be no more than the cost of acceptance of the credit card. But “convenience fees” can be used to get around this.

Fees Add Up

Credit card processing fees are becoming exorbitant, causing businesses to pass directly to consumers. This change means that consumers are now more aware of these fees because they’re visible on their bills.

For example, Square is known for its ease of use and popularity, but it’s considered one of the more expensive payment processors because of the fees. Square has neat white payments terminals that have become common, especially in small businesses.

“Square charges 2.6% of the transaction amount plus 10 cents per transaction, and these fees can really add up,” Danner said. “For instance, on a $10 transaction, they take 26 cents (2.6% of $10) plus an additional 10 cents, totaling 36 cents in fees.”

On a $10 transaction, Square thus takes 3.6%. Hence, the common practice of businesses not accepting credit cards for small transactions, where the 10-cent transaction fee is a significant chunk of the purchase.

Consumers are more aware of the fees that credit card companies charge them. In the face of paying additional fees, some consumers opt for other purchasing methods that are cheaper to them and the merchant. Some try to pay local small businesses in cash whenever they can, so those businesses get the whole payment and don’t incur fees.

In any case, the visibility of these fees, while annoying for consumers, may be for the best, as everyone is on the same page about how the payments system works. It also gives consumers and merchants more choice in available payment methods.

The post Processing Fees, Tacked Onto Bills, Are Becoming a Public Nuisance appeared first on PaymentsJournal.

The Credit Card Competition Act, a legislative measure aimed at fostering competition in credit card processing networks, is quickly becoming a much-contested issue. According to CNBC, the proposed legislation seeks to mandate big banks to permit at least one network—that’s not Visa or Mastercard—for their cards. If approved, this will give merchants more choice around payment processing.

Roughly 2,000 retailers, platforms, and small businesses—including Amazon, Best Buy, and Walmart—are pushing to pass the bill, stating that the excessive interchange fees are driving up the cost of business. They said that if fees were decreased, they would pass on the savings to consumers.

While that’s certainly a nice theory, look at what happened when the Durbin Amendment took a similar approach to creating more competition in debit card rails. As CNBC pointed out, a 2015 survey from the Richmond Federal Reserve found that just 1.2% of the surveyed merchants reduced prices, and only 11.1% saw their debit card processing costs decrease.

Credit Card Opposition

Visa, Mastercard, Discover, and Capital One—unsurprisingly—are against the proposed bill. If the bill passes, they argue, it will have a negative impact on consumers.

In June, the Electronic Payments Coalition, which is a group that represents many big banks, financial institutions and credit unions, released a joint statement on their reasoning behind opposing the Credit Card Competition Act.

“This legislation would allow big-box retailers—like Walmart and Target—to process credit card transactions based solely on what is cheapest for them without regard to the value that consumers derive from rewards and many other benefits. This would add billions of dollars to the bottom lines of mega-retailers every year while eliminating almost all the funding that goes towards popular credit cards rewards programs, weaking cybersecurity protections, and reducing access to credit. Keep reading below to learn more,” the statement noted.  

The Electronic Payments Coalition also acknowledged the failure of the original Durbin Amendment stating that “big-box retailers and convenience stores promised to pass savings from debit card interchange feed caps on to consumers—then never did.”

The bill has bipartisan support, indicating that credit card companies will have to really work to gain sympathy. Aaron Stetter, Executive Director of the Electronic Payments Coalition told CNBC that he has concerns that consumers might be misled into thinking their credit cards are processed through familiar networks like Visa or Mastercard when they may end up routed through cheaper alternatives with fewer fraud protections and rewards programs.

But it’s still early days, and much may still unfold in the coming weeks.

The post The Credit Card Competition Act Sparks Fierce Battle Between Retailers and Payment Processors appeared first on PaymentsJournal.

In a move that may have far-reaching consequences for healthcare financial products, the Consumer Financial Protection Bureau (CFPB), the Department of Health and Human Services (HHS), and the U.S. Department of Treasury, have launched an inquiry into medical credit cards and installment loans in an effort to regulate the medical credit industry.

“Financial firms are partnering with health care players to push products that can drive patients deep into debt,” said CFPB Director Rohit Chopra in a prepared statement. “We are opening a public inquiry to better understand how these practices are affecting patients in our country.”

Deputy Secretary of the Treasury Wally Adeyemo also added that the “Treasury is proud to partner with agencies across the Biden Administration to crack down on these often abusive practices that take advantage of patients during vulnerable times. We look forward to receiving stakeholder input so that we can better protect patients and consumers.”

According to both the WSJ and Bloomberg, regulators have set their sights on several key aspects of medical credit cards and installment loans, including interest rates, fees, collection practices, and the incentives extended to healthcare providers to promote these financial products. The primary focus of these investigations is to ascertain whether current practices are fair, transparent, and in the best interest of consumers.

Concerns about the lack of oversight and lack of regulation within the industry are not new. The CFPB has been vocal about the lack of transparency—and the serious risk around healthcare financial products for some time. We previously covered why consumers should be wary of these products, particularly when many healthcare providers are actively marketing and promoting these financing options to patients. Because many patients may not fully understand the terms and conditions of these financial products, they’ll end up paying more than they originally bargained for.

While it’s still early days, the inquiry is a good first step in regulating the space. It signifies an acknowledgement of the potential pitfalls and abuses within the industry, while seeking to strike a balance between providing access to care and protecting vulnerable patients. As the regulatory inquiry progresses, the financial healthcare landscape could undergo significant changes, potentially reshaping the way Americans manage their medical expenses in the years to come.

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Impersonation scams have become a pervasive issue, particularly since it’s much harder for many to distinguish if the person reaching out to them is in fact someone they know or if it’s a fake profile. As result, many having fallen victim to these scams, sending money to people impersonating their loved ones or someone in an authoritative position—leaving them feeling disheartened and distrustful.

To combat this, Mastercard has introduced its AI-based Consumer Fraud Risk solution in the UK, which aims to predict and prevent real-time payment scams before any funds are lost.

Because organized criminals often move through a series of mule accounts, Mastercard has spent the past five years working closely with UK banks, tracing the flow of funds and promptly shutting down the accounts. By analyzing specific factors such as account names, payment values, payer and payee history, and connections to scam-associated accounts, Mastercard’s AI solution is allowing banks to intervene in real time, preventing the loss of funds.

“Banks have found these scams incredibly challenging to detect,” said Ajay Bhalla, President of Cyber and Intelligence at Mastercard in a prepared statement. “Their customers pass all the required checks and send the money themselves; criminals haven’t needed to break any security measures. As we all live more digital lives this type of fraud erodes victims’ confidence to interact online. Our goal is to build and maintain that trust. Using the latest AI technology, we are helping banks identify and predict which payments are being made to fraudsters and stop them in real-time.”

TSB, one of the first banks to adopt Mastercard’s Consumer Fraud Risk tool, has already seen  success. Within four months, the bank experienced a significant increase in fraud detection, with potential scam payments prevented equating to approximately £100 million per year across the UK. As more banks adopt this innovative technology, the impact on fraud prevention could be substantial. Mastercard is also exploring opportunities to scale the solution in international markets.

Scammers have been increasingly targeting individuals and businesses through impersonation tactics, particularly the pervasive authorized push payment fraud (APP fraud). APP fraud currently represents 40% of UK bank fraud losses and is projected to cost a $4.6 billion in the U.S. and UK by 2026, per ACI and Global Data.

By integrating customer behavior insights and real-time scam detection, banks can effectively combat a wide range of scams, such as purchase scams, impersonation scams, and romance scams. Given that purchase scams constitute 57% of scams in the UK, this solution addresses a significant challenge for both banks and consumers.

The post Mastercard Utilizes AI to Combat Real-Time Payment Scams appeared first on PaymentsJournal.

In the midst of Goldman Sachs’ reevaluation of its consumer banking ventures—which have faced substantial criticism under the leadership of CEO David Solomon—the company is in discussions to transfer its Apple credit card and high-yield savings account products to American Express, according to CNBC.

If the move happens, it would signify a sudden and unexpected reversal for both Goldman Sachs and Apple. In fact, in October, the WSJ reported that the two companies had renewed their partnership, extending it through 2029.

Entry into Consumer Banking

Goldman Sachs’ foray into the consumer market represented a break with its past for several reasons. Goldman had long been known as a leading investment bank and financial services firm catering primarily to institutional clients and high-net-worth individuals. The firm’s core business revolved around investment banking, securities trading, and wealth management. By venturing into the consumer market, the company departed from its traditional business model and entered unfamiliar territory. Consumer banking requires a different set of capabilities, infrastructure, and risk management compared to its established institutional-focused operations. This move represented a strategic shift for the firm, as it aimed to diversify its revenue streams, tap into a broader customer base, and establish a foothold in the growing digital banking sector.

Additionally, Goldman’s entry into the consumer market signaled a departure from its and brand identity. The firm had cultivated an image of exclusivity and sophistication, catering to elite clients and maintaining a certain mystique in the financial industry. The move into consumer banking necessitated a more mainstream approach, engaging with a wider range of customers and offering retail-oriented products and services. This shift challenged the perception of Goldman Sachs as an exclusive institution, potentially diluting its brand.

Key Takeaways from a Possible Exit

Goldman Sachs’ rumored decision to exit its partnership with Apple would not only sever ties with the tech giant, but also signify the end of the firm’s ambitious plans to transform into a comprehensive consumer bank. Goldman Sachs introduced its Marcus high-yield savings account in 2016, expanded its consumer offerings by entering the credit card market through its high-profile partnership with Apple, and bought a fintech lending company named GreenSky.

While the company has had ambition plans, its CEO has faced internal criticism for presiding over the costly consumer-focused expansion, with Goldman Sachs revealing a loss of roughly $3 billion since 2020 due to its consumer lending push. The potential exit from the credit card business and the sale of GreenSky would leave Goldman Sachs with only its original product, the Marcus savings account, in its consumer business portfolio.

According to Brian Riley, Co-Head of Payments at Javelin Strategy & Research, there are three main lessons from Goldman Sachs’ foray into consumer finance.

“First, if you are going to get into retail credit, you must manage the lending risk factors,” Riley said. “Even though someone owns a $1,200 iPhone, that does not necessarily mean they qualify for credit. Second, when you make claims on re-inventing the credit card, be cautious—it takes more than a daily rewards payout and a flashy titanium card. Finally, if you want to start a credit card business from scratch, start off small, so you can understand the nuances of risk management and consumer credit. Ramping up as fast as Goldman Sachs did was key to the product’s failure.”

While no sudden moves have been made so far, it’s still early days to see what may come of a potential Goldman Sachs and American Express partnership.

“There will be some interesting conversion issues, including if Amex will age out the cards which are now issued under the Mastercard brand, or would they convert quickly to Amex? And what will Amex do with the daily rewards payout, will they keep the costly titanium cards?” Riley said.

As the fate of Goldman Sachs’ partnership with Apple hangs in the balance, the potential implications reach beyond the immediate deal. It serves as a cautionary tale for financial institutions seeking to expand into the consumer market and highlights the challenges they may encounter along the way.

“If the Amex deal goes through, this will be the third cobrand partner in less than ten years,” Riley said. “Apple might need to learn a little about partnership management.”

The post Goldman Sachs’ Foray into Consumer Finance May Be Coming to an End appeared first on PaymentsJournal.

Square has announced the beta launch of its new banking products, including a credit card and cash flow management tools. This announcement comes on the heels of the company’s recent success with its banking service Square Checking, which saw $1 billion in debit card spend in the first five months of 2023.

Square is also expanding its Square Loans offering to provide business, particularly larger sellers, with loans that can be repaid on a fixed monthly schedule, deviating from the previous requirement of daily repayments.

“Square Banking’s integrated suite of software and financial services was designed to help small businesses gain efficiency and peace of mind when it comes to managing their finances,” said Christina Riechers, General Manager of Square Banking in a prepared statement. “But businesses of all sizes face challenges managing cash flow, and those struggles can become more complex as a business grows, their revenues diversify, and their expenses multiply. We’re expanding what Square Banking can provide to sellers, regardless of their size, to ensure they have the tools needed to grow their businesses, smooth out cash flow, and reduce the complexity of managing their inflows and outflows.”

Keeping Up with Competition

Square’s recent banking expansion aligns with trends in the payments, fintech, and tech world, where non-banks are increasingly offering comprehensive financial services to businesses. By combining banking, payments, and lending solutions, Square is positioning itself as a one-stop-shop for sellers, eliminating the need to navigate multiple platforms and services.

The current state of the space is rather fragmented—filled with a range of payments companies, from e-commerce businesses to tech companies. For example, PayPal offers business accounts, debit cards, loans, and cash management tools to help businesses manage their finances. Meanwhile Stripe, a popular payment processing platform, has also ventured into banking services, offering business banking accounts, and issuing cards. Amazon operates Amazon Pay, and a digital NFT marketplace, while Apple offers high-yield savings accounts and credit cards.

In this competitive landscape, each company strives to differentiate itself through unique features, user experience, pricing, and partnerships. As the demand for digital banking services continues to grow, non-bank players such as Square will have to continue to attract and serve businesses looking for efficient and modern financial solutions.

The post Square Unveils New Credit Card, Cash Flow Management Products appeared first on PaymentsJournal.

After working on a pilot central bank digital currency (CBDC) project alongside the Bank of International Settlements (BIS) for a full year, the Bank of England (BOE) is edging closer to introducing its own digital currency, according to Bloomberg.

The project, titled Project Rosalind, aimed to explore the feasibility and potential benefits of CBDCs. According to a report published by BIS last week, CBDCs can facilitate faster and easier peer-to-peer payments, enable the creation of innovative financial products, and help combat fraud. Moreover, CBDCs could introduce “programmability” to money, allowing for automated settlements and verification processes.

These initial results bolster the case for BOE to launch its own CBDC, which has already been informally dubbed “Britcoin.” A final decision on whether to carry out a digital currency will depend on the feedback received through an ongoing consultation, which is set to conclude at the end of the month.

After Brexit, many banks have less interest being in London due to the lack of automatic access to EU markets. Being on the cutting edge with CBDCs could potentially ameliorate that, and help Britain continue its position as a hub for the next generation of financial systems.

The pursuit of a CBDC by the BOE has faced criticism, including from former BOE Governor Lord Mervyn King who called it a “solution without a problem.”

In the broader context, the progress made by the BOE in advancing its digital currency agenda reflects the growing trend of central banks worldwide exploring CBDCs. More countries are eyeing digital currencies and looking to “create the next reserve currency which could take over the U.S. dollar,” Gilbert Verdian, Chief Executive Officer and Founder of Quant told Bloomberg.

While CBDCs have been launched in other countries, they have encountered limited success due to various challenges, partly because—echoing King’s comment—people don’t know what to do with them. For example, Bloomberg notes, the Bahamas Sand Dollar faced technical issues, resulting in frequent offline periods, while Nigeria’s CBDC struggled to gain user adoption due to a lack of perceived benefits.

The post Bank of England’s Project Rosalind Signals Support for CBDCs appeared first on PaymentsJournal.

A significant number of Americans are reducing their reliance on credit cards, according to a recent NerdWallet survey, as a result of increased credit card interest rates.

According to the data, 15% of respondents said they completely stopped using credit cards, while another 15% said they opted for balance transfer credit cards to mitigate the impact of rising interest rates.

“For consumers that struggle with personal finance management, sometimes closing the credit card, or instituting a spend lock is a good practice to control finances,” said Ben Danner, Senior  Analyst of Credit and Commercial at Javelin Strategy & Research. “During times of strain on the household budget we typically see credit card usage increase overall, which is exactly what we’ve seen in credit card balances throughout 2022 and into 2023. Although, some will close their account, most will continue to use the card.” 

Soaring credit card interest rates have far-reaching implications for Americans’ personal finances. With interest rates at historic highs, individuals carrying credit card debt face prolonged struggles to pay off their balances. Nearly one in five Americans NerdWallet surveyed acknowledged that rising interest rates will extend the time it takes to pay off their existing debts. Additionally, 18% of respondents said the increased interest rates have made their overall debt more expensive.

The survey also highlighted the growing popularity of alternative payment options, including buy now, pay later (BNPL) services. As credit card interest rates rise, 25% of Americans have turned to BNPL services as a potentially cheaper alternative. This trend suggests that consumers are actively seeking more affordable financing options amidst the challenging economic landscape.

The survey also revealed a concerning trend of credit card debt secrecy. A significant number of individuals with credit card debt said they choose to keep it concealed from their loved ones, with approximately one-third of Americans stating that no one knows the extent of their credit card debt.

In the grand scheme of things, the soaring credit card interest rates and the subsequent shifts in consumer behavior reflect how much the payments landscape is changing, and how consumers are adapting. Traditional credit cards—once the primary method of financing purchases—are becoming less attractive due to the high cost of carrying debt. As reflected in NerdWallet’s  survey, this shift has opened the door for alternative payment options, which offer consumers more flexible and potentially cheaper financing options.

The post How Americans Are Dealing with Current Credit Card Interest Rates appeared first on PaymentsJournal.

Fleet cards play a crucial role in the day-to-day operations of fleet managers by offering a centralized payment system, which allows them to streamline fuel and maintenance expenses, track transactions, and monitor driver spending.

With these capabilities, fleet cards empower managers to effectively manage costs, enhance operational efficiency, and maintain better control over their fleet. While fleet cards have been around a long time, new fintech players are coming on the scene, and electrification is changing the whole ecosystem.

In a recent report, “Fleet Cards in 2023: An Industry in the Fast Lane,” Ben Danner, Senior Analyst of Credit and Commerce at Javelin Strategy & Research, explores the different types of fleet cards, and how the industry is shifting to accommodate electric vehicle charging.

Differences in Fleet Cards

There are three main kinds of fleet card systems—closed-loop, open-loop, and dual network cards.

“Closed-loop fleet cards operate on a proprietary payment network owned by the card issuer, such as WEX Bank, and have partnerships with fuel merchants,” Danner said. “By using closed-loop cards within the network, drivers can benefit from negotiated fuel prices below market value, resulting in fuel rebates and significant discounts.”

That said, they can only be used at specific gas stations, and only for gas.

The card issuer generates revenue through interchange fees and membership fees paid by the fleet company, which can lead to substantial savings for large-scale operations.

“While the exact discount per gallon may vary depending on the card and negotiation terms, it typically ranges from two to five cents, but closed-loop cards may offer even more substantial discounts that are privately negotiated and not publicly available,” Danner said.

Open-loop fleet cards offer wide acceptance at most merchants, and typically run on the Mastercard or Visa network. Open-loop cards can be used for various purchases beyond fuel, including maintenance expenses, but generally they provide fewer discounts compared to closed-loop cards.

“In the fleet fuel space, innovation has primarily been focused on open-loop cards, as closed-loop cards are predominantly owned by established fuel networks,” Danner said. “Fintech companies like Coast and Highnote are offering open-loop card solutions, leveraging partnerships with Visa or Mastercard. Visa, in particular, has been actively seeking open-loop partnerships.”

The dual network card offers a combination of closed-loop and open-loop functionalities. One example of this is the U.S. Bank’s Voyager Mastercard, which launched in 2021. It allows transactions on both the U.S. Bank Voyager closed-loop network and the Mastercard network, and provides the benefits of both types of cards.

“While dual network cards offer the advantages of proprietary and open-loop networks, they typically involve membership costs and trade-offs due to the broader payment acceptance they provide,” Danner said.

Impact of Electrification on Fleet Cards

While diesel fuel still dominates the trucking and transportation industry, the rise of electric vehicles (EVs) is growing in popularity, especially when it comes to last-mile delivery. Companies such as Amazon are investing in electric fleets, utilizing their own private charging infrastructure.

“This shift towards private infrastructure ownership may impact fleet payments, as businesses can directly charge their vehicles without relying on public infrastructure or EV acceptance at gas stations,” Danner said. “However, widespread adoption of electric vehicles for long-haul transportation is still limited by range and cost considerations.”

Fleet payment solutions will need to address new complexities, such as tracking vehicle charging and reimbursement for drivers who charge their EVs at home. Furthermore, their business models may need to adapt as privately-owned charging infrastructure becomes the norm.

Learn more about how fleet card vendors are addressing the needs of fleet customers, as well as how alternative fueling will affect the fleet card market.

The post Breaking Down the Various Fleet Cards in the Market appeared first on PaymentsJournal.

Citi Retail Services has launched the first product of its new embedded payment suite Citi Pay called Citi Pay Credit. The Citi Pay Credit product is a digital credit card that can be offered by merchants at the point-of-sale. The company summarizes the product highlights as follows:

“Independent line of credit: Citi Pay Credit provides a new credit line that is separate from the Citi® credit cards that customers may already have in their wallets. It allows customers to be intentional when making large or unexpected purchases at participating retail partners.

Promotional rate financing: Citi Pay Credit allows participating retail partners to offer their customers promotional financing. Additionally, customers can opt for a major purchase plan based on what the retailer offers.

Real-time approval: Customers interested in Citi Pay Credit can apply for it directly within the checkout process at participating retailers, prior to the completion of their purchase, and receive a real-time credit and authorization decision.”

In addition to Citi Pay Credit, the company plans to offer merchants an add-on for installment lending options at a later date. Customers will pay in equal installments over a 6-to-60-month period based on the retailer. These longer payment terms suggest Citi Pay is going after larger purchases—think new 4K television at Best Buy.

While customers prefer to use traditional card products such as general-purpose credit cards and debit cards, private label “store” credit cards have been in decline, in part due to innovation in POS lending products such as Buy Now, Pay Later. We see Citi’s new solution as a best of both worlds as it’s presenting the customer with the loyalty offerings of a store credit card, while also enabling POS financing opportunities such as installment lending—watch out Affirm. Citi’s Retail Services division is already partnered with more than 20 retailers particularly within the home improvement, fuel, consumer electronics and specialty retailer segments. Could this be the next evolution in private label credit cards?

Overview by Ben Danner, Senior Research Analyst at Javelin Strategy & Research.

The post POS Lending Options Expand with the Launch of Citi Pay Credit appeared first on PaymentsJournal.

In corporate banking, adapting to change is crucial. The rapidly evolving demands from corporate clients mean banks must be on the leading edge of change and identify potential success factors to move in the right direction or risk being left behind. While the technology, such as cloud-enabled platform banking or software-as-a-service (SaaS) solutions enable banks to meet their objectives, it’s imperative—above all else—that they’re meeting customer demand.

In a report titled “Cloud Payments and Payments as a Service are Taking Hold,” Steve Murphy, Director of Commercial Payments at Javelin Strategy & Research, discusses some of the key benefits of cloud-based payment solutions and payments as a service models. Adopting these solutions allows banks to put out new services more easily, and adapt to changing demands more quickly. Also, major players such as Amazon and Microsoft have cybersecurity that is top-notch, satisfying key regulators and making banks more comfortable in partnering with them. Although private cloud servers have historically been the norm, more companies are moving to hybrid operations or pivoting to public models altogether. All of this is making banking as a service (BaaS) and payments as a service (PaaS) more common.

The Cloud: An Old Newfangled Technology

The adoption of cloud-based payment systems by enterprises justifies the use of the phrase “everything old becomes new again.”

Cloud computing represents a return to a computing architecture that predates personal computers. In the early days of computing, most users accessed computing resources through terminals that were connected to large mainframe computers, which handled all of the processing and storage. Similarly, cloud computing allows users to access computing resources through the internet, with the resources hosted remotely.

But there is a key difference: With cloud computing, the resources are distributed across multiple data centers and can be scaled up or down as needed to accommodate fluctuations in demand. This makes cloud computing more flexible and scalable than the old mainframe architecture and makes it helpful for driving innovation in payment systems that layer on top of them.

The adoption of cloud-based payments in enterprise systems is rapidly growing. According to Murphy, this is due to the shift in revenue sources amid the unpredictability of market conditions and the need for more non-interest income in commercial bank models.

For example, banks can charge a processing fee for each transaction processed through their cloud-based payment systems. These fees can be a significant source of non-interest income for banks, especially if they process a large volume of transactions. Through their cloud-based payment systems, banks can also offer value-added services to their customers, such as fraud detection and prevention, data analytics, and customer insights. These services can be charged on a subscription or usage-based model, creating a new revenue stream for the bank.

Clouds can be public, private, or a mix (hybrid), each with its own pluses and minuses. Murphy also notes that banks can struggle to keep up with the latest security breach mitigation procedures and protocols required to secure their private cloud infrastructure. Pivoting to a public cloud like AWS or Azure can obviate the need to deal with all of that. Furthermore, the public cloud model is often cheaper, easier to scale, and more reliable.

When it comes to how banks interact with a public cloud, Murphy highlights the importance of distinguishing between the legacy application service provider (ASP) model versus the SaaS model. In the ASP model, service providers manage third-party software on behalf of banks. In contrast, modern SaaS providers manage their own software on behalf of their customers. This is what underlies public cloud services and the development of BaaS and PaaS solutions.

Use Cases of Cloud Computing and Cloud Payments: BaaS and PaaS

BaaS is a banking model that allows a fintech to offer banking services without needing to obtain a bank license, which avoids the rigorous chartering and capital management process. This occurs through a partnership with a licensed bank, which manages the accounts and gains some fee income. The client-facing activity remains with the fintech brand, but it is fundamentally a collaboration.

For example, the Stripe Treasury platform launched in 2020, in partnership with Goldman Sachs and other banks. According to Murphy, this was the first transaction banking business built entirely in the cloud with an API-first approach.

Another important model for cloud-based payments is PaaS, in which a third-party provider offers payment processing to other businesses. B2B PaaS can encompass a wide range of payment methods and services, including electronic funds transfers (EFTs), automated clearing house (ACH) payments, wire transfers, and virtual credit cards.

One example of the PaaS model is Stripe, a suite of software tools for businesses to manage payments, subscriptions, and billing. PaaS adoption is driven by technological advancements, such as faster payments, global messaging standards, API adoption, and increased innovation in cross-border alternative payment methods.

Advice for Financial Institutions

When financial institutions want to upgrade their payments capabilities, it’s best to approach cloud migration gradually and not disrupt existing delivery methods all at once. Cloud-based SaaS solutions can integrate banks and their clients. FIs might consider partnering with third parties to offer BaaS and take a cut of the fees that are collected by a potential fintech partner.

Real-time payments adoption is a good fit for PaaS deployment. This is because it’s a new service that won’t cause any system disruptions and has low upfront costs, allowing volume to grow over time. The FedNow launch expected in July is likely to lead to additional growth in real-time payments, and companies should plan accordingly. They can rely on third-party companies to scale up RTP for services gradually, as it gains traction.Top of Form

Banks, fintechs, and cloud services companies clearly have become entwined and are producing an ecosystem that is dynamic and flexible and will serve well as the financial system develops over time. For banks, in particular, success will involve reimagining banking as a collaborative effort.

The post Cloud-Based Payments Are the Future, and Banks Need to Get with the Program appeared first on PaymentsJournal.

The collapses earlier this month of Silicon Valley Bank, Silvergate Bank, and Signature Bank—three institutions considered cryptocurrency-friendly—continue to reverberate in financial services. The latest bit of fallout concerns crypto clients of Signature Bank, who have been given an April 5 deadline to close their accounts and move their money.

Flagstar Bank, a unit of New York Community Bancorp, stepped in with a deal to rescue Signature Bank a week after the March 12 collapse, but its move did not cover the crypto deposits. Hence, the April 5 deadline.

“Those are the deposits we are encouraging customers to move before April 5,” an FDIC spokesperson told Reuters. “If they have not by that day, we will mail checks to the address on record.”

Fail. Fail. Fail.

The failures of Silvergate Bank, Silicon Valley Bank, and Signature Bank came in quick succession:

• Silvergate Bank, March 8: The California bank’s owner, Silvergate Capital Corp., announced that it would “wind down operations and voluntarily liquidate the bank in an orderly manner in accordance with applicable regulatory processes.” The bank, long a provider of financial services and lending to cryptocurrency developers and exchanges, had ridden high during the crypto bull market but saw its deposits fall precipitously during crypto winter.
• Silicon Valley Bank, March 10: The bank, based in Santa Clara, Calif., suffered an old-fashioned bank run, with depositors pulling money at a prodigious rate and forcing the bank to sell bonds at a loss of $1.8 billion. That spooked depositors, who subsequently pulled even more money. The bank’s stock price plummeted, trading was halted, and the state of California stepped in and put it into receivership under the FDIC.
• Signature Bank, March 12: The SVB shutdown rolled into New York-based Signature Bank, where customers withdrew billions of dollars. On March 10, the bank saw its stock decline 23%, the largest fall since it went public in 2004. Two days later, the bank failed.

The Particulars of Signature Bank

The Signature Bank failure, in particular, has drawn skepticism from some observers because the status of its balance sheet didn’t appear as perilous as the others. Former U.S. Rep. Barney Frank, a bank board member, suggested that regulators “wanted to send a very strong anti-crypto message.”

“The additional scrutiny that Signature is receiving is likely due to the Justice Department investigations claiming that (Signature) didn’t have sufficient processes and internal systems in place to monitor or detect money laundering,” said Joel Hugentobler, an analyst in Javelin Strategy & Research’s cryptocurrency practice. “Whether there actually was money laundering or not is yet to be determined.”

The Broader Impact on Crypto

What’s clear is that the upending of the three crypto-friendly banks has added to the tumult in the industry. Hugentobler indicated that the most reliable on-ramps and off-ramps between cryptocurrencies and fiat currencies have eroded as a result.

“I think other substitutes will emerge,” he said, “but they will need to implement stricter anti-money-laundering processes, among other areas of concern that banks have recently experienced.” 

The post FDIC to Signature’s Crypto Clients: Get Money Out by April 5 appeared first on PaymentsJournal.

J.P. Morgan will pilot biometrics-based payments with select retailers in the U.S., including palm and face identification for payment authentication in-store.

In addition to working with a few brick-and-mortar stores, J.P. Morgan may also be working with Formula 1 Crypto.com Miami Grand Prix during the pilot stage to provide guests a faster checkout experience. After a short customer enrollment process in-store, and once product items are scanned at checkout, a consumer scans their palm or face to complete checkout and then receives a receipt.

J.P. Morgan’s biometrics-based payment efforts fit into the broader industry trend towards frictionless, contactless payments that offer speed and convenience to consumers.

Other major players in the payments industry, such as Amazon, have been investing heavily in similar technologies to enable seamless checkout experiences. Amazon Go, for example, is a concept store that allows customers to enter and exit the store without the need to queue up and pay at a cash register. Instead, shoppers use the Amazon One app to do a palm scan, then shop as usual, and walk out of the store . The app detects the items taken by the customer, charges the appropriate amount to their Amazon account, and sends them a receipt.

Amazon is looking to sell its biometric payment solutions as a product. The e-commerce giant is working with Panera Bread to offer consumers a way to both pay for items, as well as access the chain’s loyalty program, via Amazon One.

J.P. Morgan will likely work towards a similar strategy, licensing its biometric tech to stores for a fee.

“Biometric payments will likely get off to a slow start in the U.S. even as J.P. Morgan and Amazon expand the industry’s reach,” said Daniel Keyes, Senior Analyst of Merchant Services at Javelin Strategy & Research. “That’s because consumers will have concerns about the privacy of biometric payments and a disinterest in dealing with the initial friction of setting up an account.”

“On top of that, consumers are slow to change their payment habits, even if the new payment method is faster, as was previously seen in the U.S. when consumers were slow to adopt contactless payments prior to the pandemic,” he said. “But as biometric payments gain widespread acceptance and become familiar to consumers, they should carve out a place at checkout, just as contactless payments have.”

The post J.P. Morgan Joins the Biometric Palm & Face ID Race appeared first on PaymentsJournal.

A bill that could significantly impact the crypto, blockchain, and decentralized finance (DeFi) sectors has advanced in Illinois, according to a recent article in NewsBTC. House Bill 3479, sponsored by Representative Mark L. Walker, includes a proposed law called the Digital Assets Regulation Act (DARA), which seeks to regulate digital asset business activity in Illinois, including crypto, blockchain, DeFi, and NFT sectors.

The bill grants the state more power to investigate unapproved digital asset transactions, and arrest those who go against the guidelines. DARA has received mostly negative reactions from the crypto industry, but has gained some support for clarifying the legal status of various crypto-related transactions. When regulators only tell firms when they have screwed up—without specifying exact policies—it keep firms guessing and doesn’t necessarily help them as they look to avoid similar mistakes in the future.

The regulation of crypto has become a contentious issue, with debates around how it should be regulated, if at all. While some argue that crypto should remain unregulated to preserve its decentralized nature and ensure that government intervention does not stifle innovation, others believe that regulation is necessary to protect investors and prevent financial crime.

Illinois’ proposed bill is an example of the latter, seeking to regulate digital asset activity to ensure that clients’ interests are protected while crypto businesses remain compliant with laid-down rules.

“In trying to establish a regulatory regime for crypto, Illinois is attempting to offer companies in the space some clarity,” said James Wester, Director of Cryptocurrency at Javelin Strategy & Research. “There are, however, several issues that are concerning. First, by creating a very tight window for submitting an application and gaining approval if the bill is passed, Illinois is making it very difficult for companies to comply.”

“In the case of New York’s Bitlicense, which the Illinois bill seems to emulate, the process for application and approval is very long,” he said. “Will Illinois be able to handle applications or will companies simply have to abandon working in the state? Additionally, the language for what is covered is so broad that it could affect future development in the space as digital assets begin to encompass things like gaming. Will gaming companies be required to seek approval?”

“Regulatory clarity is good, but it needs to be balanced with providing flexibility, especially in a quickly evolving space.”

Regulation of crypto has become a global issue, with countries taking different approaches. China and India, for example, have banned or discussed banning cryptocurrencies, while on the other end, El Salvador has adopted Bitcoin as its national currency. The U.S. is somewhere in the middle—regulators have been increasingly scrutinizing crypto, and federal regulators are developing a regulatory scheme for the industry. In the absence of comprehensive federal regulation, states like Illinois are stepping in with their own ideas.

As the regulation of crypto continues to evolve globally, it’s essential to strike a balance that protects investors and ensures innovation can continue. This is especially the case if crypto is to move from a nice product to one that is widely adopted in the economy.

The post Illinois Takes a Strong Stance on Crypto Regulation With Proposed Bill appeared first on PaymentsJournal.

As cable companies push into the mobile industry with large growth, T-Mobile remains unconcerned with overall attrition to cable competitors and reported large overall growth and small, but significant, prepaid growth. The Motley Fool’s Adam Levy provides a rundown of T-Mobile’s earnings and subscriber growth:

“The carrier added 927,000 postpaid phone subscribers in the fourth quarter and eked out an additional 25,000 prepaid subscriber additions… (T-Mobile CFO Peter) Osvaldik suggested a lot of the growth at Comcast and Charter is coming from customers switching from prepaid plans to postpaid plans. He also called out Verizon as a major contributor to cable’s wireless subscribers. Indeed, Verizon lost 175,000 prepaid subscribers in the fourth quarter, and it struggled to add phone subscribers throughout 2022.”

T-Mobile’s results support Javelin’s predictions of slow and steady growth overall for prepaid services. Javelin predicts a CAGR of slightly more than 1% from 2023-2026 in prepaid minute and data revenue. Verizon, even with its losses this year, should continue to have a slight lead on subscribers over T-Mobile and AT&T.

T-Mobile believes that cable’s high use of promotional tools to lure customers creates an unsustainable model and appeals more to prepaid consumers. This makes sense as consumers who rely on prepaid phone plans are more likely to come from underserved and underbanked communities. These customers could be enticed by large scale promotions presenting free or discounted wireless service when linked to bundled cable and broadband services.

The continued development of Fixed Wireless Access, still in its infancy, lends credence to T-Mobile’s long-term stance. As I covered in my December 2022 report, “Prepaid Mobile Expanding Its Use Case in a 5G World,” the future marketplace may see a shift from wired to wireless. The advent of high-speed 5G networks creates an ecosystem that can support a market shift from simple voice and data connectivity through mobile devices to a full array of internet services, free from the built-in infrastructure of wired services. The marketplace is already starting to see some shift into these areas, although cable companies are spending heavily on commercials to push the message that FWA signals degrade easily with additional wireless traffic.

As the marketplace develops, prepaid FWA could help wireless providers reverse trends of low switching costs and I fact could use FWA to bolster prepaid opportunity, especially with government aid from the Affordable Connectivity Program. The program reduces hardware barriers to entry and extends offers of stipends of up to $30 a month for qualifying internet service. This program, is ideally suited to help consumers attracted to prepaid programs.

Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Javelin Strategy and Research.

The post T-Mobile Postpaid Growth Outweighs Short-Term Prepaid Concerns appeared first on PaymentsJournal.

The Credit Card Competition Act—introduced last year by a bipartisan group of senators—may be under consideration during this session of Congress, and industry groups are lining up for and against.

If implemented, cards from the nation’s largest banks would be required to be routed over at least one competing network in addition to Visa or Mastercard’s networks. Merchants would then choose between the networks, going for ones that are cheaper and have better services. Merchants would save money, and perhaps pass on some of those savings to customers in the form of lower prices. To a certain degree, they already do this. They offer discounts to customers who pay with cash or debit cards, which typically have lower transaction fees than credit cards. In theory, they might do the same with their savings in fees.

Credit Card Fees Add Up for Merchants

Merchants typically pay a variety of fees when customers pay via a credit card. These fees can vary depending on several factors, including the type of card used, the card network involved, and the terms of the merchant’s agreement with their payment processor.

What’s more, merchants are forced to pay whatever network the credit card issuer chooses, if they decide to accept the card. They end up paying an interchange fee to the customer’s credit card issuer (typically a bank), a network fee to the processing network (typically VISA or Mastercard), and a fee to the payment processor (such as Square). There can be additional fees for chargebacks.

Overall, the fees that merchants pay when a customer uses a credit card—1.5% to 3.5% of the total transaction—adds up quickly and it can have a significant impact on their bottom line.

Cutting down on these fees can produce significant savings for merchants. For credit card companies, this will directly affect their profitability, and might cause them to increase late fees and reduce rewards to make up for these losses.

Parallels in Past Legislation

To consider what might happen if the Credit Card Competition Act is enacted, consider what happened when legislation in a similar spirit, The Durbin Amendment, was passed.

The Durbin Amendment is a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law in 2010. The amendment capped the interchange fees that debit card issuers, such as banks and credit unions, can charge merchants for processing debit card transactions. Prior to the enactment of the amendment, these fees were typically set by the card networks, such as Visa and Mastercard, and were often considered to be excessive by merchants and consumer advocacy groups.

Under the Durbin Amendment, the interchange fee for debit card transactions was capped at a maximum of 21 cents per transaction, plus an additional fee of up to 0.05% of the transaction amount.

The cap on interchange fees was intended to increase competition in the debit card market and provide relief to merchants who were paying high fees for processing transactions. The idea was that with lower fees, merchants would be able to pass on the savings to consumers in the form of lower prices, and that increased competition would encourage more innovation and efficiency in the market.

While the Durbin Amendment has had some success in reducing interchange fees for merchants, it has also been the subject of ongoing controversy and debate. Some critics argue that the cap on fees has had unintended consequences, such as increased fees for consumers or reduced access to credit for small businesses, while others argue that it has been effective in reducing costs and increasing competition in the market. One clear result is that debit card rewards programs are pretty much a thing of the past.

The Credit Card Competition Act is different than the Durban Amendment in that it doesn’t cap fees, but rather forces competition. Nevertheless, for consumers, credit card benefits will likely take a hit as credit cards become less profitable. Merchants will benefit, and more competition is generally a good thing in a market economy.

Brian Riley, Director of Credit and Co-Head of Payments at Javelin Strategy & Research cautions that “the [Credit Car Competition Act] might sound attractive to politicians that want to influence payment costs, but the untended consequence will be to reduce credit availability, at the time that may voters are navigating high inflation and a riskier environment.”

The post The Credit Card Competition Act: What Is It, and Why You Should Care appeared first on PaymentsJournal.

As the shift to digital banking continues, physical bank branches are losing their raison d’etre and closing in many locations. More than 3,000 bank locations have closed in the United States over the past year, with more closures expected in 2023.

More than ever, it’s important for banks to adapt to the changing landscape and leverage technology to keep pace with what consumers expect. According to Lumen, a multinational technology company, banks can learn a lot from retailers, including Apple, and shift their focus to meet consumers where they are and how they want their banks to be. Lumen’s Revolutionizing Banks through Branch Transformation whitepaper gets into how banks can change their approach.

Banking in the Digital Era

The pandemic proved that although consumers need banks, they don’t necessarily need to go to a physical location for most services. Most consumers visit a physical branch for the personal touch many offer, as well as out of habit. This is especially true when much of banking can be done online, so to get customers in the door, banks put an emphasis on knowing their customers personally.

According to Lumen, banks can set themselves apart from competitors by addressing the omnichannel experience. That comes down to ensuring that they offer a user-friendly and reliable experience across mobile, desktop, and in-person transactions. This is similar to what is happening in retail environments. Initially, stores thought of e-commerce as a separate, secondary business and treated it accordingly. Now retailers are working to integrate physical and digital business assets for a unified customer experience, and banks are following suit.

Improving customer service can also be a game-changer. Indeed, customer service is the factor that sets the best apart from the merely good. And as in the retail space, customer service can help banks not only drive in new customers but also, just as important, retain current ones, building on long-established loyalty.

Turning to Retail Innovation for Answers

In many ways, banks and retailers face similar issues. But unlike many retailers, banks have been slow to adopt new technologies and stay ahead of the curve. An examination of successful retailers and taking some of the key lessons that have worked well for them will help banks long term.

According to Lumen, banks should look at Apple for inspiration. Central to Apple’s optimization of the customer experience are specialized cameras that track customers as they move through the stores. “By monitoring how customers used their stores, Apple has been able to continually improve the in-person services and products it offers to give customers a consistent experience across all its locations, while also tailoring services for local needs in each store,” the whitepaper noted. “The in-store interaction fits in as a part of the company’s omnichannel strategy, so customers have a familiar experience when they’re using a smartphone or computer or talking with an employee in a store.”

Banks can leverage tracking and customer identification technology in a similar way to learn how customers use their services, then use that knowledge to create compelling customer experiences that will keep bringing them in. For example, smartphone proximity sensors can pick up on where phones (and their owners) are in the room and use that information to track how customers move and spend their time in a bank.

Smartphones have a small infrared LED and photosensor located near the earpiece. The infrared light emitted by the LED is reflected back by the objects near the phone and sensed by the photosensor on the phone. The sensor measures the time it takes for the pulse of light to return and uses this to determine the distance between the phone and the object. It then sends a signal to the phone’s processor, triggering an appropriate action, such as turning off the screen. But IR light can be picked up by other photosensors in a room. Using the same principles the phone uses, photosensors scattered throughout a room can be used to triangulate a phone’s location as it moves through a room.

Photo sensors are complemented well by cameras that use machine vision. These cameras can visually track customer movement through a store. The combination of data from these two technologies can help determine which in-store activities consistently require human interaction and which don’t. Biometric facial recognition could help employees provide quicker account access and make it easier to address customers by name when they walk in.

Banks could use this technology to create a more interactive and engaging in-branch environment. This can include using digital displays, interactive kiosks, and other digital tools to enhance the customer experience and make the branch a more enjoyable place to visit.

Furthermore, technology can personalize the banking experience for customers and draw in new ones. As peoples’ lives have become more digital, a personal interaction is likely to become a stronger selling point. Indeed, for people who work from home and spend most of their days on the computer, going out to do errands and talking with real human beings may become highly desirable. That will be especially true if the people they interact with at physical bank locations know them personally. The reorienting of part of society around digital, remote work has the potential to enhance physical retail and banking locations, if those businesses play their cards right.

Although banks historically put more of an emphasis on reliability than on innovation, now is the time for differentiation. Bank branches need to become innovative showcases with a personal touch. One idea might be to transform a bank into a financial literacy center, with courses on budgeting and investing—similar to how bookstores bring in authors for book signings and host community events. Although these events are not part of the core banking business, they build relationships with the community and get customers in the door. This approach, coupled with the technological advances advocated by Lumen, could help bank branches differentiate themselves and thrive well into the digital age.  

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‘Smart terminals’ is a relatively new term in the payments lexicon. But it is one that is becoming more widely discussed among merchants of all sizes, types, and categories. The strategy that drives orchestration is nothing less than a paradigm shift. It is a shift in the way that merchants view payment service providers. 

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Data for today’s episode is provided by Mercator Advisory Group’s Report: Smart Point-of-Sale Terminals: A Rapid Transformation of Payments Acceptance

Top POS Technology Pain Points for Small Business

• 41% – Upgrading POS terminals
• 39% – POS terminal and technology security/PCI compliance
• 37% – Integrating customer data across POS and online channels
• 33% – Accepting POS Payments from customers’ mobile phones

About Report

Mercator Advisory Group’s report, Smart Point-of-Sale Terminals: A Rapid Transformation of Payments Acceptance provides insight into this exciting new technology, and what every merchant needs to know about it.

Rather than conduct due diligence to select a “best-of-breed” service provider for each functional area within payments, orchestration allows merchants of all sizes and scales to offer their customers a smooth shopping experience, be it digital, in-person, or other channels. The growing diversity in payment methods, including contactless and e-wallets, creates an environment where having the right partner is paramount towards achieving your payments and overall business goals.

The right payments partner will equip a merchant with the necessary capabilities to operate in this rapidly digitizing business environment, where automation and frictionless experiences are vital in ensuring customer satisfaction and loyalty. Similarly, in order to help merchants provide these services, processors and other payments stakeholders must update their own services and products to keep up with the latest demands of the consumer market and regulatory requirements.

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In many ways, the subscription economy is the dominant force in the U.S. today. Most consumers are managing dozens of subscriptions monthly or annually. These are from streaming services to online video game network access. They also include retail, culinary, alcohol, and much, much more.

One study from the summer showed that the average consumer spends $219 monthly on subscriptions. The average consumer manages 12 subscriptions in just the media and entertainment category alone. Furthermore, 42% of consumers are paying for at least one subscription they have forgotten about and no longer use.

Unfortunately, subscriptions aren’t without their problems. Payment issues like declines and chargebacks can be a significant drain on revenue for subscription businesses. A new whitepaper from Chargeback Gurus, in conjunction with Juniper Research, looked at some of the trends in this area. It also looked at what subscription billers can do to reduce chargebacks and declines.

Subscriptions — and Associated Fraud — Continue to Rise

As popular as subscription services are at the moment, they are only going to continue to rise in consumer adoption. Growth of more than 200% is expected from 2022 to 2026, according to the Chargeback Gurus whitepaper. At the same time, illegitimate chargebacks — also known as friendly fraud — have also risen. This was the fastest-growing type of fraud from 2019 to 2021, according to the Merchant Risk Council.

“As merchants across industries expand their subscription billing operations, mitigating the risks posed by chargebacks will be key to long-term success,” the whitepaper stated.

Subscription models are often thought about as used in streaming and media services. But their popularity has extended to other sectors. This even includes physical goods. Some examples of the latter can include wine-of-the-month clubs or recurring food delivery subscriptions. The chart that follows details the most common categories in the subscription economy.

“Subscription payments are less volatile than one-time purchases, so companies that implement this business model can reliably predict revenue as payments are scheduled,” the whitepaper stated. “Subscriptions also increase customer retention by making repeat purchases automatic.”

However, with a business model based on automatically recurring payments, there is risk of declined payments, which can be due to a variety of factors such as a consumer’s card information being out of date or a lack of funds in an account.

What Affects the Payment Acceptance Rate?

Of the industries included in the data, telecom has the highest payment acceptance rate. The rate is 99.8%, with TV, video, and gaming rating the lowest, at 90.9%. The study also found that decline reasons are often difficult to interpret for merchants, adding to the challenge of reducing overall decline rates.

The telecom industry has the highest acceptance payment rate because it has used subscription billing for decades and has “had the time and resources to thoroughly optimize their billing practices.” Another factor is that when consumers must make difficult budgetary decisions, they are likely to cancel nonessential subscriptions such as a streaming or media service as opposed to their phone.

Unfortunately for merchants, decline responses do not provide much information, which can make figuring out how to prevent future declines challenging, the whitepaper noted. “Insufficient funds” makes up a significant percentage of declines in the financial services industry, indicating that this is a major issue in that sector. Both “credit floor/insufficient funds” and “do not honor” are common decline codes across multiple industries.

The Problem of Customer Churn

Customer churn is a reality in any industry but pronounced in the subscription economy. Subscriptions often feature promotional rates to attract new customers, who then cancel when the rates go up. Also, subscriptions may be canceled after a specific movie is watched or game is played.

Then there is the sheer competition for the consumer dollar. The whitepaper noted that “the subscription market is highly competitive, especially in industries such as video steaming. There have been numerous cases where services grew rapidly, then saw a decline in user numbers as competition increased, with Netflix being one notable example. As such, there may be a high rate of churn as users change to competing services.”

Chargebacks and How to Fight Them

Chargebacks are a big concern in the subscription economy. They were initially created as a way to fight fraud, enabling cardholders to get their money back in fraudulent transactions.

However, many chargebacks are the result of “friendly fraud.” This is also known as first-party fraud. Friendly fraud is where a transaction was legitimately made and authorized by the actual purchaser. But they still requested a chargeback, potentially misrepresenting the situation with the merchant. They did this to get back their money. For example, consumers can say that an item didn’t arrive when it did, or that a service didn’t work properly. The cost of combatting friendly fraud can be high for merchants. It can be difficult to detect or prove because the perpetrator is an actual customer and not a fraudster.

There’s also the case of “family fraud,” where card details are saved in an account and then additional subscriptions are taken out by family members without cardholders’ knowledge. These instances can also be time-consuming and costly for merchants to fight.

Another big issue with subscriptions is the auto-renew nature of most of them.

“Where this renewal is monthly, this is not too noticeable, but this is very noticeable if the recurring payment is annual,” the whitepaper stated. “As such, users are very likely to question large, unexpected payments even if the terms and conditions did actually spell this out.”

How Merchants Can Combat Chargebacks

Though chargebacks present a significant issue for those operating in the subscription economy, tools and services can be used to help mitigate this concern, the whitepaper advised.

For one, merchants can leverage robust data analytics tools to help identify hidden trends in their chargebacks, thus reducing their workload and their revenue loss. Merchants can also build internal processes that enable them to bring the best and most robust evidence forward to fight chargebacks. To do this, merchants can consult with experts in chargeback management who can audit chargeback strategy, provide industry benchmarks, and make recommendations for process improvements.

Perhaps most important is working with a vendor that knows your industry. The situation across industries can be very different, with some sectors facing much higher chargebacks and declines than others. As such, it can be advantageous for merchants to choose a partner that understands the nuances of their particular industry.

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The Indian government recently launched an Open Network for Digital Commerce (ONDC). It enables small retailers to market their products on a publicly run eCommerce network. This is according to a Wall Street Journal article. Vendors and products are then searchable by any app that uses the network. The idea is to make the network interoperable so that many apps can tap into the marketplace.  

According to the WSJ: 

The network’s launch sends strong signals about how India, which boasts the world’s second-largest population of internet users, wants to cultivate its internet economy: It would prefer a competitive, decentralized model built atop digital public goods. 

Underlying the Open Network for Digital Commerce is India Stack, a set of software tools developed by government agencies to cultivate identity verification. One key feature of this system is biometric identity verification. For example, according to the article, more than 90% of India’s population is enrolled in a biometric identity-verification system called Aadhaar. 

Part of the function of private eCommerce sites is that they screen out fraudulent products. It will be interesting to see how India’s open eCommerce system handles that. 

People buy from platforms such as Amazon in part because the company invests in trying to ensure products are legitimate and will arrive in good shape and in a timely manner. When things go very wrong, customers have various forms of recourse including the courts. Building that sort of accountability and reliability into an open access, decentralized platform may prove quite difficult. 

However, there are significant advantages to running the kind of system India is attempting. For example, private eCommerce sites sometimes copy the products sold on their sites by third-party vendors, and then sell those copies, competing with those vendors. A public open eCommerce network gets rid of those incentives. 

Overall, India has moved quickly to improve financial inclusion. “As solutions such as the domestic payment scheme RuPay take hold, it will be interesting to see how they address other payment facets,” says Brian Riley, Director of Credit at Mercator Advisory Group. “Aadhaar, the biometric registration system, will certainly help bring payments to the massive market. But the market will need to address the threat of fraud risk that may ensue as they engage smaller merchants who might lack the infrastructure, or branded network support to address the nuances of card not present fraud.” 

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Payments modernization is a hot topic right now—and for good reason. New and innovative digital payment technologies and instruments are emerging constantly, sharpening competition across the payments landscape. Where do A2A payments fit in?

Innovation Paves Way for A2A Payments

The advent of open banking and Application Programming Interfaces (APIs) has unlocked access and connectivity options. It is creating links between banks, fintechs, and platforms. This is enabling the direct flow of money from one account to another. Innovation has paved the way for the rise of these account-to-account (A2A) payments. It is sharpening competition by introducing point-of-sale (POS) payments that no longer require credit card rails.

A2A payments have been around for a while in Sweden (Swish) and the Netherlands. iDEAL payments system was created in that area. It was created in response to the growth of online shopping by a group of Dutch banks. Since then, iDEAL has emerged as a dominant payment system. It is accelerating the uptake of real-time payments across the Netherlands. Real-time payments will grow in the coming years.[1] Elsewhere in Europe, the SEPA Credit Transfer (SCT) scheme enables the quick transfer of funds from one account to another within the SEPA zone.

Despite the success of iDEAL and SCT, real-time payment schemes are still relatively new in the rest of Europe and North America. So, what will it take for these fast, low-cost and versatile schemes to transform payments in the rest of the world?

A2A Payments and Regulations

A2A payments have the potential to dethrone card-based payments. They make the ecosystem even more competitive. But that will only be if regulations keep pace with the innovation. And if they create the right conditions for competition to flourish.

In simplest terms, issuing banks offer services that separate credit card transactions and A2A payments. The services that they offer that other banks can’t or don’t include: revolving credit, the ability to dispute transactions, and insurance against loss in the event of fraud.

Yet these services are extended at a steep price, requiring merchants and customers to pay high interchange fees in exchange for the promise of security and reimbursement of fraudulent transactions. Without regulation of A2A payments schemes, non-issuing banks simply won’t be able to offer the full range of services and guarantees—like security—that would allow them to compete with cards.

A2A payments are a much more efficient way to pay since the accounts settle in real time. In a truly competitive market, consumers would be able to access card-based payments and A2A payments for the same price. Friction would be removed. Interchange fees would decrease. And A2A rails could provide infrastructure. The infrastructure could enable new ways to pay using innovative technologies. These would include QR codes and wallets.

Regulation Aids Security

In Europe, Strong Customer Authentication (SCA) serves as a helpful illustration of how regulatory action can support A2A payment schemes. SCA was designed to reduce fraud and make online and contactless payments more secure. SCA requires that additional authentication via two methods be built into checkout transactions. A consumer must use at least two of the following: a password or pin, biometric identification, or hardware verification or a token. By requiring this additional layer of security, regulators have inadvertently allowed A2A payments to compete with card-based payments by providing frictionless payment experiences that are still highly secure.

The United Kingdom understands the need for regulatory action. It has undertaken two key initiatives to boost the use of A2A payments. The Treasury, Financial Conduct Authority (FCA) and the Payment Systems Regulatory (PSR) are creating a new regulatory body to oversee open banking and A2A payments. The PSR and FCA are also proposing new regulations aimed at curbing fraud for introduction into parliament.

The EU is not far behind, promising regulatory action for real-time payments in the coming months. The European Central Bank has also urged the European Payments Council to accelerate the updating of existing instant payments using the SEPA Instant Credit Transfer Scheme. Meanwhile, in the United States, the Federal Reserve is considering regulations to govern FedNow, its own RTP scheme.

It remains to be seen whether any of these regulatory actions will be enough. Will they be enough to give A2A payment schemes the leg up needed to topple the cards’ domination and level the playing field? Let’s hope so.

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Issues continue to dwell for Buy Now, Pay Later (BNPL) services, and innovator Klarna is in the hot seat. We covered this topic last week. We mentioned operational issues with BNPL in Australia, where liabilities were showing to exceed assets for Klarna Australia. To help combat this issue, the Australian Treasury is working to release a paper in the next coming weeks. The paper will propose three regulations aimed to better protect consumers. Weighing in on operational issues is not new to the Australian market, and it might bring you back to 2000, when the Australian Competition and Consumer Commission took action on credit card interchange.

BNPL Regulatory Rules

The regulator rules on BNPL are quirky. If you don’t charge interest, the regulatory requirements are fuzzy. Currently, BNPL providers are exempt from Australian regulations because they don’t necessarily follow a true lending pattern. BNPL providers don’t charge their customers interest to “borrow” money; therefore, they’re not lending credit. You might ask, “How do BNPL players make their money?” There are two revenue streams involved: fees paid by merchants to accept these payments and late fees paid by consumers when they miss an installment. The merchant fees are similar to interchange, but are called merchant fees instead. Really, it is a horse of a different color.

An article from News.com.au shares the first regulatory solution: “Financial Services Minister Stephen Jones said he wanted BNPL services to be treated like other credit products under Australian law.”

Standard Credit Product?

Treating BNPL as a standard credit product would entail complete credit checks as opposed to soft credit checks. There’s good reason for this; the intention is to ensure consumers who utilize BNPL can fund their future installments. However, this is something many customers may shy away from. Do you want your credit dinged for funding a $200 purchase? I wouldn’t. As Mercator previously pointed out, BNPL reporting should not be a new revenue stream for credit bureaus.

Surely this solution will further decrease the use of BNPL. The convenience of quickly financing at the point-of-sale provided by BNPL would be eliminated if a customer needed to wait for a complete credit check to proceed with the purchase. Why go through the pain of waiting for a credit check when you can simply opt out for a credit card at that point? Let’s keep our fingers crossed for the other two regulatory ideas coming out from the Australian Treasury.

The big question for fintech BNPL is how will the business survive, with challenges to credit quality and the business model.

Overview by Sophia Gonzalez, Research Analyst, Debit Advisory Service at Mercator Advisory Group.

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It wasn’t that long ago that the digital capabilities of the largest U.S. retail banks paled in comparison to those of a host of digital-only banking start-ups. Boy, how the tables have turned.

The largest U.S. banks have significantly improved their digital capabilities in recent years, while digitally native neobanks continue to lose money despite providing high-quality digital experiences.

That doesn’t mean banks can get complacent. On the contrary, digital-only banks have discovered a winning formula by establishing their brand as a lender before expanding into banking services. The strategy has enabled them to tap customers for new products and services, slashing the acquisition costs that plague the single-product neobanks.

But regional banks have many competitive advantages, notably established customer relationships, products, and brand equity. Moreover, consumers trust their banks to process their banking transactions and secure sensitive financial data—certainly more so than a start-up or one of the tech giants.

Most banks don’t maximize the value of this trust relationship, though. Instead, they must start by delivering the digital experience that customers have come to expect outside of banking. The largest retail banks and neobanks have closed that gap. Most regional banks? Not as much. That’s too bad because new technology has made advanced features much more straightforward and cost-effective to implement. Your card network, Mastercard or Visa, and card-issuer processor may also be able to provide the capabilities discussed below.

Let’s take a look at the digital features banks should provide to level the playing field with the big guys.

A Data Management Dashboard

Consumers have bank accounts and payment cards connected to many services. As trusted custodians of our money, banks are best-equipped to help their customers track, manage, and secure these relationships.

Chase’s Security Center dashboard, for example, lists where users have stored their cards. That’s a big time-saver when your card has been lost or stolen, and you’re getting a new card and account number. The dashboard also lists the devices, apps, and websites that can access your accounts. The user can deactivate access with a couple of simple clicks.

Banks that launch these capabilities will have laid the groundwork for open banking applications by enabling customers to control which data points are shared with other companies.

Many of the largest banks now also provide a subscription tracking dashboard to keep track of all monthly bills for streaming TV, music, etc.

Credit Card Features of “The Big Boys”… and Then Some

A handful of banks—including Citi, Chase, Bank of America, and Capital One—dominate U.S. credit-card issuance, mainly because of co-branded partnerships with airlines, hotel chains, and many others.

But that doesn’t mean your bank can’t compete for credit card customers and the steady fee revenue that comes with them. The card business tends to operate independently from the rest of the consumer business, and therein lies an opportunity.

Your bank could offer a cash-back rewards card, which functions as a debit card that taps a checking account and a credit card, similar to the OneCard offered by neobank Upgrade. The credit feature could also include a Buy Now, Pay Later (BNPL) option.

Product innovation aside, your card must also offer the digital capabilities now standard for cards provided by the giants. These include:

• Pay with Points: Accrued reward points should be easy to track and use for online purchases with partners like Amazon and PayPal. Your card-issuer processor should be able to set up a rewards and redemption system for you. Card networks Visa and Mastercard also provide APIs that link your rewards program with their partners.

• Lost or Stolen Cards Are No Longer a Worry: If you fear that your card has been lost or stolen, your bank’s mobile app should enable any user to lock and unlock the card while they try to find it. The user should be able to order a new card on their mobile app or website, but the account number, expiration date, and 3-digit CVC code should be available immediately. This feature lets the user replace the old card number with the new one everywhere it’s stored. The user can also use the new credentials to make online purchases. And here’s another way your bank can differentiate itself, offer to make the new card available as soon as possible at a local branch or arrange to have the card sent by overnight mail. Unless you ask for overnight service, it takes 7-10 business days to get your new card from one of the big card issuers.

• Automate Digital Wallet Activation: Make it easy for customers to add their cards and bank accounts to their mobile wallets of choice. If the process is manual, the customer may delay adding or opt to add those from banks that have automated the process. In addition, being “top of wallet” may not be vital as it once was. Customers typically use the card or account that makes sense for that purchase based on available rewards. But, your card must be one of your customer’s digital wallet options.   

• Automated Savings: Automated savings programs do not have to remain the sole domain of fintechs like Chime and Acorns. You should be able to track spending by category and provide real-time alerts with actionable insights. 

• Account Aggregation:A data network like Plaid can enable your bank’s customers to connect their other accounts to a dashboard on your platforms. A customer with multiple accounts typically has more assets than other customers and is more likely to treat your bank as a primary relationship if you have this capability. Moreover, the relationship will likely stick with your bank once these connections are established. Unfortunately, in most cases, account aggregation services do nothing more than track the customer’s total assets. To add value, the bank must continuously apply analytics to the data to deliver actionable insights that add value.

The Time Is Now to Grow Digital Capabilities

Banking applications that provide only basic functionality, such as checking a balance and paying a bill, are no longer enough. Customers want their bank to simplify their financial lives. 

The list above is daunting, especially if your bank doesn’t offer any of this functionality today. But technology has become much more accessible and affordable in recent years, and you may not need to change any of your existing architecture. Software-as-a-service (SaaS) offerings hosted in the cloud and connected to your systems via applicational programming interfaces (APIs) have opened new opportunities for banks and credit unions of all sizes.

The post Five Digital Capabilities Your Bank Must Have appeared first on PaymentsJournal.

One key question facing policymakers is how to regulate crypto. Due to its decentralized nature, cryptocurrency does not fall under the jurisdiction of any one country or regulatory body. This presents a challenge for legislation, as there is no existing framework to control cryptocurrency. Some have suggested that cryptocurrency should be regulated in a similar way to other financial assets, such as stocks and bonds. Others have proposed more creative solutions, such as creating a new class of asset specifically for cryptocurrency.

We suppose this post at Cointelegraph catches no reader by surprise, especially since we just commented a couple of days back on a previous article about the same thing.  In this case the central bank of Russia (Bank of Russia) is now saying that crypto legalization is inevitable.  We are not deep into the Russian legal system but one would assume that legislation in some form is required first, however, it could be that BoR has the authority to declare crypto as legal under the Russian system.

‘The Bank of Russia, the country’s central bank, has reportedly admitted that cross-border payments in crypto are inevitable in the current geopolitical conditions….The Russian central bank has been rethinking the approach to regulating crypto and agreed with the finance ministry to legalize crypto for cross-border payments, the local news agency TASS reported on Monday….Deputy finance minister Alexei Moiseev reportedly said that the Bank of Russia and the finance ministry expect to legitimize cross-border payments in crypto soon.’

The catch here is that the use case being legitimized has to do with foreign payments only, whereas domestic crypto in still not made for prime time.  One can see the clear reason for this logic of course, given that Russia is being partially sanctioned by various countries and payments networks, resulting in limited access to cross-border payment alternatives.  We assume domestic crypto payments will be coming as well, but Russia would want to build its own infrastructure first, similar to their effort to create the Mir credit card.

‘Russian lawmakers have been historically opposed to the idea of using cryptocurrencies as a payment method. In 2020, Russia adopted a major crypto law, “On Digital Financial Assets,” which officially prohibited the use of cryptocurrencies like Bitcoin (BTC) for payment purposes. The Bank of Russia has been skeptical about the idea of cryptocurrency payments because it wanted to protect the Russian ruble as the only legal tender in the country….The idea of crypto payments for national trades in Russia surfaced in late 2021. Then, Russian President Vladimir Putin said it was “still premature” to use crypto for trades of energy resources like oil and gas.’

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

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In the late 1990s, Linus Torvald launched Linux as a way to democratize source code. Shortly thereafter, other companies released their own source code, and from there, the radical notion of sharing your software for all the world to use took off like wildfire.

The actual term “open source software” (OSS), was coined later in the decade at a conference in Palo Alto, California. There, advocates worked together to create a strategy for continuing this new model of software innovation. The group introduced the term “open source” in an effort to move away from the negative implications of the term “free software” and to set a more inclusive tone. Shortly after, its followers began to grow exponentially.

Today, according to Forrester, more than 50 percent of Fortune 500 companies use open source software (OSS) for their development projects. As it was from the beginning, the appeal is the community nature of the software. People like to belong to a community, and developers are no exception. OSS allows them to work on projects they’re most interested in and put their talents in the spotlight for all to see, appreciate and benefit from.

As programming code created by software developers and offered publicly to anyone who wants to modify and build upon it, OSS has one clear rule of the road. If you use it to build a product, you must pay it forward by offering that product as open source as well.

Yet, while most people believe OSS is always free, that’s no longer always the case. Many forms of OSS, such as MySQL, require you to purchase a license, which includes upgrades and support. For some forms of OSS, a purchasing a license is not required, but if you require support from the developer, then you need to pay a fee for support services. And, most often, fees paid to OSS developers are only used to improve the code base.

Part of the appeal of OSS is that it’s everywhere – many of the websites and devices you use daily are built upon open source. It’s used by Meta (formerly Facebook) via MySQL. Android is based upon the open source programming language Java, so there’s a good chance your phone is built upon OSS. In addition, many of the popular video games nowadays are built using Python, another open source programming language. But the ubiquity of OSS isn’t just in the consumer world; leading business applications are built upon open source, and the apps just continue to get better as more innovators apply their craft to improving them continuously.

Open Source Software in the Finance and Payments Industries

Within finance and payments markets, which are competing for a greater share of customers, open source software offers an affordable way to build scalable solutions that provide their customers with greater flexibility and options. Mobile apps allow customers to conduct banking transactions whenever and wherever they choose. It also allows retailers to provide all of the popular payment platforms that their customers are accustomed to. These applications can be customized to meet the unique needs of particular companies… and all can be built using the same open source code.

Why Consider OSS Today

The attraction of OSS is nothing new, and we will continue to see its incredible growth in the coming years for three key reasons:  financial uncertainty, rising cybersecurity challenges and a tech talent shortage.

There are signs that the U.S. and many other countries are on a steady path to a recession due to rising inflation, the war in Ukraine and other factors. Companies are looking for ways to tighten their belts and leveraging (mostly) free source code is a way to keep digital transformation on track in the most cost-effective manner possible. 

Why OSS Can Be More Secure Than Proprietary Software

As mentioned earlier, cybersecurity threats continue to plague companies everywhere. Take, for example, the recent SolarWinds cyber attack. Last year, the company made a routine software update to its network management system that was pushed out to its customers. Hackers believed to be directed by a Russian intelligence service slipped malicious code into the software and used it as a vehicle for a massive cyberattack against America.

OSS software, which is completely transparent and visible to everyone, can provide a greater level of security because so many people can view it and identify anomalies. In fact, according to an article in Digitalogy, Linus Torvalds said, “Given enough eyeballs, all bugs are shallow.” This means that the more people look at code and test it, the greater the probability of finding problems and uncovering suspicious business.

Additionally, open source fulfills a great need at a time when software engineers and other tech talent is at a minimum. A 2021-2023 Emerging Technology Roadmap report from Gartner Inc. noted that 64% of IT executives had cited talent shortages as the most significant barrier to adopting emerging technology. Companies are able to get a leg up on software development when they use existing source code and customize it to meet their unique needs.

The Challenges of Open Source

Despite its appeal, there are many developers who are not into it quite yet, but that too will change. For software developers looking to reach their professional goals, having OSS contributions listed on GitHub certainly puts them to the top of the candidate list, and it’s fast becoming essential to any good resume.

OSS, however, is not the answer to every company’s software development needs. Due to the competitive nature of business, OSS will never supplant proprietary systems. Additionally, for many companies, the software they have now works well and is scalable.

Another issue is that typically, software developers love to write code, but hate to write documentation. OSS detractors complain about the dearth of documentation for open source software. A lack of documentation increases the time it takes to understand and implement the source code.

Despite these challenges and others, Red Hat’s 2022 State of Enterprise Open Source report found that 77 percent of IT leaders have a more positive perception of enterprise open source than they did a year ago, and 82 percent of them are more likely to select a vendor that contributes to open source.

From its early roots, OSS has embraced collaboration and innovation and can be the answer to the finance and payments industries’ quest for secure and reliable software that helps them compete in a complex and competitive marketplace.

The post Innovation and Community: Why the Time Is Right for Open Source Software appeared first on PaymentsJournal.

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Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Crypto is decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.

This article from Wired focuses on the SEC’s activities to identify crypto as a security. I don’t know if it is, or is not, a security, but I have often used the analogy that it operates like a diamond market. I also recognize that crypto, as it operates today, supports far too much criminal activity. The crypto elite suggest that anonymity, or pseudo-anonymity, is a positive attribute. If the only way we can force crypto exchanges to track user identities is to declare it a security, then so be it. However, one expects there is a less disruptive approach that would accomplish this without taking the draconian step of declaring it a security:

“If you have paid casual attention to crypto news over the past few years, you probably have a sense that the crypto market is unregulated—a tech-driven Wild West in which the rules of traditional finance do not apply.

If you were Ishan Wahi, however, you would probably not have that sense.

Wahi worked at Coinbase, a leading crypto exchange, where he had a view into which tokens the platform planned to list for trading—an event that causes those assets to spike in value. According to the US Department of Justice, Wahi used that knowledge to buy those assets before the listings, then sell them for big profits. In July, the DOJ announced that it had indicted Wahi, along with two associates, in what it billed as the “first ever cryptocurrency insider trading tipping scheme.” If convicted, the defendants could face decades in federal prison.

On the same day as the DOJ announcement, the Securities and Exchange Commission made its own. It, too, was filing a lawsuit against the three men. Unlike the DOJ, however, the SEC can’t bring criminal cases, only civil ones. And yet it’s the SEC’s civil lawsuit—not the DOJ’s criminal case—that struck panic into the heart of the crypto industry. That’s because the SEC accused Wahi not only of insider trading, but also of securities fraud, arguing that nine of the assets he traded count as securities.

This may sound like a dry, technical distinction. In fact, whether a crypto asset should be classified as a security is a massive, possibly existential issue for the crypto industry. The Securities and Exchange Act of 1933 requires anyone who issues a security to register with the SEC, complying with extensive disclosure rules. If they don’t, they can face devastating legal liability.

Over the next few years, we’ll find out just how many crypto entrepreneurs have exposed themselves to that legal risk. Gary Gensler, whom Joe Biden appointed to chair the SEC, has for years made clear that he believes most crypto assets qualify as securities. His agency is now putting that belief into practice. Apart from the insider trading lawsuit, the SEC is preparing to go to trial against Ripple, the company behind the popular XRP token. And it is investigating Coinbase itself for allegedly listing unregistered securities. That’s on top of a class-action lawsuit against the company brought by private plaintiffs. If these cases succeed, the days of the crypto free-for-all could soon be over.”

Mercator Advisory Group has a report that examines the growing role of financial institutions in the cryptocurrency landscape and highlights areas of opportunities for payment providers and fintechs.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

The post The Days of the Crypto Free-For-All Could Soon Be Over appeared first on PaymentsJournal.

The headline of this brief piece posted in Cointelegraph will likely come as no surprise to most readers; the ECB is basically endorsing CBDCs over Bitcoin (among others) as a means of transferring value cross-border. Members will know that we recently released a research paper on the growing uses of cryptocurrencies in the B2B space. In that paper we point out that the BIS reports that as of 2021 14% of central banks in their purview were deploying a CBDC and 60% were experimenting with at least one form (this includes the U.S., which we have pointed out in these pages as well). 

‘A recent study conducted by the European Central Bank (ECB) on identifying the ultimate cross-border payment medium crowned central bank digital currencies (CBDCs) as the winner against competitors, including banking, Bitcoin (BTC) and stablecoins, among others….ECB’s interest in identifying the best cross-border payment solution stems from the fact that it serves as the central bank of the 19 European Union countries which have adopted the euro. The study, “Towards The Holy Grail of Cross-border Payments,” referred to Bitcoin as the most prominent unbacked crypto asset….On the other hand, the ECB recognized CBDCs as a better fit for cross-border payments owing to greater compatibility with forex exchange (FX) conversions. Two major advantages highlighted in this regard are the preservation of monetary sovereignty and the ease of instant payments via intermediaries such as central banks.’

One of the biggest hurdles for Bitcoin is of course the relatively slow transaction settlement associated with the proof-of-work layer, which runs counter to the growing ‘need for speed’ in modern transaction processing.  Interestingly enough, the article goes on to point out that a central bank governor in Australia has the opposite view, favoring private solutions. The subject is front and center so we’ll see more about this consistently over the next couple of years.

‘Contradicting the ECB’s reliance on CBDCs, Australian central bank Governor Phillip Lowe believed that a private solution “is going to be better” for cryptocurrency as long as risks are mitigated through regulation….Mitigating risks related to crypto adoption can be fended off by strong regulations and state backing, stated Lowe, adding:

“If these tokens are going to be used widely by the community, they are going to need to be backed by the state or regulated just as we regulate bank deposits.”

In Lowe’s view, private companies are “better than the central bank at innovating” the best features for cryptocurrency.’

Among commercial cards, Mercator Advisory Group sees development in crypto rewards and expanding crypto payments acceptance, while in treasury and trade, there are uses in cross-border payments, liquidity and cash management.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

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After another turbulent year dominated by the ongoing pandemic, the 2021 holiday spending season is officially upon us. In fact, it has been for some time.

According to Mastercard, consumers got a head start on their holiday shopping this year. In the most recent Mastercard SpendingPulse^TM, which measures retail sales across all payment types, the holiday shopping season began in October, which is earlier than what we’ve typically seen in previous years.

Mastercard anticipates that e-Commerce sales during these “75 Days of Christmas” (Oct. 11-Dec. 24) will be 7.5% higher than the same period last year. Supply-chain disruptions and ongoing labor supply shortages are contributing factors, inspiring retailers to offer omnichannel promotions early on.

Certain categories of retail have already seen noteworthy growth. Total retail spend was up 29.8%, with in-store and e-Commerce spend both seeing growth. Apparel spend was up 86.4% year-over-year. Department stores and electronics also saw increased spend this year. The infographic below breaks down 2021 Black Friday retail sales in more detail.

While some consumers returned to in-store shopping this year, e-Commerce is the new normal. According to a recent statistic from eMarketer US retail e-Commerce will climb 14.4% to $211.66 Billion. With this growth, optimizing the consumer experience in the online environment should be top of mind. So, what can e-Commerce retailers do to accommodate this?

In 2019, Mastercard, Visa, American Express, and Discover Introduced Click to Pay, a global industry standard for online checkout with the goal of providing a simple, secure, and consistent way for consumers to check out across a retailers website regardless of their device or browser.

Mastercard built Click to Pay on EMV Secure Remote Commerce specifications to support network tokenization, increasing approval rates for merchants and adding an extra layer of security for consumers.

With Mastercard Click to Pay’s sophisticated authentication technology, there is no longer a need for a customer to manually enter their card payment information and will match their identity with the card stored in their Click to Pay Profile, immediately providing them with a faster more secure way to check out.

Making the online shopping experience for your customers as seamless as possible is a great way to maximize this seasons potential for sales. The tedious and time-consuming guest checkout process of entering information, filling out multiple fields, and authenticating a purchase can result in customers losing patience and abandoning their purchase altogether.  

Mastercard Click to Pay is gaining momentum across the ecosystem, launching with over 10,000 merchants across 18 global markets, with many more in the works.

Mastercard Click to Pay implementations on a business’ site to date have been via a button-based experience, a form factor that is consistent and familiar to consumers today. While Mastercard will continue to support button-based implementations for both new and existing retailers, the focus is shifting to more streamlined implementations that sit behind and power merchants’ existing checkout experiences. For example, consumers in the future will be able to enroll into and checkout with their Mastercard in Click to Pay simply by entering their email address on a retailer’s checkout page instead of having to look for a button.

How e-Commerce retailers can “sleigh” this holiday season

2021 was a year marked by strong retail performance, and the holiday season will be a fitting end. As online holiday shopping enters its peak, e-commerce businesses should prepare to offer a seamless shopping experience to maximize sales and keep customers coming back.

With Mastercard Click to Pay, e-Commerce businesses can impress their customers with a payment option that reduces checkout times, fights bots, improves conversion and protects their personal data using proprietary security solutions such as tokenization and NuDetect, all while removing the need to have their card in hand to shop online.

Individually, Mastercard Click to Pay, Tokenization and NuDetect serve as powerful standalone solutions that help address some of the key challenges in the checkout process today. Paired together, these solutions are a powerful combination that reduce frustration in the checkout processes and enable retailers to wrap up the 2021 holiday shopping with a bang.

To learn more about Mastercard Click to Pay visit their website here.

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In today’s digital world, subscriptions are becoming an increasingly popular revenue model for businesses across a variety of industries, from enterprise software to consumer products. The pandemic acted as another catalyst to accelerate this transformation as business owners looked for more stable revenue streams, as opposed to relying on several big purchases from customers each year. Implementing a successful subscription strategy can help a business scale faster and improve revenue predictability.

However, it also comes with complexities and challenges that if left unchecked, can result in high customer churn and low acquisition rates. Some of the biggest challenges I’ve seen include growing billing complexities that are no longer manageable through manual processes, loss of revenue due to failed payments, having an unscalable billing infrastructure and more. In order to combat these challenges, I’ve outlined five steps below that any business can take to minimize roadblocks on their path to transitioning to a subscription revenue model.

Conduct detailed cost-benefit analysis on your billing infrastructure

Many subscription billing companies find themselves at a crossroads on whether to build their billing system in-house or invest in using an existing solution on the market. When experiencing rapid growth, remember to take a pause and carefully evaluate which option is better for you. This includes analyzing customer growth rate, determining whether you need to experiment with pricing, discounts and trials, whether there are any compliance concerns or security needs etc. Once you have your biggest needs and challenges identified, conduct a careful calculation on whether it is more cost-effective and efficient for your business to build from scratch or invest in an existing solution. Building your own can be a good option for some, but for others, it can be unscalable and can also take valuable resources away from your team.

Reduce churn through dunning management

It always hurts when a customer stops paying. But what hurts even more is when this customer never intended to stop paying, which can occur for a number of reasons, such as maxed-out credit cards or connectivity issues. Implementing dunning management can help mitigate involuntary churn. That is, retrying payment attempts and sending payment reminders to customers when a transaction gets declined. You could also avoid lost revenue by sending out emails to customers reminding them their card details are about to expire or even require backup payment methods to hold on file.

Let automation be your friend

While it may have been possible to manually manage your billing process at one time, at some point it will become far too complex and time consuming. Therefore, it is important to know when and what to automate. Processes, which include dunning management, reminder emails, billing alerts, payment reconciliation, etc., should all be automated so that people can focus more on strategic activities. Combining your company’s tech stack with automated processes can also help mitigate the complexities that come with global expansion, such as supporting multiple payment methods and currencies and various tax rules.

Track the right metrics to improve operational rigour

We have all become accustomed to tracking a variety of shiny metrics to measure business success such as Monthly Recurring Revenue (MRR), Churn, and recurring profit margins. However, instead of looking at these metrics individually, a combination will offer a subscription business more actionable insights and answer critical questions such as how your company’s overall financial health is looking and if business goals are being achieved. This starts with knowing which metrics to look at holistically and in combination. Having a dashboard can help you visualize this as well.

Billing should not be a siloed approach

Traditionally, billing is considered a siloed process, limited to a finance vertical. But in a subscription-centric business, billing spans different business functions including sales, marketing and customer support. Make sure to streamline processes and tooling so that everyone has visibility and access to the same system and metrics. Once done, internal productivity, efficiency and time-to-response will improve.

Subscription billing isn’t a straightforward process. Fast-paced growth, internal processes, and tooling can cause challenges. But businesses can mitigate roadblocks by proactively addressing these challenges. Incorporating methods around detailed cost-benefit analyses, dunning management, automation, comprehensive metrics, and company-wide processes and tooling are the key steps to freeing up internal resources so that teams can instead stay on top of business KPIs, sales cycles, customer retention, experience and service, and focus on adding business value.

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In the past year, ecommerce businesses experienced a dramatic increase in activity as more and more shoppers moved online in response to lockdowns. Ecommerce jumped to nearly 20% of all global retail sales. Along with the increase in online shopping came a rise in online payments and, unfortunately, payment fraud. 

Ecommerce fraud cost businesses tens of billions of dollars last year, and fraudulent transactions caused more problems than chargeback costs. Some ecommerce businesses also found themselves labeled as high-risk and subsequently lost their payment providers.

No merchant will ever be able to prevent payment fraud completely. But there are ways ecommerce businesses can protect themselves and their customers from all the bad actors out in the world. Below are several steps every prudent business should take.

Common fraud attempts in ecommerce

Hackers and fraudsters use various ways to gather the information needed to commit fraudulent transactions, ranging from targeting single individuals to generating fake identities to large-scale data breaches. And when criminals can’t find the data themselves, they can often simply purchase it on the dark web from other criminals. 

Here are just a few ways fraudsters are accessing or creating payment information.

Phishing

Phishing attacks remain a tried-and-true method for fraudsters to obtain identity information. They are simple compared to other methods and frequently successful. Phishing relies on users believing that the source of a communication they receive is genuine and trustworthy. Attackers make their communication appear to come from a trusted sender, for instance, by spoofing a company email address. 

Synthetic identity fraud

In synthetic identity fraud, criminals create a fake persona using stolen identity information (e.g., a social security number) combined with fabricated identity information such as a name, address, phone number, or birth date. They then establish credit under the fake persona, make transactions, never pay, and eventually abandon the persona. According to the Federal Reserve, synthetic identity fraud is growing faster than any other financial crime in the U.S.

Automatic card number generators

A quick online search will turn up quite a few virtual card number generators. They exist for legitimate purposes, namely for creating single-use cards specifically to defeat online transaction fraud. 

But criminals also have been successful in using these generators to facilitate fraud, by generating a large set of numbers and then using bots to try each card number until one goes through. It is a simple, automated process that does not require much effort on the criminal’s part.

e-Skimming

In e-skimming attacks, hackers insert malicious code into a company’s online store or payment gateway, stealing a customer’s payment information during a transaction. Consumers are unaware of the skimming code and, in fact, have no way to identify its presence.

Minimizing online payment fraud

Fraud attempts will only continue to increase as consumers shift further towards online, cashless transactions. So businesses must do everything in their power to offer payment processing services that are secure for the consumer and minimize the possibility of chargebacks.

Ensure that you are compliant with security standards

All businesses that process online credit card transactions should comply with the Payment Card Industry-Data Security Standard (PCI-DSS). PCI-DSS includes a set of twelve requirements to secure credit card data and other personal information related to online transactions. The requirements generally fall into several categories:

• Network security – e.g., properly using firewalls and anti-virus programs
• Data security – e.g., encrypting transmission of consumer data and limiting internal access (both digital and physical) to consumer data on a need to know basis
• Policies and procedures – e.g., instituting cybersecurity policies and providing continuous monitoring and frequent security testing

Most ecommerce businesses look to third-party providers for PCI-DSS compliance. Businesses should subsequently ensure that all applications and providers they use for touching transactions, from invoicing to payment acceptance, ensure customer data is kept secure with PCI-DSS certification.

Review transactions for common indicators of fraud

While not all fraudulent transactions are easily identifiable, certain traits can raise red flags for merchants, causing them to look more closely at given transactions. One common indicator is an unusually large transaction amount. Often, criminals who have stolen credit card information will quickly attempt several large transactions before having the card blocked. 

A business that allows one of these transactions may suffer a correspondingly large chargeback. Worse yet, payment processors may label the business high-risk and revoke access to payment services. The primary way to avoid this type of payment fraud is to limit the size of transactions going through the payment gateway. 

Another common indicator of fraud is the transaction’s country of origin. Certain countries are notorious for high levels of credit card fraud, including Indonesia, Brazil, Romania, Nigeria, Pakistan and Russia. Businesses should require additional verification when processing orders from these countries, such as asking the customer to call and personally verify their payment information.

Merchants can even look for suspicious devices attempting to access their online payment systems using specific identifying information for the actual device attempting the transaction (e.g., IP address, operating system, browser, etc.). Mobile devices are notoriously susceptible to attacks, and criminals can exploit 89% of mobile device vulnerabilities without physical access to the device. If the payment system detects a suspicious device, the merchant can ask for additional verification information or decline the transaction.

Verify card information

Most businesses are already familiar with the range of card verification options available and should use them whenever possible. In addition to the widely used card verification value (CVV), the three-digit number on the back of the card, there are also other options for verifying cardholder identity.

One option growing in popularity is the 3D-Secure card verification system, which many merchants will recognize under the names Verified by Visa or MasterCard SecureCode. 3D-secure systems act much like multi-factor authentication for account logins. 

In addition to entering basic card information and a CVV, cardholders must further verify their identity by entering a pin or other additional information before a transaction is processed. Some banks require a user to verify transactions through the bank’s application on their mobile phone, which consumers already use for many other fintech applications.

Another commonly used method is address verification, which all online consumers have seen and used at one time or another. Address verification services (AVS) match the card information against known address information for the consumer, most notably the zip code of the billing address. AVS, however, do not always detect more advanced frauds such as synthetic identity fraud. But they can be very useful in defeating automatic card number generators because those cards will typically not have an associated address.

Other advanced methods such as biometric verification are also becoming more popular, although they have limitations, particularly regarding data privacy concerns.

Stay one step ahead

By taking sensible measures to protect your website, your network and your customer’s data, you can stay a step ahead of the majority of fraudsters. A few small investments on the front end will save the business from large chargebacks in the future, as well as reputational damage.

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The mobile wallet market is set to register significant growth during the forecast period. Mobile wallets and mobile banking have gained a lot of importance in the past few years due to the increased internet penetration in various industries across the world. There are many benefits associated with using mobile wallets like convenience in making payments, higher safety while keeping all card-related information at one place. The youth population across the world prefers to use these wallets instead of carrying physical ones as they can have easier and safer access to their money.

The banking industry in developed regions like North America and Europe has undergone tremendous transformation with the introduction of mobile banking transactions. Banks and other financial institutions today are introducing their own mobile wallets to enhance customer experience and increase their customer base as well. They are targeting the millennial generation as they are the largest users of digital banking services.

Online shopping and other e-commerce activities have witnessed robust growth, especially during the COVID-19 pandemic. The lockdown restrictions imposed by various governments across the globe has led to increased dependence on these online platforms to make their daily purchases and carry out other transactions. This has led to a sharp spike in the demand for mobile wallets to help customers conduct their transactions with ease.

The trends that will foster global mobile wallet market size are listed below:

Open mobile wallets will witness hike in demand in Europe

Europe mobile wallet market is reported to be worth a whopping $60 billion by the end of 2026. Open mobile wallets will see robust demand among the regional population. In fact, this segment is expected to grow at a CAGR of 15% during this time period. Open mobile wallet is a type of virtual wallet with the help of which one can make payments, withdraw money and conduct several other transactions.

Europe is known to have one of the most advanced digital banking infrastructures in the world. Banks in the region use state-of-the-art technologies to make everyday banking convenient for customers. The traditional banking system is facing some serious competition from fresh fintech start-ups, resulting in the introduction of open mobile wallets and other modern banking technologies to retain customers and expand their business.

European device manufacturers adopt mobile wallets

Banks, tech companies, telecom operators and device manufacturers constitute the users of mobile wallets in Europe. Out of these, the device manufacturers will increasingly adopt mobile wallets in the region. This segment is reported to grow at 20% CAGR through 2026. One of the main reasons cited for this is the rapid increase in demand for smartphones among the young population.

This demand has skyrocketed to such an extent that countries like France, Italy and Germany had almost 150 million smartphone users in 2019 alone. It is even being reported that 80% of the transactions will be done via internet-backed devices by the year 2025. There are several smartphone manufacturers that are introducing mobile wallet technologies by creating in-built apps to cash-in on the growing demand.

Scope of the U.K. mobile wallet market

Among the several countries in Europe engaged in providing digital banking services, the U.K. is reported to showcase promising growth by 2026. The country even held a market share of more than 20% in 2019 and this figure is projected to go even higher in the future. One of the main reasons for this is the rising awareness among customers about the concept and benefits of mobile banking.

These include higher convenience and transparency in operations, wide variety of channels to make payments from and many others. Key factors have prompted several traditional banks to revamp their offerings and introduce user-friendly mobile wallets to increase their customer base.

Use of closed mobile wallets will increase in North America

Mobile wallet market size in North America is reported to exceed a staggering $80 billion by 2026. The closed mobile wallet segment is projected to show robust growth trends in the coming years in the region and will grow at a CAGR of 20% between 2020-2026.

One of the major reasons for this is the security issues arising from conducting online cash transactions. The risk of cyber-attacks is always present, and a major chunk of the creators of mobile wallets are not well equipped to handle these attacks, leading to heavy financial losses for the company and loss of customer confidence as well. This is why more customers prefer to use closed mobile wallets to keep their money safe.

Banks will be the largest owners of mobile wallets in North America

Banks are reported to be the largest owners of mobile wallets in North America. In fact, this segment will capture a growth rate of 15% by 2026. One of the major reasons for this is attributed to the rising focus of banks to enhance customer experience by introducing them to convenient and transparent banking procedures.

There are several banking and financial institutions that are replacing their traditional ways of doing business with digital processes. Banks and customers enjoy several benefits like improved customer relations, increase in customer base, exponential market growth and increased customer confidence. All these advantages have made several banks to offer mobile wallet services in North America.

Mobile wallet use in emerging economies of Asia Pacific

Asia Pacific mobile wallet market size will be more than $200 billion by 2026. Economies like India, Singapore, South Korea and China are going through a period of economic transition. This has caused increased demand for digitization in these countries, leading to creation of advanced technologies in the banking sector to foster economic growth. Since the regional population has become quite aware about the benefits of using mobile wallets, there is a substantial growth being seen in their demand.

There are many banks in Asia Pacific that are increasing their funding on research and development processes to introduce their own mobile wallets to provide convenience to customers in their transactions. All these factors will accelerate demand for mobile wallets in Asia Pacific.

Increase in NFC technology use in Asia Pacific

Among several technologies being incorporated while creating mobile wallets, the Near Field Communication (NFC) technology will attract a high demand among consumers in Asia Pacific. In fact, this technology is set to witness more than 20% growth rate by 2026. One of the main reasons for this is that mobile wallets that are equipped with NFC technology have additional security and prevent unauthorized data transfer from one device to the other.

It even creates an encrypted and secure channel of communication between a POS system and the device and has message authentication system in place. The security features of this technology can be customized according to end-user requirements as well, leading to increased demand for mobile wallets with NFC.

Some of the reputed companies engaged in providing mobile wallet services across the world are American Express Company, Amazon.com Inc., Mastercard Incorporated, PayPal Holdings Inc., Wells Fargo & Company, Tencent Holdings Ltd., Google LLC and some others.

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EMV. PCI. PLU. SKU. There’s a hodgepodge of acronyms for multiple critical functions of the retail industry, and there are always new ones to get acquainted with. Here’s another one to know: SD-WAN, or software-defined wide-area networking.

Some retailers are at least tangentially familiar with the technology, but for those who aren’t, SD-WAN streamlines network management operations by separating the way a network is controlled from its hardware, allowing data traffic to be dynamically segmented and directed. This alleviates network congestion, providing higher reliability, and frees up capacity for more applications on a network, even bandwidth-heavy ones like live video streaming.

SD-WAN can be layered on top of existing connectivity solutions (MPLS, broadband, LTE) to interlink a retail branch’s in-store applications — including inventory and point-of-sale (POS) systems — with data centers, the cloud, a corporate headquarters and other branches.

Why Retailers are Embracing SD-WAN

SD-WAN has not traditionally been used in a retail space, but that has been changing in recent years as retailers realize what they stand to gain by adding this networking technology. Three key benefits include:

1. The ability to implement high-bandwidth features and applications

To attract foot traffic and retain customers, retailers are exploring new in-store digital and Internet of Things (IoT) capabilities: free customer Wi-Fi; kiosks, tablets and touchscreens connected to inventory or POS systems, for ordering or browsing; augmented reality and virtual reality experiences so customers can “try before they buy”; smart cameras and video analytics to learn foot traffic patterns and gauge customer reactions to displays and products; and more.

These bells and whistles come with a hidden cost, however: They can strain traditional networks. To support these connected devices and digital features in addition to business-critical applications, like POS systems, a network needs lots of bandwidth and very high reliability and uptime.

Because SD-WAN can improve network uptime, performance and redundancy, a retailer’s network can support the data traffic from connected devices as well as from payments terminals, back-end computers, and more — so everything stays up and running, and payments and sales don’t take more time to process.

2. The flexibility to try new strategies

Many startups and tech companies in Silicon Valley operate under the mantra of “fail fast and fail often,” while Mark Zuckerberg popularized “move fast and break things” — in other words, try new things all the time without being afraid to fail, so you can see what performs the best. That might work for startups and big tech companies, but retail branches that still use legacy networks don’t have the ability to “move fast” when scaling, or the option to “break things” by risking the stability of business-critical applications to try new applications that require connectivity.

Say a retailer decides to open a pop-up location to test a new market. To do this, the retailer must have a network that can quickly and cost-effectively scale to turn up a new branch, but scaling a legacy networking solution, like a traditional WAN that relies on MPLS, requires significant cost and time.

Or say a retailer decides to add a new cloud application to an existing store. MPLS is not designed to handle the high volumes of WAN traffic that cloud adoption creates, and this strains bandwidth and slows connectivity, including for existing internet-connected applications like POS systems.  

With SD-WAN as an overlay on a network, scaling a network to a new location takes days rather than weeks. Retailers can test or open new locations, or add innovative new features and products, without worrying that more connected “things” on the network will affect other systems. SD-WAN will manage the network traffic appropriately, even from the cloud.

3. A better way to securely support all types of payment methods

Customers have myriad options these days for how and where they pay for products: cash, card, QR code, mobile app, eCommerce portal, kiosks, tablets, curbside, and more. With so many ways to pay, payment infrastructure is growing more complex, while the need to ensure security of payments becomes more urgent.

SD-WAN provides the reliable connectivity to support all types of digital payment options within a retail environment, alongside all other connected devices and systems within a branch, without sacrificing reliability or speed. Depending on the equipment and/or vendor, SD-WAN can also protect sensitive personal and financial data and traffic — key for the retail industry. Some SD-WAN solutions offer best-in-class security protocols like next-generation stateful firewalls (NGFW) (including IPSEC VPN tunnels), anti-virus features, URL filtering and TLS packet inspection.

Compliance with PCI DSS security guidelines is, of course, also critical. Some SD-WAN solutions available today have been designed to comply with PCI DSS data security requirements, helping to mitigate the potential risk that new software-based payments solutions coming to market may not be secure. SD-WAN’s ability to expand connectivity over a wider area also allows retailers to take payments in more places — outdoor terminals, pay-at-the-pump options, self-service kiosks and even tablets that serve as mobile POS terminals.

Supporting the Customer Experience

A retailer’s network is an essential piece of infrastructure for providing an exceptional customer experience, and it needs to reliably and effectively support more connected “things” — devices, apps, inventory systems, digital payments systems and more. Implementing SD-WAN can help retailers improve their in-store customer experiences, experiment with new strategies, and support payments systems while ensuring data security.

However, some retailers may be challenged to implement this technology, either because their in-house IT staff doesn’t have the time, expertise, or resources. Fully managed solutions can help in this instance. They remove the hands-on work of deployment while giving a business all the capabilities of SD-WAN solution— which allows retailers to focus on the Quality of the Experience for their customers, not their network.

The post Three Reasons Retailers are Taking a Fresh Look at SD-WAN appeared first on PaymentsJournal.

Modern customers expect service providers to have a strong digital presence and banks are no exception. According to Business Insider, about 89% of bank account holders in America use mobile banking to manage their accounts. Moreover, only 20% of clients would prefer to visit a physical branch of their bank in order to complete a certain transaction or obtain information while the remaining 80% would prefer digital banking.

These numbers make it clear that online banking has become an essential part of the industry. Hence, in order to retain your clients and keep a competitive advantage, one has to have a mobile banking application. And some of the most important things to keep in mind about it is the functionality of such an app and its most essential features. 

Secure authentication and login

The top priority of any banking application is its security since there is a great amount of sensitive data being processed. Hence, one of the most important features of a banking app is secure login and high-level authentication.

In general, a banking application usually requires a password from a user in order to log in but you can also add biometric authentication. Note though that even biometric authentication can be bypassed by hackers. So in order to enhance the security, you can do the following:

• Store all passwords and PINs either encrypted or hashed. Also, it is highly recommended not to store them in the source code but on a server instead.
• For biometric authentication, store PINs in the verified storage of a specific platform (either Keychain for iOS or Keystore for Android).
• Add SMS confirmation to the log-in.
• Limit the number of login attempts.
• Always make sure to start a new session every time.

Chatbots and customer support

Even though customers prefer digital banking over traditional one, they still need customer support. In a banking app, you can implement it with the help of chatbots.

Chatbots have become immensely popular and are being used across all industries. The main benefit of chatbots is speed and quality of services: when a customer makes an inquiry, the chatbot immediately provides the needed information. This greatly contributes to user satisfaction as customers do not have to wait for a long time to obtain necessary information. Another advantage of having a chatbot implemented in your banking app is that it can be capable of performing simple operations and thus will serve as a personal assistant.

Note though that chatbots are recommended but not obligatory. Either you decide to implement one or not, it is essential to have a few ways to provide support service to your clients. It may be an option to dial the bank right from the app or integration with messengers, depending on what method of contact your customers prefer. Just don’t underestimate the importance of providing efficient customer service and support to your clients, especially if your application is feature-rich and has complex navigation.

Account management

The main idea behind a banking app is to enable users to manage their accounts from any place and any time – hence, it is essential to provide efficient account management.

A user’s account is usually the core of a banking app and its management includes the following options:

• Display of all active and inactive accounts;
• Balance check;
• Display of transaction history;
• Funds transfer;
• Saved payments and “quick payments”;
• Display of available transactions.

Of course, this is not the whole list and there may be many more functions available. Just remember that the main idea is to let a user fully control their bank account from an app without the need to contact bank representatives for assistance.

An integrated map

One more important feature of any banking application is an integrated map. This map usually shows ATMs and bank offices within a chosen area and a user can filter his search by choosing specific filters.

Why is an integrated map so important? First, it allows users to quickly identify what’s the nearest ATM or a bank office and it takes a few seconds only. Second, it usually shows not only the ATMs and offices but also their working hours and other important information that a user might need. In this way, an integrated map saves a lot of user’s time and allows to quickly find all needed information without the need to contact a bank representative.

QR code payments

As stated above, the main idea behind a banking app is convenience and speed. And QR code payments perfectly fit into this description by allowing users to perform financial transactions by simply scanning the code.

While the QR code technology has been around for quite a while, quite a few banking apps have this feature implemented. However, QR code payments are highly efficient due to their speed and simplicity. Plus, this technology does not require a massive investment of resources and finances so every bank should consider implementing it.

Summing up

When working on a banking application, it is important to keep in mind that its main focus should be usability, simplicity, and accessibility of operations. Unlike traditional banking, mobile banking is all about speed and user-friendliness so make sure your application can be easily navigated and managed. And don’t forget to invest some time into finding a good service provider as the future success and performance of an application will depend solely on how well developers will carry out the project.

The post The Essential Features Of A Banking App appeared first on PaymentsJournal.

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To learn why a digital identity network is the best approach to digital identity verification, PaymentsJournal sat down with Steve Munford, CEO at Trulioo, and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group.

What is digital identity verification?

Digital identity verification is a process that identifies a person’s digital identity—the data and personally identifiable information (PII) existing online that can be traced back to a real person, organization, or device. 

Digital identity networks allow businesses to take a risk-based approach to verifying digital identity. A risk-based approach means that the identity network uses only the PII needed to verify a digital identity. The amount of information needed and verification methods used is dependent on the risk level of the specific digital user being identified.

For someone in North America, that digital proof of identity might come from a driver’s license and proof of address such as a utility bill. For someone in a developing country, that might be a mobile phone number tied to their name, a selfie (biometric authentication), and digital document verification.

The identity network’s infrastructure does the hard work of matching the verification methods to the risk level, offering an optimal user experience with the appropriate security measures.

Why an identity network is the best approach to digital identity services

Businesses that operate in the digital economy—and in particular regulated entities—must create their own safe and trustworthy online environments. This means satisfying strict security requirements without lengthy identity checks that can alienate customers. This is particularly true during the customer onboarding process, which needs to have the right level of protection while also being frictionless for customers.

Without these layers of protection, companies risk inviting fraudsters and bad actors who are looking to breach the onboarding process. “Account takeover [ATO] fraud rates grew by 282% from Q2 of 2019 to Q2 of 2020, with overall fraud rates rising 1.6% year over year to 5.3% in Q2 of 2020,” said Munford, citing the findings of a recent report.

To combat rising fraud rates and the costs associated with successful security breaches, countless identity providers are striving to fill the trust gap—but many are missing the mark. That’s because single solutions that verify one facet of identity don’t go far enough in reducing fraud.

For example, it’s easier for a bad actor to get past the verification process if it only checks an ID document, but doesn’t verify the PII on that document or further authenticate the user with biometrics. 

Deloitte researchers have called for a way to “tie [these] solutions together so they form a strong identity system. Something that’s convenient, effective, lets users control their information and protects their information where it is in use. Something that can handle large transaction volumes and makes good sense for everyone involved.” In other words, a digital identity network.

Digital proof of identity combats an alarming rise in fraud and associated costs 

As digital identity security and fraud prevention technology advances, it is becoming easier for organizations to prevent unsophisticated forms of fraud. Unfortunately, as many know, fraudsters are also taking advantage of new technologies and techniques to create more elaborate and profitable schemes.

“I spent my last 20 years in the security industry, and if I learned anything, [it’s] that if there’s money, there will be sophisticated actors that will try to get it in a fraudulent or malicious way,” explained Munford. “And this is exactly what we’re seeing,” he added. 

One form of fraud that is on the rise involves the use of “fullz,” a slang word for full sets of identity data that can be used for account openings. The proliferation of data breaches has led to widespread black market access to these identity data sets, resulting in a huge spike in this type of fraud.

The costs associated with new account fraud are significant, with a Javelin Strategy & Research study estimating that FIs lose more than $10 billion a year, not including synthetic identity fraud or other identity-related fraud. Further, the Federal Trade Commission has reported an increase in new accounts with credit card fraud, new mobile accounts with fraud, and new fraudulent bank accounts. And with the increase of digital activities due to the COVID-19 pandemic, these costs look like they are rising.

Fortunately, the technologies for digital identity security and authentication are advancing rapidly and provide multiple layers of protection to combat new account fraud. While a data breach might expose one set of data, numerous other data sources can provide alternative information to verify against.

“An identity network reduces the effort [of providing credentials and other information] for the consumer, while assuring that the individuals [who] are trying to authenticate the user have good data and actually know who it is they’re interoperating with,” noted Sloane. 

Digital identity networks are well-suited for the needs of financial services providers

The financial services industry is highly regulated, with providers needing to comply with complex Know Your Customer (KYC) identification and authentication requirements to prevent money laundering, terrorism financing, and other financial crimes and fraud. These regulations complicate the desires of organizations to launch global services.

So how can fintechs and other financial organizations accelerate their global expansion plans while meeting data privacy, KYC, and other regulations that differ across the globe?

By partnering with a provider that offers a digital identity network, financial services organizations can provide a single point of access for KYC and KYB, simplifying the process of regulatory compliance.

“They really need access to a network and to have at their disposal the right techniques for the right markets,” said Munford. “A digital identity network allows organizations to tailor what information they request in a specific geography to match what information they need, both to be compliant and to provide [digital identity security].”

The takeaway

Rising fraud, data privacy concerns, and an increasingly complex regulatory landscape have brought urgency to the adoption of digital identity and identity verification. As public and private entities continue to undergo digital transformation, regulations, standards, and guidelines will evolve to address new use cases and fraud attempts will become more sophisticated.

Digital identity networks can help businesses navigate this constantly changing digital identity landscape, providing a holistic view of user identities and risk factors and bringing greater accessibility to digital services. Businesses seeking to undergo digital transformation should leverage digital identity networks to engender consumer trust, mitigate business risk, and enable continued growth, convenience, and inclusion.

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EBANX partners with digital wallet PicPay to offer a new payment option for international e-commerce in Brazil

One of the most widespread digital wallets in Brazil, PicPay can now be used by Brazilian consumers to buy on international websites that integrate with EBANX’s solutions through digital payment accounts

CURITIBA, BRAZIL, November 30, 2020 – EBANX, a Latin American fintech specialized in local payment solutions for global merchants, has partnered with PicPay, the largest digital wallet in number of users in Brazil, to offer a new payment option in the country.

International companies that adopt EBANX’s solutions to sell in Brazil through digital payment accounts can now offer PicPay as one of its payment options, expanding their Total Addressable Market in the largest economy in Latin America, and giving access to millions of Brazilians to global products and services.

PicPay has 34 million users in Brazil – the largest users amount compared to other digital wallets – and is currently accepted in over 3 million stores throughout the country. Customers can also use PicPay to split payments in installments, a preferred way for Brazilians to buy products and services. The partnership with EBANX marks PicPay’s first step into the international market.

“Our main goal at EBANX is to create access through payment solutions. This is why we are very happy to announce this integration with PicPay, a widely known e-wallet in Brazil, which will allow more and more Brazilians to connect with global products and services, and international companies to reach consumers that don’t necessarily have a credit card or a bank account,” says Erika Daguani, B2B product director at EBANX.

“This partnership provides our users with a great opportunity of expanding their online shopping experience with PicPay. By now, they have been able to make payments in national stores only. Now they will be able to use our solution in a variety of international merchants that fit their needs as well”, said Elvis Tinti, Chief Commercial Officer, PicPay.

PicPay has been growing steadily since 2012, when it was launched. In 2020, the company registered an impressive growth of 126% in number of users, which proves that Brazilians are welcoming digital payments and digital wallets. “Being a tool for Brazilians to buy globally is an important step forward for us, and we are happy to partner with EBANX for it”, says Tinti.

A growing market

With this partnership, EBANX once again reinforces its presence in the digital wallets market – which is expected to reach almost 50% of transactions on e-commerce by 2022, according to Bain consultancy.

In Latin America, digital wallets have gained special traction during the pandemic, not only because they allow easy access to e-commerce, but also because of the distribution of emergency aid during the pandemic, which was extensively done through e-wallets.

“Digital wallets are an instrument of financial access for thousands of consumers in Latin America who do not have a bank account, or who simply opt for the ease of having the data already stored in one single place,” says Daguani. “Connecting with players such as PicPay is crucial for international companies that want to seize the e-commerce market in Brazil.”

About EBANX

EBANX is a global unicorn fintech company with Latin American DNA. It has operations in Brazil, Mexico, Argentina, Colombia, Chile, Peru, Ecuador, Bolivia, and Uruguay. The company was founded in 2012 to bridge the access gap between Latin Americans and international websites. Currently, EBANX offers over 100 Latin American local payment options to global merchants and has already helped over 70 million people to access global services and products, with over 1,000 merchants expanding to Latin America. AliExpress, Wish, Uber, Pipedrive, Airbnb, and Spotify (these two in a partnership with Worldline) are some of the companies that use EBANX solutions. In 2019, EBANX started to offer local payment processing solutions in Brazil through a new company, EBANX Pagamentos Ltda. In early 2020, the company entered the B2C world, with the launch of EBANX GO, a digital payments account with virtual and physical cards for Brazilian consumers. For more information, please visit https://business.ebanx.com/en/.

About PicPay

PicPay is the largest payment application in Brazil, with more than 34 million users. It was created in 2012 by three entrepreneurs from Vitória, Espírito Santo, whose aim was to transform the way people deal with physical money through the use of cellphones. It was the first fintech in the country to offer the QR Code as the most assertive technology for instant payments – a method that, today, has become a habit. PicPay is the only app in Brazil to offer social network usability, allowing interactions between people and a unique experience. Much more than digitizing money, PicPay is designed to be an increasing part of people’s lives in different everyday situations: recharging your cell phone, paying bills, shopping at the supermarket or on the internet, buying your subway ticket, ordering delivery, subscribing to a streaming service or games… And also making money, with 210% of the CDI (Interbank Deposit Certificate). With a combination of technology, security, and the offer of a series of transactions at no cost to the user, PicPay generates financial inclusion and benefits millions of Brazilians who do not have a bank account. For companies, PicPay helps not only to expand its streams of revenue but also to generate consumer loyalty, creating promotions and attracting users, reducing the use of cash and its related costs. More than a payment method, PicPay is a partner of the retailer.

The post EBANX, PicPay appeared first on PaymentsJournal.

Consumer spending continues to climb a wall of worry. That appears to be the case as the Commerce Dept.’s latest monthly numbers are released. The climbing part shows a 0.5% gain in personal consumption expenditures from September to October. The worry part comes from a decline in household income and increased jobless claims.

Continued concern about Covid-19 and travel restrictions aren’t helping either, even though three positive vaccine announcements in the last few weeks reveal a light at the end of the tunnel. We are entering the pivotal holiday shopping season with the start of Black Friday and there are contrasting scenarios. In-store shopping will be down while e-commerce shopping will continue on a torrid pace and probably save the day for most merchants.

The following excerpt from a Wall St. Journal article reports more on the topic:

Americans’ spending rose briskly in October while their income fell sharply, adding to other mixed signals about the strength of the economic recovery. Consumer spending rose 0.5%, the sixth straight monthly increase, the Commerce Department said Wednesday. However, the gain was the smallest over that stretch.

Household income—which includes wages, investment returns and government payments—fell 0.7% last month, in part because of the fading effects of government aid programs. The drop could weigh on consumer spending in the months ahead.

Consumer spending has been strong enough to help fuel economic growth since the sharp recession this past spring, when the coronavirus pandemic forced millions of businesses, schools and government agencies across the U.S. to shut down or limit their activities. Consumer spending represents more than two-thirds of economic activity in the U.S.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Consumers Continue To Buy More, But At Slower Pace appeared first on PaymentsJournal.

The global economy has quickly adapted to the new normal, and customer expectations of speed and security continue to drive innovation and adoption. COVID-19 has moved digitization to the forefront, and Property & Casualty (P&C) insurance is no exception. As insurers look to protect employees while answering policyholder demands for faster and safer payment methods, push to card solutions have emerged as a method of offering a new level of flexibility and speed to a traditionally ACH and check heavy industry.

In this webinar, the speakers will discuss:

• Broad payment strategies driving the insurance claims industry and impact of the pandemic
• Why the P&C insurance claims payment ecosystem is ready for change
• Benefits and opportunities of push-to-card payments in the P&C insurance space

Speakers:

Silvana Hernandez, Senior Vice President and Innovation for North America for Mastercard

Jeffery W. Brown, President, VPay

Kris Herrin, Chief Technology Officer, VPay

Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post On Demand Webinar: Transforming Property and Casualty (P&C) Insurance Claims appeared first on PaymentsJournal.

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How high is up? That’s a question regarding Adyen’s payments business bonanza as e-commerce sales growth continues unabated. The stay-at-home lifestyle favors online shopping which will reach record levels during this holiday season.

Even when more in-store shopping volume recovers sometime in 2021, the online travel business will once again take flight and provide more e-commerce payments transactions. Mercator discussed payments vendors including Adyen and others that make up the U.S. e-commerce market in a recent report Crowded Payment Gateway Landscape Offers Much To Online Merchants, Part 2: U.S. Market Company Profiles (report abstract found here).

The following excerpt from a Wall St. Journal article reports more on the topic:

Few companies have benefited more from the e-commerce shopping boom sparked by the pandemic than Dutch payments firm Adyen NV. The best-performing large stock in Europe this year, Adyen is up almost 120%, vaulting its market value to nearly $60 billion, bigger than some of the region’s top banks, including Swiss giant UBS Group AG.

Adyen’s stock performance has even outpaced PayPal Holdings Inc., another beneficiary of the move toward digital payments, which is up about 70%. Unlike PayPal, which hundreds of millions of consumers world-wide use to send money and make internet purchases, Adyen sits behind the scenes, providing the technology that merchants use to process credit card and other types of digital payments.

Analysts say that unlike some rivals that rely on in-store transactions for a big chunk of their business, almost 90% of Adyen’s transaction volumes come from online sales. That advantage has attracted investors to Adyen.

Online payments have held up better than in-store digital payments during the pandemic as people avoid crowds. More consumers are shopping online and more merchants are adopting digital-payment technology to service e-commerce as well as in-store purchases.

Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group

The post Adyen Continues To Ride High On E-commerce Wave appeared first on PaymentsJournal.

With very little news on credit cards, as the United States waits for “the other shoe” to drop on the presidential elections, here are three quick reads on unauthorized or improper credit card usage.

The King: Spain’s Former King Faces Credit Card Probe

Spanish prosecutors have opened an investigation into whether former king Juan Carlos I used credit cards linked to accounts not registered in his name in a possible money-laundering offence, judicial sources said Wednesday, the Local, a Spanish news source reports.

• The probe is latest of a string of legal inquiries into the finances of the scandal-hit 82-year-old who fled into self imposed exile in the United Arab Emirates in August.   
• His departure came as investigators in Spain and Switzerland were looking his financial affairs following revelations by his former mistress, German businesswoman Corinna Larsen.
• Anti-corruption prosecutors opened their investigation at the end of 2019 but it only came to light on Tuesday with the publication of a story by online news site elDiario.es
• Legal sources said they were looking into the origin of funds deposited in several Spanish bank accounts held by a Mexican business and an official in the Spanish Air Force, and whether the money in them had been used by the
  former monarch.   

This bring back memories of Imelda Marcos!

The Zing: Woman admits to $200,000 in grand larceny

Maybe the goal was award points. Putting $223,428 on your credit cards? My wife would absolutely kill me.

• According to the Erie County DA’s Office, Titus admitted that while employed by Acme Bearings Corporation, she stole $223,428.04 from the company by writing 138 checks out of the company’s operating account to pay her credit card bills between July 2016 and June 2019.
• Karen Titus, 57, pleaded guilty in state Supreme Court to two counts of second-degree grand larceny, both felonies. It was the highest sustainable charge.
• The theft was uncovered following an internal audit and she was fired from her position of bookkeeper for the company in June 2019.
• Titus faces a maximum of 15 years in prison when she’s sentenced on Jan. 26, and she remains released.

Well, if you do the math, that is $14,800 a year.  Probably not worth it.

And, No Ka-Ching

This one hits home for me because I always worry when I give a waiter or waitress my card to pay for a meal. This slippery dude got off easy.

• A RESTAURANT worker who tried to use a stolen credit card to pay for online gambling has been spared jail.
• Bogdan Niculae (36) made three attempts to use the card on a poker website after it was given to him by a friend, Dublin District Court heard.
• Judge Michael Walsh ordered him to complete 200 hours of community service to avoid an eight-month prison sentence.
• Niculae had no previous convictions, was from Romania and had been living in Ireland for a number of years, his solicitor Brian Doherty said.
• He was given the number of the card by a friend and tried to use it online on a gambling website.
• There were three attempts to use it and all failed.

More news to follow, after we get through the drama of the U.S. elections.

Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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In today’s world, digital success is more important for the prosperity of financial institutions than ever before. This is largely due to the COVID-19 fueled acceleration of digital banking adoption. In fact, J.D. Power has estimated that only 46% of consumers will go back to banking as usual after the pandemic ends, indicating that over half of clients will not revert to their old ways of banking. 

To further explore why financial institutions need to consider digital success as part of their business continuity plans—and why the time to do so is now—PaymentsJournal Editor in Chief Ryan McEndarfer spoke with David Potterton, Director of Strategic Initiatives at Alkami Technology. 

COVID has accelerated the shift away from branch banking

COVID-19 is “accelerating a trend that we’ve been talking about in financial services for a long time, and that’s around branch banking” explained Potterton. For years, financial services organizations have asked themselves questions about how many branches are really needed and whether digital-only is viable for the future.

While some consumers were early adopters of digital banking technology, others remained content visiting branches in person to conduct banking activities. The pandemic changed that, shuttering the doors of branches across the nation and forcing even those resistant to digital banking adoption to move online.

Now, those who previously thought they needed to physically go to a branch “are finding that the [digital] solutions have matured to the point where they really don’t, and they are getting comfortable with that,” he added.

FIs should embed digital success into their overall business plans

Whatever space a financial institution is in, and whatever metrics are used to track growth, digital success should be part of their overall continuity plan. But currently, digital ambitions are often seen as separate from an organization’s overall business plan. “Digital is a way to facilitate parts of that [business] plan, but it’s the plan itself that’s going to drive institutional success,” noted Potterton.  

Data is a crucial component of this plan. Organizations can leverage data to measure the success of their strategic plan and gather actionable insights into what can be improved. This could look like making intelligent decisions about which consumers to market to, when to market to them, and how to best meet their needs. 

Customer service: A key component of digital success

Today, there is a breadth of technology used to offer an improved customer experience. Video calls make it possible for consumers to interact with banking agents face-to-face via mobile devices. Agents can screen share with customers to walk them through an online banking process.

Artificial intelligence (AI), such as chatbots, can answer customers’ questions without the need for a human agent at all. With chatbots handling simpler inquiries and general questions, call center agents can spend more time helping customers with issues that are more specific, time-sensitive, or complex, making the resolution process quicker and more satisfying. 

Further, AI is increasingly capable of providing customized experiences to consumers based on factors like their previous banking activity and shopping habits. Personalization is critical to the customer experience, and can range from the basic color scheme of a website to customized offers and quotes that foster financial wellness. Ultimately, “digital is going to really facilitate that [personalization] to a much larger degree” moving forward, concluded Potterton.

The takeaway

Consumers have been shifting toward digital banking options for several years, but the COVID-19 pandemic served as an unexpected and aggressive catalyst in accelerating digital adoption. While digital growth is often viewed by financial institutions as a separate component from their main business continuity and success plan, this shouldn’t be the case.

Digital banking technology allows banks to leverage data for actionable insights and better serve their customers. From personalized marketing and product offerings to seamless chatbot experiences, digital success efforts are key for banks to thrive in today’s world.

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Despite the global economic slowdown occasioned by the COVID-19 pandemic, Bank of America managed to turn a sizeable profit during the first half of 2020. According to the research data analyzed and published by ForexSchooOnline.com, the bank reported a profit of $7.5 billion for the two quarters.

During the first quarter of 2020, Bank of America reported profits amounting to $4 billion, a drop of 45% compared to the $7.3 billion reported in Q1 2019. The second quarter of 2020 was even worse, with a 52% drop YoY to $3.5 billion. Courtesy of the Fed’s emergency rate reductions, interest income in Q2 2020 amounted to $11 billion, marking a drop of 11% compared to Q2 2019.

Even though there were changes in interest rates and credit spreads were widened, the bank still managed to get $9.3 billion for its Q1 2020 pre-tax pre-provision income, down only 5% YoY. In Q2 2020, pre-tax pre-provision income amounted to $8.9 billion, a decline of 9% YoY.

During the first half of 2020, total deposits increased by $284 billion and reached $1.72 trillion. Consumer deposits rose 17% or $123 billion. On the other hand, global banking deposits grew $118 billion or 31%, while wealth management deposits increased $29 billion or 11%. Thanks to this surge in deposits, the bank’s balance sheet at the end of Q2 2020 held total assets worth $2.7 trillion. This was an increase of $122 billion from Q1 2020.

Trading Volumes Grow 31% YoY During H1 2020

Even though the H1 profits mark a drop of 49% compared to the first half of 2019, its performance beat expectations. Part of the reason for this is the fact that trading revenue increased, helping to offset the drop in interest income and provisions for loan loss.

Sales and trading revenue grew a remarkable 35% YoY. Investment banking fees also increased 57% YoY to a record $2.2 billion. On average, there was an improvement of $1.9 billion in sales and trading compared to a similar period last year. There was a 31% improvement in overall trading volumes during H1 2020 as compared to the same period in 2019.

However, provisions for bad loans ate up the hugest chunk of income, as the burden increased from $1.9 billion in H1 2019 to $9.9 billion in H1 2020. This was in view of the fact that the economic downturn could hamper the capability of consumers to repay loans.

The 5x increase in provisions for loan losses was thus in anticipation of the risk. With the amount the bank has set aside, it now has the capacity to cover potential loan losses of up to 1.96% of all loans.

Another area in which the bank excelled was in its Global Markets segment. The segment by itself made $1.9 billion in after-tax profits in Q2 2020. To a great extent, this was as a result of a surge in investor demand for the relative security of bonds.

BAC Stock Down 30% YTD

It is noteworthy that Bank of America stock lost at least 49% in Q1, dropping from $36 to $18 between the end of 2019 and end of March 2020. Though it rose 34% to $24 at the end of Q2, it still remains down almost 30% at $26 in early September compared to the start of 2020.

According to a Trefis estimate though, the valuation of the BAC stock should be about $29. The valuation, which is almost 20% higher than the current price, is based on improved performance during H2 2020.

It estimates that 2020 revenue for the bank will amount to $86.4 billion, marking a drop of only 5% compared to 2019. This forecast is based on the possibility that the second half of 2020 will see the economy open up. Additionally, with the easing of restrictions and lockdowns around the globe, consumer demand is likely to get a boost.

The banking sector as a whole fared far worse than most others due to its close ties with the economy. Little wonder, at the beginning of August, the KBW Bank Index was still down over 31% compared to the end of February. Similarly, the STOXX North America 600 Bank Index showed a decline of -31.23% in H2 2020.

In Europe and Asia, the situation was more or less the same during the first half of 2020. The Euro STOXX Bank Index showed a -40.18% drop and the STOXX Asia/Pacific 600 Banks Index reported a drop of -26.09%.

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 Volante Technologies Inc., a leading provider of payments and financial messaging solutions in the cloud, today announced that it has raised USD 35M in growth equity financing led by Wavecrest Growth Partners with strategic participation from BNY Mellon, Citi Ventures, PostePay and Visa Inc.

The capital raise represents the company’s first outside investment after nearly two decades of strong organic growth and profitability. Volante will direct the capital towards accelerating its cloud expansion globally and its reach into new geographies, market segments, and industry verticals.

“We are thrilled to lead the first institutional investment in Volante and partner with its stellar team,” said Vaibhav Nalwaya, Co-Founder and Managing Partner of Wavecrest, who will be joining the Company’s Board of Directors. “Volante has built an impeccable reputation as a fintech that can quickly enter and dominate new markets. Shortly after launching their Volante Designer financial messaging platform, they became providers to some of the world’s largest custodians and exchanges. Two years after entering the payments arena with VolPay, they processed the first U.S. real-time payment. Today, they can count four of the top five corporate banks among their more than one hundred customers.”

“They’ve also rapidly emerged as the leader in cloud-based payments as a service,” added Nalwaya. “With cloud and digital transformation becoming ever more critical for organizations of all types, Volante is perfectly positioned to capitalize on this arc of success. We look forward to accelerating the company’s growth trajectory.”

BNY Mellon and Volante have been collaborating since 2017 on creating and deploying real-time payment capabilities.

“We are excited to expand our strategic relationship by investing in Volante,” adds Saket Sharma, Chief Information and Digital Officer for BNY Mellon Treasury services. “This reinforces our commitment to helping our clients leverage best-in-class products and services in their own digital transformations.”

Citi’s Treasury and Trade Solutions business has been working with Volante for several years and Volante currently serves as the translation layer across Citi’s core payments infrastructure. 

“Volante’s solutions are already an integral part of Citi’s payment processing architecture, underpinning the outstanding payments and transaction banking platforms for which Citi is known worldwide,” explained Nick Nadgauda, Global Head of Treasury and Trade Solutions Technology at Citi. “Our investment signals our confidence in Volante’s technology and we look forward to enhancing our relationship for future engagements.”

PostePay, a leading Italian Electronic Money Institution (EMI) and part of the Poste Italiane Group, is partnering with Volante to enable instant payments for SCT-INST as well as to provide a new transactional gateway to traditional interbank networks via their open banking platform. 

Mirko Mischiatti, Group Chief Digital, Technology & Operating Officer at Poste Italiane, said, “Our investment in Volante is directly linked to our ‘Deliver 2022’ innovation strategy. VolPay’s cloud-native microservices architecture will allow us to support current and future payment rails on and off the cloud. This will enable us to provide innovative customer experiences for over 14 million Poste Italiane account holders and 28 million cards as we continue to shift away from traditional payment methods to next-generation digital options and account-based payments.”

Vijay Oddiraju, Co-Founder and CEO of Volante, commented, “We started Volante in 2001 with a clear purpose. We wanted to help financial institutions by providing modern solutions to simplify the complexity of their operations and accelerate business outcomes, from capital markets to custody to transaction banking.”

Oddiraju continued, “Today, we process trillions in value and millions of transactions daily for the world’s largest banks, financial institutions, card networks, market infrastructures, and corporations. We plan to invest further in cloud technologies and into other areas of financial services, as well as new industries. The fact that the majority of our strategic investors are clients is a testament to the mutual trust we have built over the years with a wide range of organizations.”

Read more about the Volante journey and the company’s future plans in CEO and co-founder Vijay Oddiraju’s blog, “Taking Volante To The Next Level“

The post Volante Technologies Receives $35M of Growth Funding from Leading International Investors to Accelerate Cloud Expansion Globally appeared first on PaymentsJournal.

BOB Financial Solutions Limited (BFSL), a wholly owned subsidiary of Bank of Baroda, has chosen Fiserv, Inc. (NASDAQ: FISV), a leading global provider of payments and financial services technology solutions, to enable the digitization of their end-to-end card issuance and processing cycle and support the launch of several new and high-tech products including contactless credit cards, tokenisation and integration with branded wallets, and virtual credit cards.

BFSL is one of the earliest issuers of credit cards in India and has a reputation for delivering superior card products and services to its customers. To advance their digital strategy and keep pace with rapidly changing consumer expectations, BFSL will utilize FirstVision from Fiserv, an end-to-end managed services solution that enables card issuing and processing with global economies of scale and integrated capabilities that span the card lifecycle.

The service-oriented architecture and open APIs of FirstVision facilitate rapid application development, enabling new capabilities to be brought to market more quickly and at a lower cost. The software as a service (SaaS) solution is hosted locally in India and enables card processing for major issuers across the country, helping ensure compliance with local payment and customer data regulations.

“Delivering robust, secure products and a superior experience to our customers is our priority,” said Shailendra Singh, managing director and CEO at BOB Financial Solutions Limited. “Fiserv understands our market, and we value the fact that their card processing capabilities are hosted in India. The scalable, integrated technology provided by Fiserv will allow us to deliver the experiences our customers expect now and into the future, as we accelerate the launch of new products
and services being adopted by all major issuers.”

The FirstVision platform will enable BFSL to move forward on their digital transformation journey with a fully integrated suite of card management tools including digital cards and loyalty management, advanced fraud modules, risk management and analytics solutions.

“The speed at which financial services providers need to satisfy customer demand for digital services has further accelerated as a result of the impact of COVID-19,” said Ivo Distelbrink, EVP and head of Asia Pacific at Fiserv. “With Fiserv, BFSL can reimagine customer journeys and launch to market with speed in order to better serve their customers in a rapidly changing digitally-centric world.”

About BOB Financial Solutions Limited

BOB Financial Solutions Limited (formerly known as ‘Bobcards Limited’) was established in the year 1994. It is a NonBanking Financial Company, wholly owned by Bank of Baroda, one of the top banks of India. The Company’s primary business is in credit cards with its key differentiator being simple, easy-to-understand products that are fairly priced and efficiently serviced. For details, please visit www.bobfinancial.com.

About Fiserv

Fiserv, Inc. (NASDAQ: FISV) aspires to move money and information in a way that moves the world. As a global leader in payments and financial technology, the company helps clients achieve best-in-class results through a commitment to innovation and excellence in areas including account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover cloud-based point-of-sale
solution. Fiserv is a member of the S&P 500 Index and the FORTUNE 500, and is among FORTUNE World’s Most Admired Companies . Visit fiserv.com and follow on social media for more information and the latest company news.

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The issue of how to tackle financial inclusion has long been a part of the conversation in banking and financial services circles. Regulations have led to the UK’s biggest banks having to provide ‘basic bank accounts’ to cater for those who do not qualify for regular current account products. Many fintech and prepaid players have spotted an opportunity to provide products and services to underserved communities, whether it be payment cards without the need of a bank account, or financial wellness tools that help with budgeting and basic personal finances.

Despite these positive steps, financial exclusion still stubbornly persists. Research by The Inclusion Foundation shows that 1.23 million of the UK’s most vulnerable are unbanked. One in four of us will experience financial exclusion at least once in our lives.

The recent Covid pandemic has brought the issue of financial exclusion back to the fore. With the use and acceptance of cash declining, many consumers and businesses have had to make major changes in how they operate when it comes to payments. Whilst many have embraced digital payments further, others risk being left further behind.

Widening the debate on inclusion

To date, much of the conversation around financial inclusion has focused on basic financial literacy, how best to widen access to existing financial products, or on how to improve products and services to appeal to underserved communities. By their very nature of being app / online only, neobank and fintechs – many argue – are not likely agents of financial inclusion.

This characterisation is unfair given a lot of recent innovation around budgeting tools, financial literacy, and bank account and card management has come from the fintech community. Yet, even these positive innovations miss the more fundamental barriers to financial inclusion faced by many; that is, the fundamental lack of digital skills and confidence many have in going online.

Widening the debate to discuss the ‘digital barrier’ alongside financial inclusion is crucial if we are serious about tackling the latter. Banks and fintech’s may well have the most beautifully designed, intuitive websites and app user journeys, but if someone cannot access the internet or has never learnt how to browse the web, it’s like having a high street with great shops and products that only those with special maps can find. Failing to address this as an industry risks us failing to tackle an underlying cause of exclusion.

The ‘digital barrier’ is real. In a recent DCMS select committee evidence session, The Good Things Foundation, a digital inclusion charity, cited a raft of statistics highlighting the issue. For example 11.9 million people are without basic digital skills, one in five adults are incapable of accessing online services, and nearly 7% of the population are without internet access. There is also a ‘digital divide’, with almost 50% of those with an income below £11,500 lacking essential digital skills compared to less than 11% of those with an income over £25,000.   

This is something we can no longer ignore. Market forces and bank economics mean that we are undergoing an inevitable shift towards a world with far fewer physical branches, and more services being delivered through apps. The COVID crisis has seen an unprecedented shift towards digital payments in place of cash. One solution to this is to continue to provide alternative non-digital products (such as basic bank accounts). But these are expensive to run, can be difficult to apply for and lack much of the functionality of a standard bank account. 

Surely an enhanced approach to financial inclusion is to improve the digital skills of those who lack them so that they too can access digital banking products and services, and benefit from the innovation they deliver. This should not be at the expense of banks and financial institutions compromising on the design of these services – intuitive user experiences and simple customer journeys are complementary activities to breaking down the digital barrier.  

Playing our role – The Inclusion Foundation and Mastercard

At The Inclusion Foundation (TIF), we have structured our response to the challenge through delivery of three core services. As a dedicated not-for-profit Community Interest Company (CIC), TIF aims to provide better, more inclusive access to information on financial services and offer the banking world practical tools to help them improve access. The aim is to help signpost to everyone – particularly the most vulnerable – the services that can enable them to take control over their finances, thereby improving their lives overall.

The SignpostNow^TM comparison service is all about helping underserved customers navigate the different financial products in the market and enabling them to compare these products in a clear, jargon-free way. We also want to celebrate the best products out there with The Inclusion Signpost^TM – an independent accreditation service recognising financial products and services that serve the needs of previously underserved groups in society.

Additionally, the Foundation provides an education and learning programme for financial services providers and the government, The Inclusion Academy. The Academy’s think tank is dedicated to keeping the pressure on all key stakeholders, while publishing news, research and discussion papers that can aid in developing better and more inclusive products and services.

As proud pioneers members of TIF, Mastercard is also making its own commitment to digital and financial inclusion. In the UK, this includes looking at ways to use our technology and innovation to help consumers make digital payments safely and securely and finding ways to help those digitally excluded with practical support.

At a global level, we  have brought 500 million excluded individuals into the digital economy in the past five years. We achieved that through more than 350 innovative programmes across 80 countries. This year, we made a further commitment to include another 500 million by 2025, a total of one billion people. We’re also pledging to help 50 million small and micro merchants with a direct focus on 25 million female entreprenuers.

We’ll do this by drawing together partners to widen government disbursement solutions, digitising how private sector workers are paid, through partnerships with mobile phone operators, and scaling efforts with fintechs and other partners to address the digital barriers to financial exclusion. 

The Hard Part

One of the consequences of the Covid-19 crisis has been to put a spotlight on the issue of financial inclusion once again. It has been encouraging to see how so many in our industry have worked together at speed to come up with innovative ways to help customers, businesses and governments adapt to what many are calling the ‘new normal’. Conventional wisdom has often been that the ‘fallback’ of cash and physical services will always be available as a last resort in the event of a crisis. However, the Covid-19 pandemic has demonstrated the complete opposite; digital payments, online and app-based banking has proved to be the anchor in supporting the continuation of consumer payments and businesses who have had to shut their physical stores.

The hard part for all of us in the industry is to ensure that in this rush to digital – brought about by tragic circumstances – we do not forget the many who are not easily able to make this transition. We need to offer those people a range of support – not only through the design of products and services, but also in their fundamental digital skills and capabilities. Only by addressing the latter can we truly get to a position of eliminating financial exclusion in the UK.

The post Two Sides of the Same Coin: Financial and Digital Inclusion appeared first on PaymentsJournal.

A new survey from the Mercator Advisory Group and DailyPay reveals that:

• One-half (48%) of those surveyed have run out of money before their next pay period
• 24% said that a bill of less than $1,000 would require them to seek alternative funding
• 46% are stressed by having to pay monthly medical bills
• 70% reached out to external sources for funding that often incur high fees
• There is a critical need for on-demand access to earned pay that Americans experience even in typical economic times

A new co-branded survey from the Mercator Advisory Group and DailyPay, of salaried workers earning less than $75,000 per year, reveals that by introducing an on-demand pay benefit, employers can help their workers reduce the stress associated with paying monthly bills. Most notable and relevant today, nearly half (46%) of those polled are stressed by having to pay monthly medical bills.

DailyPay is an employer-offered benefit that allows employees to access money from earned income prior to payday. This financial flexibility and empowerment over their pay reduces stress and increases attendance and productivity at work. 

The survey indicates that the timing of cash flow is highly important to workers, and the option of flexible withdrawal of earned income before payday can be critical to their quality of life and quality of work. While those polled are generally confident in their ability to meet most of their basic needs on a regular basis, a single unexpected expense, such as a medical bill, can be financially devastating. COVID-19 has simply underscored this urgency. In fact, one-quarter (24%) of the respondents to the Mercator/DailyPay survey, said that a bill of less than $1,000 would require them to seek alternative funding.

By offering an on-demand pay benefit, employers can provide their workers with the financial flexibility they need, at no expense to the company. This helps employees to avoid more financially crippling options, including using credit cards, drawing down savings, incurring overdraft fees and resorting to payday loans, which can incur high-interest rates, fees and penalties.

Key findings of the survey include:

• Nearly half (48%) of respondents reported having a shortfall between payroll cycles, at least sometimes
• 46% surveyed have difficulty paying medical expenses, at least sometimes
• About seven in 10 reached out to external sources for funding that often incur high fees; among these individuals, many are frustrated with high-interest rates (51%) and fees (26%) associated with borrowing this money
• 23% incurred an unexpected expense they could not pay
• Three in 10 report some difficulty in keeping up with monthly expenses

The research shows that a flexible financial solution would act as a substitute for predatory alternative methods that come with high fees. When presented with the option for on-demand pay, respondents saw the value and an opportunity to stop the cycle of debt. In fact, more than half noted they would also use the DailyPay platform to save money and become more fiscally responsible. 

• 34% responded that they would either “definitely use” or “probably use” DailyPay if it were offered to them.
• When asked about services that could be replaced by DailyPay, respondents indicated the same potentially financially draining options that they reported using to obtain extra money to pay a bill, including check-cashing services, pay-day lenders and credit cards.
• 52% noted they would use the “Save” feature that is unique to the DailyPay platform. The “Save” feature allows Daily Pay customers to put away money for future bills and expenses before they even get paid.

The data collected in this survey reveals the critical need for on-demand access to earned pay that Americans face in typical economic times.

“The recent events that have effectively shut down the U.S. economy have only heightened that need for financial relief support, particularly among workers facing medical and other critical expenses,” said Sarah Grotta, Director of the Debit and Alternative Products Advisory Service, Mercator Advisory Group. “Understanding the data that defines this market segment has never been more important.”

Please join us on Thursday, May 28 (1 p.m.-2 p.m. ET) for a joint webinar with the Mercator Advisory Group and DailyPay to discuss the results of the research survey. You can register for this webinar here.

Methodology

Mercator Advisory Group, on behalf of DailyPay, conducted a survey of 1,000 salaried U.S. employed consumers earning less than $75,000. The 10-minute online panel survey was fielded Dec. 26, 2019 – January 4, 2020.

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Everyone’s saying it, but it continues to ring true: we are living in unprecedented times. At the time of writing this article, there have already been over 56,000 deaths and more than one million confirmed cases of COVID-19 in the United States–and these numbers are still rising.

In an attempt to contain the pandemic, state and federal governments have ordered businesses to stop in-house operations and consumers to stay at home, bringing economic growth to an abrupt stop. Of course, hitting the brakes on the economy comes with its own consequences, as millions of Americans are out of work and unemployment claims soar.

To counteract some of this economic damage, the federal government recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The $2 trillion economic relief package, which includes paychecks to around 150 million Americans, was signed into law on March 27, 2020. By mid-April, millions of eligible Americans began receiving their checks via direct deposit.

The stimulus package hasn’t come without challenges, however. A major challenge associated with the stimulus payments is how to quickly put money into the hands of those that don’t already have direct deposit information set up with the Internal Revenue Service (IRS).

Who’s Eligible for a Stimulus Check? 

Most economic impact payments are based on tax-paying recipients’ income, which is determined using information from tax returns filed in 2019 (or 2018 if a 2019 tax return hasn’t been filed yet). Consumers with bank account information already on file will have their stimulus funds deposited directly into their account, no action needed.

The stimulus checks are as much as $1,200 per individual (or $2,400 per married couples), plus an additional $500 per dependent child. Consumers with an adjusted gross income under $75,000 (or $150,000 for married couples) are eligible for the full $1,200, with tapering off amounts of stimulus funds available for incomes up to $99,000.

The Internal Revenue Service (IRS) has an online form on its official website for eligible tax non-filers to enter direct deposit information and avoid the lengthy wait anticipated for paper checks.

The stimulus plan isn’t perfect. If a consumer’s income has dropped since filing taxes due to a reduction in hours or a lost job, their stimulus check won’t reflect that. This may keep some workers above the income threshold, thus ineligible for a stimulus check, even if that no longer applies. Additionally, newborn babies that weren’t listed as dependents on the 2019 tax return won’t be counted, leaving some parents out of their extra $500. There are other exceptions regarding eligibility as well.

Over Half of Stimulus Checks Have Been Dispersed, but Millions Won’t See Theirs for Months

Even with these instances of people falling through the cracks, around 150 million individuals are expected to receive stimulus funds. As of April 24, 2020, the IRS has distributed stimulus checks worth $157.9 billion to 88 million individuals, according to Forbes, with another 62 million people waiting for their payments, including many that urgently need the extra funds.

Others won’t see their funds anytime soon; the process of distributing paper stimulus checks is anticipated to extend into September. Lower earners will have their checks mailed first, with weekly rounds of stimulus checks until the highest eligible earners receive their payments sometime in September.

Unbanked Households are Particularly Vulnerable

Particularly concerning, those without bank accounts, or unbanked individuals, will have to wait longer because they simply don’t have direct deposit information to provide. Yet common reasons cited for not having a bank account are not having money to keep in an account or an inability to pay bank fees, highlighting the urgent need of unbanked Americans to receive their stimulus funds.

According to a study conducted by the Federal Deposit Insurance Corporation (FDIC), which identified that 14.1 million adults and 6.4 million children were unbanked in 2017, unbanked rates are “higher among lower-income households, less educated households, younger households, black and Hispanic households, working-age disabled households, and households with volatile income.”

Clearly, it’s important that a faster solution becomes available to get stimulus checks into the hands of those that need them the most. This is especially true with the possibility of a second round of stimulus funds.

A Single Stimulus Check Won’t Cut it for Many Americans…

Additional rounds of stimulus funds would be invaluable to millions of Americans. The reality is that a single $1,200 payment is unlikely to make a significant dent in counteracting the devastating economic consequences of COVID-19. The Motley Fool recently calculated that a $1,200 stimulus check won’t cover a single month’s rent and utilities for the average American, with the average national rent for a one-bedroom apartment at $965 and average utilities just under $400.

Even as some states tentatively begin lifting social distancing and stay-in-place mandates, millions of individuals are filing for employment every week as businesses struggle to remain profitable during this economic squeeze. 26.4 million Americans filed for unemployment in the five weeks ending on April 18, 2020. Based on that data, the U.S. real-time unemployment rate is over 21%, the highest level since the Great Depression.

… But Subsequent Payments Could Be on the Horizon

It is important to note that even if a better solution isn’t put in place soon enough to correct for the drawn out process of this initial round of stimulus checks, improvements could be made for any additional rounds of stimulus funds that may be dispersed by the federal government. If additional funds are made available,, the clear pitfalls of this initial round of stimulus payments can be addressed to make subsequent rounds more efficient.

Lawmakers have yet to come to an agreement on what should be included in a CARES Act follow-up, but discussions are ongoing. Included in these discussions are not only debates regarding how much money–if any–Americans will receive for subsequent checks, but also how to improve the process of dispersing them faster. A recurring theme? Going digital.

 Will the U.S. Adopt a Digital Dollar to Distribute Funds Electronically?

Getting trillions of dollars of stimulus funds into the hands of American consumers is an enormous undertaking. In the words of Sarah Grotta, Debit and Alternative Products Advisory Service at Mercator Advisory Group, while “many have approached Treasury with new options for delivering funds electronically, there’s no word on whether any of these options are a real consideration right now.”

One suggestion has been for the U.S. Federal Reserve to create a “digital dollar” distributed through FedAccounts, which could speed up future stimulus checks. But this would likely be a time-consuming process that ultimately results in more delays. If a series of checks is to be expected, however, it may very well be a worthy investment of resources.

Receiving Stimulus Payments via Fintechs and Digital Banks 

Beyond the hypothetical possibility of a digital dollar, fintechs have largely stepped up to enable unbanked consumers to more quickly receive the relief money they desperately need. Here are a few examples of companies already speeding up the process:

• Chime: The biggest digital bank in the U.S. is piloting a way for its users to instantly receive their stimulus checks using a feature called SpotMe, which lets customers go negative in their accounts for no fee. The digital bank is taking on risk by using its own capital to front up to $200 in stimulus money to 100,000 consumers in need until government payments trickle in over the next few months. This program could expand in the future. 

• Netspend: Netspend is letting its customers load checks to their accounts through the Netspend Mobile App. They can then use their Netspend prepaid debit card when the funds become available in their account, which in many cases is within minutes.

• PayPal: PayPal is offering a service that lets consumers cash checks and have the funds credited to a “Cash Plus” PayPal account, which is free to do and immediately accessible. This means unbanked individuals can instantly access stimulus check funds when their payments come in the mail.

• Square’s Cash App: Cash App is offering its customers account and routing numbers like a bank so they can deposit stimulus payments directly to their Cash App balance. This circumvents the need for a bank account, allowing customers to set up direct deposit with the IRS, thus avoiding that long wait for a paper check.

Conclusion

The federal government’s stimulus checks are a good start, but are unfortunately unlikely to put a substantial dent in people’s financial crises—especially if they can’t access the money needed now for weeks or months.

Whether a government digital currency project (like China’s) will be taken on by the U.S. government remains unclear. Regardless, digital banks and fintechs have stepped into the space to offer electronic payment platforms that make stimulus payments easier and quicker to access by those who need it.

In any potential subsequent rounds of stimulus checks, these platforms may be even better prepared to help Americans navigate the financial hardship of the COVID-19 era. 

The post Millions of Americans Won’t See COVID-19 Stimulus Checks for Months—Digital Payments Could Change That. appeared first on PaymentsJournal.

At Spendee, we are deeply touched about the current world situation. Following the crisis, we’re aware how serious the circumstances are. Please, take this article as an insight to better understand the effects on shopping behavior that we are able to monitor with our data.

There is no doubt that the COVID-19 crisis affects the whole planet. Thanks to our data, we were able to visualise how the financial habits of our users have been changing. Are you a data enthusiast? We hope you’re ready to find out what the trends are like in different countries, what they have in common, and what spending categories the pandemic effected most.

First, let’s look into different regions.

Different regions usually follow different spending patterns. People in Asia tend to make more transactions, compared to Europeans or people in North and South America. Interestingly, the effect of the global pandemic on personal finance struck the same everywhere! All regions started to decline in the same week. Let’s dive a bit deeper into each region!

If you look closely at the end of the graphs — you can observe a starting trend upward in most countries. It could mean that people are stocking up again, getting used to the new situation, or just slowly getting back to their old habits where possible. However, this is just a hypothesis.

The average number of transactions per user is still nowhere near the pre-coronavirus levels.

In Europe, it’s interesting to analyse different patterns of reactions. For example Germany is already on its way back to the old shopping habits, while Italy is struggling to climb up due to many shopping restrictions.

Most affected shopping behavior categories

Without a doubt, eating out took the largest hit. The number of transactions per user declined as well as the overall number of users that spend in this category. This is likely due to the fact that restaurants are closed in a lot of countries. People are staying home — and overall, there are fewer opportunities to create additional transactions.

Around 23–27% of our users were spending in the groceries category. We’ve seen a significant decrease in users’ expenses for eating out. When expenses in this category occur, most often it’s a food delivery service.

Even though the groceries category declined as well, when it comes to the number of transactions per user, the number of users remained similar. Most importantly, the average expense per purchase increased sharply. This means that people buy more supplies at once. They’ve taken responsible steps to avoid frequent grocery shoppings and replace eating out by making their own meals or ordering delivery. This is a good sign that people are indeed limiting the risk of spreading the COVID-19 virus when shopping.

We see a decline in the number of users that spend in the Gas, Public Transport and Foreign Travel categories. This means our users’ mobility decreased and people tend to stay home, as recommended by WHO and governments.

We can also analyze a decline in the Entertainment category, since most entertainment facilities like cinemas, sport stadiums, concert halls, etc. are closed. These expenses again appeared in the same week, when financial transactions all over the world started to fall.

We sincerely hope that by taking action together, we will only keep getting closer to the world we knew before. We hope you all to stay healthy and full of energy to fight together! Feel free to share with us some of your personal stats — do they follow a similar trend? What changes did you see in your stats? https://medium.com/spendee/covid-19-pandemic-how-did-shopping-behaviour-change-across-the-world-b8cea83f3523

The post COVID-19 Pandemic: How Did Shopping Behavior Change across the World? appeared first on PaymentsJournal.

BlueSnap is now a Nacha Preferred Partner for Digital Commerce and Business-to-Business Payments.

HERNDON, Va., April 7, 2020 /PRNewswire-PRWeb/ — BlueSnap is now a Nacha Preferred Partner for Digital Commerce and Business-to-Business Payments.

In becoming a Preferred Partner, BlueSnap joins a select group of innovators that Nacha recognizes for offering products and services that increase or enhance the use of secure ACH payments, information and messaging by financial institutions and end-user entities.

“As the modern ACH Network thrives, we look for Preferred Partners with solutions that help advance the Network,” said Nacha President and CEO Jane Larimer. “Today we welcome BlueSnap as our newest Preferred Partner for Digital Commerce and Business-to-Business Payments.”

BlueSnap offers an All-in-One Payment Platform that helps organizations – from retail to SaaS to business services – increase global sales and reduce costs with one integration. It allows businesses to offer ACH as a payment method on their checkout page or via electronic invoicing, helping them digitize transactions and reduce processing costs.

“We’re proud to be one of Nacha’s newest Preferred Partners. We’re on a mission to simplify the complexities and reduce the costs of payments,” said Ralph Dangelmaier, CEO of BlueSnap. “With one integration to BlueSnap, businesses around the globe can accept ACH payments and cards, saving development and maintenance resources. The alternative is costly and complex technology and compliance efforts that distract businesses from their core operations.”

Nacha’s Preferred Partner Program is open to any technology solution provider whose offerings align with Nacha’s core strategies to advance the ACH Network. Learn more about Nacha’s growing community of Preferred Partners and how they can support your payments needs. For more information, visit http://www.nacha.org/Preferred-Partner.

About Nacha

Nacha is a nonprofit organization that convenes hundreds of diverse organizations to enhance and enable ACH payments and financial data exchange within the U.S. and across geographies. Through the development of rules, standards, governance, education, advocacy, and in support of innovation, Nacha’s efforts benefit all stakeholders. Nacha is the steward of the ACH Network, a payment system that universally connects all U.S. bank accounts and facilitates the movement of money and information. In 2019, 24.7 billion payments and nearly $56 trillion in value moved across the ACH Network. Nacha also leads groups focused on API standardization and B2B payment enablement. Visit nacha.org for more information, and connect with us on LinkedIn, Twitter, Facebook and YouTube.

About BlueSnap

BlueSnap provides an All-in-One Payment Platform designed to increase sales and reduce costs for B2B and B2C businesses. Our Platform supports online and mobile sales, marketplaces, subscriptions, invoice payments and manual orders through a virtual terminal. With a single integration to our Platform, businesses can accept any payment with ease. The Platform includes access to 110 payment types, including popular eWallets, built-in world-class fraud prevention to protect sales and detailed analytics to help businesses grow. Based in Waltham, MA, BlueSnap is backed by world-class private equity investors including Great Hill Partners and Parthenon Capital Partners. Learn more at https://home.bluesnap.com/.

The post Nacha Announces BlueSnap as a Preferred Partner for Digital Commerce and Business-to-Business Payments appeared first on PaymentsJournal.

Much, MUCH attention has been given to how benefits from the federal government’s CARES Act will be distributed. Since many individuals will receive this payment—and others, such as unemployment insurance—though a paper check, it may be weeks before some receive their money. Though it is difficult to change processes inside massive government operations while meeting the needs of all citizens, this current pandemic underscores the benefits of electronic payments. 

Speed matters here. The current environment is the best illustration of the value of electronic payments and, hopefully, will be the impetus that government entities are looking for to prioritize an improvement in quickly and safely delivering funds to their constituencies. The financial benefit of electronic payments over paper payments already exists, and has been understood for years.

This article in PaymentsSource looks into the struggle of trying to change a payment process in the midst of the current chaos:   

Fintech companies see big opportunities to help the government connect consumers and small businesses and banks with funds, but many gaps stand in the way, said Jareau Wadé, vice president of growth at Finix, a San Francisco-based payments software infrastructure provider that launched in 2015.

“A lot of fintechs want to be involved in helping disburse government funds, but they can’t because they’re not banks. And a lot of banks who could help are choosing not to, because they’ve decided it’s not worth it,” Wadé
said.

The government’s best option might be testing an approach that offers consumers several options for receiving funds.

“Ideally, consumers could go to a central location and pick any number of different disbursement options and there might be some complications with fraud and ID, but it would still be better to get funds out quickly, especially to the millions of people who are underbanked. There are more underbanked people operating in cash than most people realize,” Wadé said.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

The post Rethinking Government Disbursements appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – 2019 U.S. PaymentsInsights – Technology and Fraud: Consumer Concern Is Real.

Even before Coronavirus, there were doubts in the U.S. about paying bills:

• Only 55% of U.S. adults rated themselves ‘satisfied’ (8, 9, or 10 out of 10) to meet financial obligations
• Only 43% of U.S. adults are satisfied with their ability to ‘communicate their financial matters’
• Only 22% of U.S. adults are satisfied with their plans to finance their children’s education
• Only 27% of U.S. adults are satisfied with the earning potential of their current job
• 34% of U.S. adults are satisfied they’re on track to have enough money in retirement
• 41% of U.S. adults were satisfied with their emotional response to personal finance
• 40% of U.S. adults were satisfied with the level of debt they carry

About Report

Mercator Advisory Group’s most recent consumer survey report, Technology and Fraud: Consumer Concern Is Real, from the bi-annual North American PaymentsInsights series, takes an in-depth look at U.S. consumers’ current perspectives on technology and fraud.

This report explores how technology and fraud impact consumers lives and, in particular, the way they shop and pay for things. This includes detail on not only what they do but also how they feel about these two important consumer issues.

The post Even before Coronavirus, There Were Doubts in the U.S. about Paying Bills: appeared first on PaymentsJournal.

Many companies have recently sacrificed mobile security for functionality, a move which comes with obvious costs if a data breach occurs. While mobile security should always be a priority, the unprecedented influx of mandated work-from-home employees caused by the COVID-19 pandemic has made mobile security more urgent than ever. It’s time to take security to the next level. 

To talk more about the importance of mobile security and what strategies organizations should implement in 2020 to prevent a breach, PaymentsJournal spoke with Terrance Robinson, Head of Sales & Marketing, Enterprise Mobile/IoT Cybersecurity at Verizon Wireless.

Businesses are willing to risk security in favor of functionality

The 2020 Verizon Mobile Security Index (MSI) revealed significant flaws in how organizations approach mobile security. The findings came from a survey of over 850 professionals responsible for buying, managing, and securing mobile and IoT devices. Since mobile attacks aren’t exclusive to any specific industry, this year’s index featured supplemental vertical reports in other key segments—one being financial services.

The results were alarming: 43% of respondents admitted that their organization had sacrificed mobile security in the past year, and those that did were twice as likely to suffer a compromise. In industries with widespread access to especially sensitive data, such as the financial services industry, this is unwelcome news.

“Financial institutions and banks recognize that they need mobile banking apps with the best features and functions for their customers, but from a corporate security standpoint, they aren’t really paying much attention,” explained Robinson.

Corporate-level mobile security needs to be a priority

Mobile security encompasses far more than secure mobile banking options for customers. It’s also important for financial institutions to prioritize mobile security from a corporate standpoint —especially with so many employees increasing their corporate mobile usage while working from home. For example, employees should be able to confidently send secure work-related emails from their mobile phones because adequate protections have been put in place by their employer.

There is no corporate asset that employees use more than phones. This is particularly true if they’re using a personal mobile phone for work purposes. “Mobile phones are unique because they’re always connected to the internet and always with people; they’re the last thing people look at before they go to sleep and the first thing they look at in the morning,” Robinson noted.

The data exposure risk alone makes it critically important that mobile security is taken seriously, but that’s not the only risk that comes with a compromise. Companies want to ensure that mobile devices are behaving and performing optimally, but operations can be compromised if a device is impacted by malware or another means of attack. In other words, the same functionality that employers have prioritized over mobile security can itself be impacted by a breach in security.

BYOD vs. COPE mobile business models

The relationship people have with mobile devices is the most personal in bring your own device (BYOD) work cultures—where employers allow employees to use their own computers, smartphones, or other devices to do work. When this is the case, employees are more likely to feel entitled to do whatever they want on their mobile device.

The intermingling of business and personal data is something that organizations have struggled to manage, especially when it comes to personally identifiable information (PII) that could be exposed to unauthorized parties. Because of this, many businesses have opted to steer away from BYOD in favor of corporate-owned, personally enabled (COPE) policies.

The COPE business model is when employees are provided corporate computers, smartphones or other devices, but are allowed to use the devices as if they were personally owned. This model allows organizations to have more power to manage the devices and protect their own data. Large financial institutions have already expressed interest in shifting away from BYOD to mitigate the risks of a security breach.

What can organizations do to boost mobile security?

A well-implemented security solution that is transparent to users is key to maximize mobile security while ensuring the confidentiality, integrity, and access of data. There are already non-intrusive, sophisticated mobile security tools out there, so it’s simply a matter of implementing them.

Here are some of Robinson’s tips for organizations looking to ramp up their mobile security:

1. Prioritize doing more at the network level. Demand for network solutions is rising, said Robinson, as “more people want to see network-layered solutions that are seamless and agnostic in nature.” This is something that can be done directly today with solutions such as routing internet traffic to a private, non-routable IP address and enhancing mobile secure gateways by deploying adaptive authentication.

1. Leverage a device enrollment program to enhance endpoint management. This ensures that organizations can access the data for corporate-use devices.

1. Enable threat defense monitoring. This refers to monitoring networks and other information, such as the data usage permissions applications are requesting from a corporate endpoint.

1. Implement an acceptable use policy that includes mobile devices. Though a majority of employers have some type of acceptable use policy in place for corporate employees, only 44% of them have policies that include mobile devices. By adding mobile devices into their policies, organizations can reduce risky behavior from end users who aren’t concerned about security.

The takeaway

Mobile security is often overlooked, especially on a corporate level, but this can no longer be the case. In this indefinite work-from-home era, an increasing number of employees are relying on mobile devices to get work done. Organizations can take a number of steps to enhance mobile security, and in turn, protect their data and mobile functionality. 

The post Don’t Be an April Fool: It’s Time to Stop Cutting Corners with Mobile Security appeared first on PaymentsJournal.

i2c Inc., a leading provider of payment and open banking technology, today announced the appointment of banking veteran Tracy Seng as EVP, Head of Global Client Success at i2c, responsible for leading account management, program management and advisory services to help clients grow their business and deliver bottom-line revenue and profitability. Seng joins i2c from Wells Fargo, where she and her account management team won Stevie awards in 2018 and 2019, as well as the 2020 People’s Choice Stevie Award for Customer Service Department of the Year. Seng reports to i2c President Jim McCarthy and is based at i2c headquarters in Silicon Valley.

A 20+ year payments and client services veteran with senior leadership roles in account management, industry relations and merchant acquiring, Seng served 15 years at Wells Fargo as SVP, Segment Business Leader Account Management and Industry Relations. Seng helped grow ecommerce payments volume, created differentiated customer solutions and consistently received best in class customer satisfaction scores.

“i2c identifies our success with that of our clients,” said Jim McCarthy, President, i2c Inc. “We are delighted to welcome such a recognized client advocate to i2c as we continue our global expansion. Tracy is that rare individual who becomes a trusted advisor to her clients by delivering value to help them grow their business while she drives revenue through top- performing account management strategies.”

Seng and her team will partner with clients to optimize portfolios, identify new revenue opportunities and, working with i2c management and operations, spearhead the development of creative solutions that meet and exceed expectations. The client success team will also ensure speed to market for their client’s innovative programs and services.

“i2c is focused on partnering with clients to deliver innovative credit, debit, prepaid, lending and multicurrency programs that provide an individualized and superior customer experience,” said Tracy Seng, EVP, Head of Global Client Success at i2c Inc. “I’m thrilled to be joining i2c and to be working in concert with all groups across the company to continue delivering innovation that aligns with and advances our clients’ goals.”

About i2c Inc.

i2c is a global provider of highly-configurable payment and open banking solutions. Using i2c’s proprietary “building block” technology, clients can easily create and manage a comprehensive set of solutions for credit, debit, prepaid, lending and more, quickly and cost-effectively. i2c delivers unparalleled flexibility, agility, security and reliability from a single global SaaS platform. Founded in 2001, and headquartered in Silicon Valley, i2c’s next-generation technology supports millions of users in more than 200 countries/territories and across all time zones. For more information, visit www.i2cinc.com and follow us at @i2cinc.

The post i2c Appoints Banking Executive Tracy Seng to Lead Client Success appeared first on PaymentsJournal.

As consumer payment preferences continue to change, and the payments industry evolves to meet these preferences, fraud prevention solutions will need to be flexible and scalable to ensure that consumers and companies can transact securely. 

Kount, a company at the forefront of digital fraud prevention, recently released such a solution: the Identity Trust Global Network. To talk more about the importance of identity trust and Kount’s unique solution, PaymentsJournal spoke with Gary Sevounts, Chief Marketing Officer at Kount, and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group.

What is identity trust?

Kount defines identity trust as “the ability to establish the level of trust for each identity behind every payment, account creation, and login event.” Each of these interactions has identifiers behind it, and each identity has a determinable trust level. A strong digital identity trust platform, such as Kount’s, accurately identifies and verifies the level of trust behind individual interactions, which is critical to effectively prevent fraud.

Identity trust levels can range from very low to very high. If an identity trust level is very low, it’s almost guaranteed to be fraud and knowing this allows businesses to react accordingly. On the flipside, an identity level determined to be very high allows businesses to feel confident that the interaction or transaction is legitimate. 

For identity trust levels that fall somewhere between low and high, businesses have the option of stepping up authentication and monitoring customers for progressively trustworthy behavior. If a trustworthy pattern is established and the trust level rises, that extra layer of authentication can be removed.

What is an identity trust network?

An identity trust network is a platform enabled with technological capabilities that can establish identity trust. Identity trust platforms go above and beyond the older method of evaluating identity trust level with a handful of device identity elements and an email address. Kount’s AI-powered Identity Trust Global Network, for example, looks at the “physical location of the interaction, correlation between the card transaction location, card location, shipping location, and history of the address,” explained Sevounts.

Commenting on this, Sloane added that “fraud platforms have been expanding to incorporate more of the customer journey, all the way from the first time they touch the website to ordering and payment disputes. It’s great to see that Kount has integrated identity trust right up front.”

Three major components that go into an identity trust network are:

1. A big network of identifiers (data)
2. Artificial intelligence (AI) and machine learning (ML) capabilities that provide accurate results
3. An engine with the ability to customize personalized experiences

The importance of real-time capabilities

It is important that identity trust level capabilities are not only accurate, but can be processed in real time. Companies relying on third party processors often connect to APIs that take time to process and provide data. Depending on the processor, this can take anywhere from a few minutes to multiple days. 

For time-sensitive transactions, such as a gamer trying to make an in-game purchase or an e-commerce consumer creating an online account, the convenience of real-time transactions is particularly crucial. “The speed of a company’s response can be the difference between losing business and gaining revenue,” noted Sevounts. “It’s really not something that can be delayed.”

Recognizing this as critically important, Kount’s Identity Trust Global Network comes with an extensive and diverse set of built-in data that provides consumers with that real-time experience they crave, while protecting them from fraud.

An identity trust network improves the customer experience 

Accurately identifying the trust level behind an interaction does more than prevent fraud. It also enables personalized customer experiences. If the identity trust level is determined to be high and a business feels confident in that, they may want to deliver a VIP, frictionless customer experience. This experience, in true, could motivate these customers to shop more and generate more revenue for the business.

Businesses with data on previous transactions can customize the customer experience even further by offering personalized recommendations. For online merchants, this customization and personalization enables them to better compete with e-commerce behemoths like Amazon. 

Businesses benefit from identity trust in other ways, too

By using an identity trust network to create a better customer experience, businesses can increase revenue, establish a good brand reputation, and generate repeat customers.

Businesses using Kount’s Identity Trust Global Network have reported reduction in chargebacks, manual reviews, and false positives, while seeing significant improvements in operational efficiencies. 

Kount’s Identity Trust Global Network

Kount’s Identity Trust Global Network, which encompasses the customer journey from start to finish, is an in-depth fraud prevention platform that reviews over 32 billion annual interactions, including over 17 billion devices each year and 2.7 billion fraud signals per interaction. The network spans across 75 industries and includes over 6,500 customers and payment providers.

“Having the depth and richness of data makes the world of a difference in being able to accurately identify the trust level,” said Sevounts, who added that Kount’s major advantage is that it “has built that data over 13 years of working with some of the largest online businesses and financial institutions in the world.”

Within milliseconds of initiating an interaction, Kount’s platform analyzes billions of identifiers for each transaction through hundreds of different types of data. It then links what data points belong together, analyzes those, and comes back with an identity trust level in real time.

The takeaway

A strong identity trust platform can be used by businesses in dozens of industries, and is a worthy investment for those looking to prevent digital fraud. Adopting such a platform also offers customers a personalized experience that brings them back, in addition to reducing manual labor for the company. Kount’s Identity Trust Global Network stands out as a leading digital fraud prevention solution, as the company’s vast pool of data enables it to accurately determine identity trust in real time.

The post Identity Trust: The Future of Preventing Digital Fraud and Improving the Customer Experience appeared first on PaymentsJournal.

For years, ecommerce and payment pundits have looked to developments in China as the harbinger of things to come in this space. In China, both ecommerce and mobile payments have taken off much faster than in many of the “Western” markets. The popularity of making payments through social apps is another area where Chinese consumers are leading the way.

It is with this in mind that was I very interested in a recent PaymentSource article, Gen Z will give rise to ‘super apps’. In this article, author Henrik Nilsmo references examples of Chinese companies that are building apps that combine social media, shopping, payments, and more into a single digital experience for the consumer – or “super apps”:

In the future, different payment methods will be directly linked to different channels, and increasingly the purchase and payment experience will have to seamlessly blend into one.

One prime example of the experience I am talking about is what we call “retail-tainment”: in China, virtually all major social media platforms have fully integrated e-commerce and digital payment solutions. At the same time, and not surprisingly, Chinese e-commerce websites have transformed themselves into social media platforms. Digital influencers have their own products and online stores, where they turn followers into consumers and earn thousands of dollars with it. Online search in super apps also allows consumers to find recommendations not only on the web, but also on social media posts and private conversations. For Gen Zs, everything has to be connected and we’ll very likely see this similar pragmatic attitude from them develop outside of China throughout this decade.

While super apps seem to have taken off in China, there have also been attempts at fully integrated “all in one” solutions in the U.S. Many, if not all, of the social apps purport to have some type of payment capability. Success has been mixed.  I think the P2P payments have fared better than perhaps straight up purchasing from a retailer solutions at this point in time.

If the super app is going to make it in the U.S., the author rightly points out it will likely start with the digitally native Gen Z consumers.  That said, there are some certain barriers or hurdles consumers in the U.S. will have to overcome before a successful full-scale adoption of a super app.

One of the biggest barriers is that more popular social networks will have to earn trust at a much higher level than they currently have. As I have said many times before when it comes to people’s money, if there is no trust, they are not going to have confidence that their money is safe. It is key to remember that trust and perception of security are inextricably linked.

Additionally, there is a meaningful portion of the population that likes to shop. These consumers pride themselves on getting the best price, and will not necessarily buy directly from an ad or an influencer’s suggestion. Instead, they will leave the app and look for the better deal.

I am not saying the supper app won’t work in the U.S., but I do think that just because it works in Beijing, doesn’t mean it will play in Peoria. 

Overview by Peter Reville, Director, Primary Research Services at Mercator Advisory Group

The post Super Apps for Shopping and Paying – Will it Play Out in Peoria? appeared first on PaymentsJournal.

PayFit, one of the fastest-growing tech companies in Europe, has unveiled new receipt capture functionality. This news comes against a backdrop of consistent positive growth, as the company has expanded into new markets over the last year, and grown its team to over 500 people.

PayFit is an enterprise SaaS (Software as a Service) company that provides integrated and HR management software products. The company’s suite of products automate all payroll processes, from RTI submissions and payslips, to employee leaves and expenses.

The goal is to save time taken up by manual payroll tasks, and to therefore enable HR teams to spend more working on improving employee experience, and nurturing company culture.

As UK MD Nick Miller comments, “We’re constantly looking at ways to automate manual tasks so that employees can focus on areas where they can add the most value. Recording expenses is a hugely time consuming process, and so many small-to-medium-sized businesses lose hours scanning receipts and manually amending payslips. We want businesses to spend that time elsewhere: on growing their team, taking care of their employees, and creating a fulfilling place to work. That’s why we invent tools that make HR easier”

Payfit’s new solution functionality that it now only takes a few seconds for employees to submit expenses by scanning their receipts. The employee snaps a picture of the receipt (or adds it manually) in the employee space. The text is then read automatically, and all the mandatory data field entries are filled for the purpose of creating the expense.Once the expense has been validated by a manager, the outstanding amount will be automatically added to the payslip for the current month.

This new solution adds to Payfit’s suite of solutions, which are detailed on its website.

The new feature has been added against a backdrop of continuing global success. The team now employs over 500 people across four countries, works with more than 4000 customers, and has raised over $100m in funding to date.

The post PayFit Unveils Expense Capture Functionality, as It Smashes past Growth Milestones appeared first on PaymentsJournal.

This episode was recorded at the Money 20/20 event in 2019. On this episode, PaymentsJournal’s editor-in-chief, Ryan McEndarfer, sat down with Marc Vaughn, Concourse Sales Director at BHMI.

PaymentsJournal:

Welcome to the PaymentsJournal podcast. I’m your host, Ryan Mac, and today’s episode was recorded at the Money 2020 event 2019. Now during this episode, I’m going to be speaking with Marc Vaughn who is the Concourse Sales Director at BHMI. Now, Marc has been in the payments industry for over 40 years. So we’re going to be taking a look at the evolutions and changes that he’s seen within the payments industry. And we’re also going to be getting into how BHMI is working with the payments industry on a global scale. So without any further delay, let’s start the show.

So Marc, it’s fantastic to talk with you today. Now, I know that you’ve been active in the payments industry for more than 40 years. So I’m guessing that you’ve seen a lot of change in the industry.  And so, I’m curious and if you could help enlighten our audience, what are some of the biggest and most monumental changes that you’re seeing in the payments industry today?

Marc Vaughn:

Thank you, Ryan and I appreciate the time today. You are right about seeing a lot of change and I began putting ATM systems back in the 70s. And in fact, I replaced offline ATM system to use track three, to account for the balances of the accounts. So it tells you how we’ve moved and been able to go to an online system and beyond with some of the things I’ve seen in the ATMs of today. But the innovations that I’ve seen are probably similar innovations that most people in America have seen is in the area of mobile phones and in first personal computers and then in mobile phones.  The idea and ability to go to the internet and connect to a phone that has that much power and that much application capability is incredible. And so it’s been a catalyst for the industry to be able to take advantage of that digital technology digital phone and put it into the business environment where it can be used and stretched and we’ve seen the younger generation take advantage of it but I also think folks that are the 40s and even in the 60s are taking advantage of that technology. So with that, you also see micro payments is being a very important part of that growth of transactions and even tap and pay you could have been paid by a card now I’ve used it myself. So those transactions will eventually show the momentum of real time payments. And in that payment structure, the fact is that you’ll see many more payments that have to be addressed and the adoption of that.  We’ve seen faster payments as part of this overall evolution of payments. And the initial part of faster payments that we saw in action was in the UK initially.  In 2008, we saw the faster payments program in the UK begin and also internationally, the New Payments Platform in Australia, short name of NPP, in earnest in 2018.  And in the United States, we saw faster payments and same day payments in 2016 and then RTP in 2017 along with P2P networks like Zelle that were later this year. So shortly after that, we all saw the card networks get out involved, including Visa Direct and Mastercard Send, to be able to push money to accounts in a real time fashion. We then saw the recent announcement of the Federal Reserve; they’re going to be participating in a program called FedNow, that will go live within a few years. So we’re going to see more and more faster payments.  It’s going to be C2C or consumer to consumer, P2P payments, as well as B2C as well as consumer to business payments, which will be a form of bill pay. So that kind of gives you a feel for what I see is changed over the last 40 years. Ryan I hope that answered your question.

PaymentsJournal:

No, it certainly does. And thank you very much for that Marc. You know, I think you’re completely right there. You know, it really is amazing to see how the payments industry is changing and the rapid pace of changing that it’s going through but as we know, you know, with change that is obviously going to bring up some challenges here. So I’m really curious from your perspective and from BHMI’s experience, what are some of the biggest challenges that you see companies facing today?

Vaughn:

Yes, there is. I mentioned it earlier I talked about transaction volume but one of the biggest challenges will be the sheer volume of transactions. We talked about micro payments. We talked about other types of adoption of digital technology with the mobile phone that will always drive to payments. And if you don’t have a software environment and a hardware environment that is able to handle these transaction loads, you’re going to be behind the trend so to speak or be able to handle these alternate payment mechanisms. Another key challenge is able to support new payment methods. For instance, card based /account based payments as well as card based payments will need to be supported. In some cases, they will have to be supported in different environments. You have alternate reference numbers such as telephone and email addresses that also have to be taken into consideration and have directory services for.  Based on what has happened during these last years, I think there you say many types of new digital transactions. And this means companies will need to have a flexible system that will support these new upcoming payment methods and the transactions that are tied to them. Also, as we discussed earlier, faster payments is gaining momentum, and companies need to ensure they can handle a flexible system to perform a real time processing. Currently, most legacy systems are based on batch processing by moving to a continuous passing environment standard application standard, excuse me, companies will not be able to create a system that is faster but they also be able to be more efficient and the overall capacity.

PaymentsJournal:

Excellent. So now let’s talk about faster payments here. Obviously a big topic within the payments industry. Now you mentioned at the tail end of your last answer there that most legacy applications are based on batch processing. I could imagine that this is going to be a significant barrier for companies that want to be successful in this modern world of payments that we’re living in. So, can you tell me more about what you’re seeing in this particular area?

Vaughn:

Sure, absolutely. To address the changes occurred in the payments industry, many companies have focused on frontend systems, which makes sense because they connect directly to the mobile phone that we talked about earlier, or those endpoints that are were transactions are being originated. All these transactions ultimately, though, need to be processed for a back end by a back end, and have back end processes tied to them to ensure that they’re audited and reconciled properly. This will be very difficult for a batch system to be able to move and address these new environmental changes in the marketplace. And you can consist of multiple levels, legacy systems to be able to try to work together to be able to meet these needs. Therefore, they don’t have an “always on” environment that will allow them to simply consume increased volume of transactions and leveraging new value the digital world.

PaymentsJournal:

That’s certainly very interesting there, Marc. So I know that BHMI is best known as the creator of Concourse Financial Software Suite. And there’s been a lot of press lately about how it enables companies to support faster payments. So perhaps you could enlighten me and our audience to a little bit more about Concourse?

Vaughn:

Yes, I will be glad to and you mentioned faster payments—when you say that I think about the architecture of Concourse first, and then I’ll talk about that and then talk a little bit about the application modules. So let me talk about the architecture. Unlike traditional back office systems that we talked about earlier, Concourse continuously loads data and from all transaction sources and process that data as it arrives and places the data into a centralized repository. It then instantly performs back office processing, as soon as the data arrives. As a result of that, companies have real-time access to the data and processing activity. They can view the complete transactions, they can look at the current life cycles of every transaction. A real important example of that would be, as we talked about earlier, the NPP system in Australia; you only get three business days to do a dispute process, meaning that you have to have the data available in an immediate timeframe.

Also, when we talked about Concourse, we talk about how you need flexibility. With that flexibility, we provide a modern, dynamic rules engine. That rules engine supports requirements that customers will have to address, and it has to meet their client’s needs and requirements. So I think the architectural feature of the rules engine, along with the continuous processing and continuous loading, is very important. In the Concourse Financial Software Suite, the application modules and integrated software include transactional research, as I mentioned earlier, settlement processing, dispute management, reconciliation, and fee calculations. So those four modules in a package provide the overall suite and you can use the modules as needed as you go forward with your application installation.

PaymentsJournal:

Excellent. Thank you for that overview there, Marc. Now, I wanted to ask you about some recent news I’ve been seeing about clients in the United States and internationally that have selected Concourse for faster payments. Can you enlighten us to about some of those recent announcements?

Vaughn:

Sure, so you may have seen the announcement about Early Warning selecting Concourse for the Zelle network. All Zelle transactions will be accepted by Concourse in a near real time fashion and stored in a Concourse repository. In fact, Early Warning licensed the whole suite of Concourse products, but their initial implementation will be to address dispute processing and then they will be able to look at reconciliation, as well as settlement processing as an audit function for the overall Zelle network. The next one you may have noticed is in Australia.  Concourse is being used by Cuscal.  Concourse’s role within Cuscal is similar to the role that is played by Zelle. A new payment platform, as I mentioned earlier, is a real time payment network in Australia. Concourse is being used by Cuscal for providing NPP gateway services for their clients. Concourse is a repository for research facilities and the database of record for all NPP transactions by the Cuscal clients.  With Concourse, Cuscal able to provide real time updates for all money movement activities. Concourse is also being used by the NPP payment disputes involving Concourse clients. In addition, Concourse is being used as the dispute and settlement system for the non NPP transactions within Cuscal, including Visa and moving forward next year with Mastercard settlement. Another example is Portugal-based Payshop, which is a subsidiary of Banco CTT and provides Europe a wide range of payment services. Payshop is using Concourse to provide a unified back office environment for all their payment services. This includes cashless transactions and cross border payments, which, Concourse supports via the ISO 20022 payments standard for SEPA, which is the Single European Payment Area.

PaymentsJournal:

Wonderful know that certainly very exciting news. You know, obviously, based upon the clients that you mentioned there, it would obviously appear that Concourse is a very well suited offer the modern world of payments, and I certainly mean the world of payments because you had mentioned Portugal, you had mentioned Australia and obviously the United States here. So now I’m curious in terms of just additional resources here, you know, obviously as an experienced payment software provider, you know what industry councils and payments advocacy groups, would you recommend to our audience?

Vaughn:

That’s a great question. BHMI is involved in a variety of councils and events. As, as of late with the last year that we were focused on the evolution of modern payments first comes to mind is BHMI is a member of the Faster Payments Council.  In fact, I just got back from an autumn council meeting and in Boston. BHMI is also a member of the ATPC, which is the American Transaction Processing Coalition which is the influential group of payment processors and solution providers, that is helping the lead away from the payment industry from a regulatory perspective. BHMI also intends to participate in many other payment events much like Money 2020. I also want to mention that BHMI has published a variety of white papers. We recently did a research brief with the Mercator Advisory Group called “Is Your Back Office Keeping Up With the World of Payments”. I would like to invite everyone listening to the podcast download is complimentary copy, which is within the white papers section of the PaymentsJournal website. It gives great information about the current payments landscape.

PaymentsJournal:

I think that that that’s fantastic there. And yes, just as the last kind of reminder to our audience that they do have the availability to be able to download that white paper from PaymentsJournal.com. I certainly read through it is a fantastic, fantastic read from not only a resource perspective. So, Marc, thank you so much for taking the time today for speaking to me about BHMI and kind of your insight to this changing and quickly changing payments industry that we have.

Vaughn:

Oh, thank you very much, Ryan. I really appreciate your time today.

The post How the Payments Industry Is Changing: A Conversation with BHMI appeared first on PaymentsJournal.

Nacha understands that you don’t have to look far to find proof that many Americans aren’t saving enough. It’s why Nacha supports America Saves Week, which this year is Feb. 24-29, and encourages employees to enroll in Split Deposit to #SplitToSave — a helpful tool to automatically grow savings.

“One of the many advantages of Split Deposit is how easy it is. It puts saving on autopilot,” said Jane Larimer, Nacha President and CEO. “Everyone needs to have a nest egg, and Split Deposit helps make it happen. Even just a few dollars at a time adds up.”

America Saves Week annually features daily themes to encourage different – yet equally effective – ways to save. This year, Nacha is focused on Monday, Feb. 24, which highlights how saving automatically can be easily done through Split Deposit.

Split Deposit is just as it sounds: each payday, you automatically split your Direct Deposit between two or more accounts. For example, you can choose either a dollar amount or percentage of your pay to go into a savings or retirement account, with the rest sent to checking. Even automatically saving just $10 or 1% of your salary adds up over time.

“America Saves Week promotes the importance and effectiveness of saving automatically, and Split Deposit is an efficient way to save for a secure financial future,” said George Barany, Director of America Saves, a national campaign managed by the nonprofit Consumer Federation of America.

For more information, tools and resources on Split Deposit, please visit electronicpayments.org. To learn more about America Saves Week, visit americasavesweek.org.

About Nacha

Nacha is a nonprofit organization that convenes hundreds of diverse organizations to enhance and enable ACH payments and financial data exchange within the U.S. and across geographies. Through the development of rules, standards, governance, education, advocacy, and in support of innovation, Nacha’s efforts benefit all stakeholders. Nacha is the steward of the ACH Network, a payment system that universally connects all U.S. bank accounts and facilitates the movement of money and information. In 2019, 24.7 billion payments and nearly $55.8 trillion in value moved across the ACH Network. Nacha also leads groups focused on API standardization and B2B payment enablement. Visit nacha.org for more information, and connect with us on LinkedIn, Twitter, Facebook and YouTube.

About America Saves

America Saves is a campaign managed by the nonprofit Consumer Federation of America that uses the principles of behavioral economics and social marketing to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. America Saves encourages individuals and families to take the America Saves pledge and organizations to promote savings year-round and during America Saves Week. Learn more at americasaves.org and americasavesweek.org

The post Nacha Celebrates America Saves Week appeared first on PaymentsJournal.

Data aggregation continues to gain importance in the financial services world. But what value does it offer?

PaymentsJournal sat down with Paul Diegelman, VP of digital payments and data aggregation at Fiserv, and Sarah Grotta, director of the Debit and Alternative Products Advisory Service at Mercator Advisory Group, to delve deeper into the topic.

Defining data aggregation

Data aggregation, or what Diegelman referred to as “consumer permission financial data aggregation,” can be broken down into two parts: consumer permission and financial data aggregation.

The consumer permission component of the definition refers to the fact that in data aggregation, consumers should consent to the process and provide the necessary credentials for their bank. In return, consumers expect security, privacy, transparency in the use of their data, and some form of benefit.

The second component, financial data aggregation, consists of the financial data that is pulled—or aggregated— from thousands of sources, including banks, credit unions, credit card platforms, investments, mortgage companies and other payment providers. Aggregators like Fiserv have built what Diegelman referred to as an “underlying set of pipes,” allowing these parties to connect together in a faster process and deliver something of value to consumers.

Visa’s $5.3 billion Plaid acquisition

Visa’s January 2020 announcement of its $5.3 billion acquisition of third party data aggregator Plaid caused major players in the payments world to focus more of their attention on data aggregation.

Though open banking is not mandated in the U.S., there is a growing interest on the part of consumers and small businesses to connect their bank and credit union accounts to a third party app or platform. Data aggregators such as Plaid, MX, Fiserv and others are needed to facilitate this connection and the sharing of information, making it available not only through P2P payment apps like Venmo or Zelle, but also through private label debit cards like GasBuddy and Cumberland Farms, mortgage originators, and some digital-only banks.

Visa’s acquisition underscores how important data aggregation has become and reveals the direction it is heading. According to Grotta, Visa’s decision to buy Plaid gives it “a jump start in what is becoming the private sector approach to open banking in the United States.” 

Consumers are interested in using platforms that manage their finances

The results of the 2019 Expectations & Experiences: Consumer Payments survey from Fiserv indicated that consumers are interested in several financial management techniques that would require data aggregation.

In the survey, over 3,000 consumers ranked their interest level in the following financial management techniques:

1. The ability to manage their financial accounts from different organizations using a single online location or app.
2. A mobile money management/budget app that is connected to their bank and credit card accounts.
3. Aggregated credit card usage statements that would allow them to track spending in different budget categories across multiple cards.

For all three options, over one-third of the respondents were “Extremely Interested” or “Very Interested.” The generational difference was noteworthy. In some cases, Generation Z consumers reported being four to five times more interested in using these techniques than older adults.

Data aggregation benefits consumers and businesses

Diegelman provided PaymentsJournal with a clear example of data aggregation making the consumer experience smoother.

“Let’s say a consumer applies for a mortgage, and as part of the qualification process they need to provide three months of bank statements,” he said. Today, many mortgage originators are “providing the ability for the borrower to input their banking account credentials into the originator’s loan system, which then connects to an aggregator like Fiserv or Plaid.” 

This means that consumers can avoid the headache of bringing in paper bank statements or finding, scanning, and then emailing the statements as PDFs. Instead, such an approach offloads the work to an aggregator that provides the digital rendering of that statement directly into the mortgage generator’s platform.

“It’s entirely possible that this makes the mortgage process go much faster for the consumer. Speed and convenience are two dimensions data aggregation can provide, and consumers value speed when it comes to their finances,” added Diegelman.  

Data aggregation helps businesses, too. If a business wants to increase its customer base, and needs information to grow, using a data aggregator is an obvious opportunity.

Beyond that, though, data aggregators have already built the infrastructure needed to retrieve data from a banking or financial services platform and, at the consumers’ request, send data to a permissioned third-party. It would be extremely difficult, costly, and time-consuming for individual companies to take on the burden of building out thousands of connections themselves, when they can instead opt to take advantage of already in-place data aggregation systems from aggregators with strong data security.

Consent and privacy are hallmarks of a strong data aggregator

Strong data aggregators must live up to expectations of both sides of a transaction. When consumers want to connect their bank transactions to other apps, they do it for a specific purpose and expect their data to be used for that purpose. They have privacy expectations regarding who sees their transactions and how secure the transactions will be. Financial institutions, banks, and credit card platforms on the other end of the transaction have similar expectations.

Furthermore, even though a consumer provided their username or password via an app or platform of their choosing, this does not mean that the app has access to the credentials. Instead, the consumer’s credentials are often held in the smaller realm of data aggregation providers who offer security as part of their aggregation offering.

Data aggregation enables faster payments

Data aggregation is already working to enable faster payments. For example, if a consumer has to pay a monthly fee for their child’s school lunch, but the school only accepts ACH payments, it can be tedious for the parent to find their checkbook and routing information. Alternatively, a school website with an aggregation component would allow parents to connect their bank account using their bank account credentials.  

Another strong example of data aggregation enabling faster payments is the use of P2P payment platforms, such as Venmo or PayPal, instead of writing a check or going to the ATM to withdraw cash. After linking a bank account with the app, consumers can send money to others with the click of a few buttons. The recipient can then immediately deposit the funds into their account.

Grotta noted that data aggregation services may also be the mechanism that launches real-time payments in the point-of-sale environment. “It will certainly be an area to watch to see if new apps or payment devices connection with aggregation start developing new POS payment capability outside of the current networks being used today,” she said.

The future of data aggregation 

Looking forward, Diegelman identified two major developments related to data aggregation that are already underway: the shift away from screen scraping and the evolution of open banking.

The legacy method of data aggregation, known as screen scraping or credential-based harvesting, relies on an aggregator writing scripts and automating the same process a consumer would use to log into their bank. Then, the data that has been requested gets pulled.

The legacy method of screen scraping may create a burden on the technical infrastructure of banks, or may be a less-secure practice than other options. Thus, Diegelman expects larger financial institutions to continue to shift toward a form of direct connection such as OAuth, a token-based model that provides a dimension of privacy and consent. 

Secondly, open banking is maturing in the U.S. market at an advancing rate that is expected to continue. With that in mind, Fiserv became a board member Financial Data Exchange (FDX) in 2019. FDX brings together payments industry leaders that want to “develop standards around account aggregation with the goal of balancing consumers’ desire to utilize and share their data for some purposes and banks’ prioritization around data security and use cases.” Standardization by leaders in the industry will be needed to successfully expand the open banking market.

Conclusion

Data aggregation is currently experiencing high growth in the financial services world, and that growth won’t be slowing down anytime soon.

With aggregation, the convenience and speed demanded by consumers is made possible. Ultimately, maximizing the power of data through data aggregation services benefits consumers, businesses, and financial institutions alike. 

The post How Consumers and Companies Benefit from Data Aggregation appeared first on PaymentsJournal.

As 2020 gets underway, the upheavals that shook the payments industry over the past year show no sign of ending. All signs point to transformational change in 2020. How will payments technology change things?

Top trends to watch in 2020 include the continued growth of embedded payments with business management software, an acceleration of the B2B payments market, and the belated entry of big banks into the competitive fray.

#1: Software will continue to eat payments

Consumers have been conditioned by Uber, Amazon and others to expect a frictionless user experience where paying is baked into the experience and not a distinct and cumbersome step.

2020 will see this trend extend past the early adopters into a broad range of payments technology from the service industries. Whether for a fitness studio or a landscaping service, customers expect to make electronic payments as part of a seamless digital customer experience. Industry-specific business management software will increasingly offer integrated payments solution to their merchants. Beyond fully controlling (and improving) their customer experience, integrated payments offer automated reconciliation with the general ledger, multiple payment options, and more control over the billing and collection process.

Based on their appetite for control, revenue and risk, vertical software vendors have two main choices for how to provide payments to their customers. The easiest way to start is through a partnership with an Independent Sales Organization (“ISO”), serving as a “referral partner” to a partner payment processor (such as Worldpay or First Data).

At the other end of the spectrum is becoming a Payment Facilitator (“PayFac”). This requires taking on underwriting risk (e.g. responsibility for chargebacks), in return for a larger portion of the payments stream, which can boost net revenue by 20% to 50%. New PayFac-enabling technologies such as Finix are being developed to help software companies become PayFacs with reduced human investment in compliance and security.

#2: Business to Business (B2B) payments is the next frontier

In the U.S., 42% of B2B payments are still being completed by paper check[1]. A new set of innovators are attacking this market, such as Bill.com, BillTrust, Nexus, GTreasury and Coupa. Some are offering more straightforward payments-only solutions, and others are wrapping payments into a software workflow (see trend #1).

The card networks and issuing banks are spending significant investment and marketing dollars on B2B payments. The high penetration rates in consumer payments, especially in developed markets, limits the future growth rates in B2C. Interchange rates being offered on products such as virtual cards (single use, pre-funded cards) are currently high but are expected to come down over time.

To drive adoption, durable value must be provided to both the B2B buyer (consumer in B2C) and the B2B supplier (merchant in B2C). Buyers (or payors) want ease of use, integration into their GL, security, increased visibility, speed and working capital benefits. Suppliers (or payees) want speed, accurate reconciliation and visibility into payments.

Lastly, the promise of Real Time Payments (“RTP”) (basically fast ACH with data) is being partially achieved in non-U.S. countries such as Mexico and the U.K., usually driven by coordinated central bank initiatives. RTP has penetrated P2P payment engines in the U.S. such as Venmo, but B2B RTP in the U.S. is still a laggard.

Check usage will continue to decline across B2B payments, but the current manual virtual card model on a standalone basis may not be the long-term solution as a better user-experience is required, including access to RTP. B2B payments companies such as Fleetcor and Wex are expanding rapidly out of their core transportation and travel verticals into new vertical markets and could eventually collide with B2B software + payments companies for payments volume.

#3: The banks are starting to move …

The banks and the card networks have enjoyed a prolonged period of fat payments margins. With the large-scale payments consolidation, banks are starting to make their own strategic moves towards payments technology, such as Bank of America’s recent decision to end its strategic joint venture with First Data/Fiserv.

For years, banks worried they were going to lose their payment systems. Now, they are realizing they are going to keep them (at least authorization, clear and settle), but no one wants to pay for them.

We are starting to see banks adopt basic modern technologies, such as open APIs, to replace legacy host-to-host connections. However, the majority of banks in the U.S. and abroad still require a range of file types and prolonged testing periods for basic account integration.

For payments, the future is bright with payments technology

All growing core software companies should consider payments as part of their growth strategy, and all payments companies should consider building or merging with workflow software. There has never been a more exciting time to be a software provider innovating with payments.

[1] JPM/Association for Financial Professionals Payments Survey (2019)

The post 2020 Will Be a Transformational Year in Payments Technology appeared first on PaymentsJournal.

PSCU, the nation’s premier payments credit union service organization (CUSO), has announced a patronage dividend for the 2019 fiscal year of $25.9 million, with 25% being distributed in cash. As part of its commitment to helping Owner credit unions succeed and prosper, PSCU’s cash distribution to Owners this year is $15.3 million, including $8.9 million in capital redemptions. Since its founding, PSCU has distributed more than $540.2 million in patronage dividends, with over 50% paid in cash.

“The pace of innovation and emergence of new competitors in the payments industry continues to accelerate, with new opportunities for credit unions to consider daily,” said Chuck Fagan, PSCU president and CEO. “We are proud to have delivered expanded digital capabilities, enhanced security and an unparalleled member experience to our Owner credit unions and their members this year. We are committed to continuing to invest in the industry-leading technologies, solutions and services that make us a beneficial and financially empowering credit union cooperative and partner for years to come.”

Highlights from the past fiscal year include:

• Announcement of a multi-year $100 million investment focused on delivering optimized service, credit union tools, advanced technologies and automation capabilities, including $35 million dedicated to Lumin Digital, PSCU’s innovative cloud-based digital banking platform

• Implementation of robotic process automation (RPA) throughout PSCU to drive automation-based process improvements, strengthening efficiency and scalability

• A continued commitment to risk management and fraud prevention, which saved Owner credit unions more than $263 million in potential fraud dollars this year and helped mitigate countless business interruption events while preserving the member experience

• Optimization and enhancement of the CUSO’s service model, enhancing its Service Delivery team and implementations resources, strategically shifting IT infrastructure to a cloud-based environment and refining the organizational design of PSCU’s account management teams to bring greater consultative value to Owners

Owners benefit from PSCU’s investments by sharing in the financial returns that are distributed through the company’s annual dividend. PSCU’s cooperative structure enables distribution of the company’s earnings to its Owner credit unions as tax-free patronage dividends. The origin of PSCU’s model is collaboration and scale, and the company has leveraged its influence on behalf of credit unions and their members for more than 40 years.

The Annual Meeting of PSCU’s Owner credit unions will take place on April 21 during Member Forum 2020, which will be held April 21-23, 2020, at the San Francisco Marriott Marquis. This year’s event – with the theme of “Bridge to the Future” – will feature dynamic keynote speakers, senior leadership sessions and strategic insights on digital payments and other industry-leading and innovative topics. Registration is now open to Owner credit unions and can be accessed here. 

About PSCU

PSCU, the nation’s premier payments CUSO, supports the success of 1,500 credit unions representing more than 3.8 billion transactions annually. Committed to service excellence and focused on innovation, PSCU’s payment processing, risk management, data and analytics, loyalty programs, digital banking, marketing, strategic consulting and mobile platforms help deliver possibilities and seamless member experiences. Comprehensive, 24/7/365 member support is provided by contact centers located throughout the United States. The origin of PSCU’s model is collaboration and scale, and the company has leveraged its influence on behalf of credit unions and their members for more than 40 years. Today, PSCU provides an end-to-end, competitive advantage that enables credit unions to securely grow and meet evolving consumer demands. For more information, visit pscu.com.

The post PSCU Announces Annual Dividend of $25.9 Million appeared first on PaymentsJournal.

Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.

Data for today’s episode is provided by Mercator Advisory Group’s report – Tech Forward Shoppers: A Retailer’s Dream.

Generally speaking, retail loyalty programs work:

• Overall, 53% of consumers in loyalty programs report visiting those stores more often
• 56% of loyalty program members report spending more at those retailers
• Apparel leads industry categories with 62% of consumers reporting increased visits from loyalty membership
• Grocery, restaurant, & entertainment trail other verticals with 54% of consumers reporting increased visits from loyalty
• Loyalty programs also increase spend: 64% of consumers enrolled with online-only retailers report increases
• Home improvement trails other verticals with 56% of enrolled consumers reporting increased spend

About this report

Mercator Advisory Group’s latest Primary Data report, Tech Forward Shoppers: A Retailer’s Dream is the based on the company’s 2019 Buyer PaymentsInsight Survey (formerly Customer Merchant Experience Survey). The online survey of 3,000 U.S. adult consumers, which was conducted in March 2019, explores consumers’ merchant experiences as they shop in-store, online, and via mixed channels. The survey was designed with the goal of defining and highlighting consumer expectations for optimal experiences with merchants.

This third report of three on the survey’s findings looks more specifically at the emerging behavior patterns of customers as they shop in-store, online, via mobile. The report’s analysis of the findings offers insights into how consumers shop, how their attitudes toward technology impact their shopping behavior, and how loyalty program membership drives the way they shop.

The post Generally Speaking, Retail Loyalty Programs Work: appeared first on PaymentsJournal.

The Payment Services Directive 2 (PSD2) is the implementation of an EU directive that ensures the further standardization of the payments system in the European Union. The goals of PSD2 are: to create an equal playing field through regulation for providers of online payment services, to increase the security of European payments, to offer consumers more security, to promote competition in the uniform payment market to stimulate innovative online payment services and to reduce costs for consumers. Additionally, PSD2 offers third parties the possibility to access consumers’ payment accounts, but only if consumers give their consent.

Context

As PSD2 unfolds, there happens to be a dramatic rise in demand for PSD2 solutions. This because PSD2 offers vast potential across European markets. With the increasing demand for PSD2 solutions, there is a need for transparency on the offered PSD2 services within the market.

The PSD2 Marketplace

As the leading European channel, designed to ensure that companies and clients get the maximum value out of PSD2 solutions, PSD2 Marketplace creates maximum transparency on offered PSD2 products and services, and their (unique) value-added in the PSD2 ecosystem. In addition, PSD2 Marketplace continuously provides all parties in the (European) PSD2 ecosystem with the latest news and insights.

The PSD2 Marketplace connects consumers and businesses to relevant PSD2 solutions in the market, and therefore fulfills a matchmaking role.

You can access the PSD2 Marketplace at www.psd2marketplace.eu.

The post PSD2 Marketplace Ensures That Companies Get Value out of PSD2 Solutions appeared first on PaymentsJournal.

Gather FCU has expanded its partnership with CO-OP Financial Services to include contact center services, as the credit union seeks to make itself always immediately available to members, during busy office hours and after-hours.

Gather FCU (www.gatherfcu.org), is a nearly 36,000-member credit union based on the Hawaiian island of Kauai, with $520 million total assets under its control. The credit union is contracting with CO-OP Contact Center for member, card and cardholder dispute resolution services.

“We primarily needed a contact center solution during business hours,” said Justin Ganaden, EVP for Gather FCU. “We often get a heavy influx of calls that we can’t get to right away. We have used call-back services, but we were accumulating about 1,000 per month, so we wanted to ensure a live voice available to our members right away. In addition to overflow services, we plan to have contact center services available after-hours and weekends – eventually 24×7 coverage.”

Gather FCU has been a CO-OP client credit union since 2005. The institution participates in CO-OP ATM and CO-OP Shared Branch networks, uses CO-OP for PIN/Debit Processing and ATM Terminal Driving, and offers CardNav by CO-OP, a card controls and alerts mobile application, to its members.

“We went with CO-OP because we know they do a good job, based on the other services we use them for,” said Ganaden. “During our due diligence, the CO-OP people also gave us a very good sense of the process of how they will work with us and our members. We are confident they will provide excellent service to our members and represent us in the way we want to be represented. And, there is their experience with us – they know our business.

“We are looking for CO-OP to serve as a seamless extension of our credit union, with members able to reach a live agent conveniently during busy times, weekends and after-hours,” Ganaden continued. “We anticipate that our enlarged partnership with CO-OP will also, very importantly, relieve the current pressures on our own call center staff.”

The CO-OP Contact Center, celebrating its 10th anniversary in 2019 as a CO-OP credit union solution, is a 24/7, 365 credit union member, card and lending service organization. The unit includes more than 400 employees in three campuses, serving 400-plus credit union clients. CO-OP Contact Center processes 15,000 loan applications month, and underwrites 10,000 loans. More than 750,000 live agent and IVR calls are handled monthly, of which approximately are 16,000 are Spanish language calls.

“Our team of contact center agents are armed with the most sophisticated technology and training to meet the needs of today’s ‘always-on’ member and provide personalized, empathetic and effortless experiences anywhere and anytime they call,” said Dr. Kathy Snider, SVP, Engage Group Leader, for CO-OP Financial Services. “We are proud to serve Gather FCU members on behalf of their credit union.”

For more on the CO-OP Contact Center, visit www.co-opfs.org/Solutions/Engage/Contact-Center.

About CO-OP Financial Services

CO-OP Financial Services is a payments and financial technology company whose mission is ensuring the success of the credit union movement. CO-OP payments solutions, engagement services and strategic counsel help credit unions optimize member experiences to consistently provide seamless, personalized multi-channel offerings, while delivering secure, sophisticated fraud mitigation service. For more information, visit www.co-opfs.org.

Contact:

Bill Prichard, APR

Director, Public Relations

CO-OP Financial Services

800.782.9042, ext. 3450

Bill.Prichard@coop.org

The post Gather FCU Partners with CO-OP Contact Center for Member, Card and Dispute Resolution Services appeared first on PaymentsJournal.

SWIFT today announces initiation of the development phase with EBA CLEARING to migrate the large-value payment system EURO1 to the ISO 20022 standard, marking the next step in a transformation journey they began together last year.

The two organisations will work toward a November 2021 completion date to correspond with the deadline for the ISO 20022 migration of the Eurosystem’s TARGET2 platform. The goal is to align specifications and milestones to minimise effort by market participants during the
transition and ensure seamless intra-day switching between both euro payment systems.

ISO 20022 creates a new language and structure for payments information, enabling the exchange of more and higher quality data that in turn improves efficiency, compliance and client experiences. Payment systems of all reserve currencies are moving to the standard, and SWIFT has put in place a robust programme to facilitate community-wide adoption.

Alain Raes, Chief Business Development Officer, SWIFT said: “The migration to ISO 20022 is a significant inflection point in the payments industry that promises a new era of possibilities. We are pleased to work with EBA CLEARING to unlock the potential and further a partnership of innovation that spans two decades. EURO1 users can count on us to support them throughout and deliver the same robust security, resilience and reliability that are hallmarks of the SWIFT network.”

SWIFT has provided the messaging layer for EURO1 and served as processing agent for the system operated by EBA CLEARING since its launch in January 1999.

The ISO 20022 migration is part of a larger future positioning programme that the two organisations announced last year after a comprehensive consultation with EURO1 users. The project seeks to evolve EURO1 in line with user expectations while maintaining benefits such as liquidity efficiency, immediate payment finality, cost effectiveness and added resilience for high-value payments. The first deliverables, including a dashboard to enhance liquidity monitoring capabilities of EURO1 users, will be implemented before the end of 2019.

Erwin Kulk, Head of Service Development and Management, EBA CLEARING, said: “Since its launch in 1999, EURO1 has generated substantial cost savings for its participants and, with the migration to ISO 20022, it will be able to continue to do so in the future. We are striving to keep the EURO1-related efforts to a strict minimum for our users. To this effect, we are pleased that we are ready to move forward with our system developments in time and in maximal alignment with TARGET2, together with our EURO1 users and our long-standing EURO1 technology partner SWIFT.”

EURO1 is the only private sector large-value payment system for single same-day euro transactions at a pan European level and has been identified as a systemically important payment system (SIPS) by the European Central Bank.

EURO1 processes on average 200,000 payments per day with an average total value of over EUR 200 billion. The system currently counts 45 participant banks and reaches nearly 20,000 BICs in and beyond Europe.

The post SWIFT and EBA CLEARING Start Development Phase of EURO1 Migration to ISO 20022 appeared first on PaymentsJournal.

Millennials value financial openness in their relationships, with 31 percent saying they would consider breaking up with their partner if they discovered hidden debt or a bad credit score, according to the fifth annual Love and Money Survey by TD Bank, America’s Most Convenient Bank®.

The survey polled 1,753 U.S. individuals who are married, in a committed relationship or divorced to learn more about how they approach money.

The survey revealed that more than one-in-four (27 percent) millennials currently keep a financial secret from their partner – more than any other generation. The biggest financial secret is significant credit card debt, with 43 percent of all respondents hiding debt, and millennials leading the pack at 48 percent.

Baby boomers and the silent generation (ages 73 and older) have their secrets, too. When it comes to hiding bank accounts, 46 percent and 52 percent of these older generations, respectively, conceal money secrets from their partners. In fact, these generations have no plans to tell their financial secrets (81 percent and 82 percent, respectively), whereas more than half (55 percent) of millennials plan to disclose their secret within the next year.

Additionally, despite the threat of financial instability, most Americans (59 percent) admit to making impulsive money decisions, even when they know it’s irrational. The survey revealed that 72 percent of millennial respondents in relationships knew a money decision was irrational but acted on it anyway.

“It’s important that couples are honest and open about their money challenges. Often times a partner will hide a credit card bill or low score due to guilt or embarrassment, yet when the debt comes to light it’s often not the debt that creates the conflict – it’s the secrecy,” said Rachel DeAlto, relationship expert, coach and television personality. “If you want to maintain trust with your partner, own it and create a plan to improve your financial situation.”

Five Years Later: More Talk, More Problems?

Since 2015, communication between millennials talking about finances with their partners is up 21 percent, more than other generations. Now, almost all millennial couples (94 percent) discuss the subject together at least once per week. However, the survey found millennials are still more likely than other generations to argue with their significant others about money. Nearly 40 percent of those ages 23 to 38 admit to fighting about finances at least once a week, up four percent from 2015, while 14 percent of Gen Xers and five percent of baby boomers say they argue about money.

Bending Boundaries for Love

The survey also uncovered how far couples may be willing to go to advance their child’s education. The survey found that nearly one-in-two parents (48 percent) would consider offering a monetary incentive to an educational institution to accept their child. But there is some disconnect between couples, as men (60 percent) are more likely to take this action than women (35 percent). When couples were asked whether they would pay for answers to a standardized test to help get their child into a good school, fathers (68 percent) again were more likely to bend the rules than mothers (32 percent). Overall, sixty percent of millennials would be inclined to pay to improve their child’s chance of success– more than any other generation.

The study also showed that while men (70 percent) are more likely than women (48 percent) to reward their child with money, women are twice as likely to say that their love for their child would sway their money decisions (23 percent of women versus 12 percent of men). Meanwhile, men (16 percent) were more likely to say their spouse would influence their money choices.

“It’s easy to get carried away with spending on our loved ones in the moment but knowing when to draw the line and setting boundaries for spending is critical to staying on track and building your financial health together,” said Jason Thacker, Head of Consumer Deposits, Products and Payments at TD Bank. “The most important thing to consider when making money decisions as a couple is to establish a financial plan that reflects unified goals and a system for managing your money.”  

To learn more about the survey data and managing money with a partner, please visit www.tdloveandmoney.com.

Survey Methodology

Research company MARU/Matchbox conducted the survey among a nationally representative sample of US consumers focused on couples and money. The online fieldwork occurred between July 2, 2019 to July 10, 2019. A total 1,753 completes were gathered in the U.S. Data have been weighted by age, gender and region to reflect the population. Margin of Error on the total sample is +/-2.3 percent.

About MARU/Matchbox 

MARU/Matchbox, formerly the Research & Consulting division of Vision Critical, is a professional services firm dedicated to improving its clients’ business outcomes. It delivers its services through teams of sector-specific research consultants that have technology in their DNA, specializing in the use of Insight Community and Voice of Market technology. MARU/ Matchbox’s research drives decision-making across all aspects of customer experience, including innovation, product, branding, commercialization and communications.

About TD Bank, America’s Most Convenient Bank® 

TD Bank, America’s Most Convenient Bank, is one of the 10 largest banks in the U.S., providing more than 9 million customers with a full range of retail, small business and commercial banking products and services at more than 1,200 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Bank and its subsidiaries offer customized private banking and wealth management services through TD Wealth^®, and vehicle financing and dealer commercial services through TD Auto Finance. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US.

TD Bank, America’s Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol “TD”. To learn more, visit www.td.com/us.

The post One Third of Millennials Would Consider Ending a Relationship Because of a Financial Secret, According to TD Bank’s Fifth Annual Love and Money Survey appeared first on PaymentsJournal.

Complimentary Whitepaper: Faster Payments 101 – An introduction to Faster Payments in the US This complimentary whitepaper will cover the following:  – An Introduction to What Faster Payments Is  – Timeline of Payment Milestones  – Steps Taken During a Faster Payment Transaction and Considerations  – Comparing Attributes of US Faster Payments Solutions Download: Faster Payments 101

The post Faster Payments 101 appeared first on PaymentsJournal.

The whole gambling thing never made sense. A lottery ticket here and there seems harmless, and once Mega-millions hits the $600 million level, I am in for 5 dollars, but when it comes to big-time sports betting, I don’t get it.

The driver is that I am a sore loser. But when you get credit cards involved in the topic of gambling, my credit manager training makes me start to twitch. It doesn’t take a sophisticated FICO score to tell you that someone who finances gambling with a credit card is a poor credit risk.

We covered one side of the gambling issue last year when the WSJ ran an editorial on the gambling/credit card issue, suggesting that the topic is not about gambling and credit cards, but rather about liberty. In this matter, in the case of Murphy v. NCAA, the Constitution prevents Congress from giving orders to state legislatures had more to do with states rights than it did with the ethics of gambling.

Ok, I get that. Legal gambling becomes an unintended consequence, but it is not for me, nor it is in my household budget to drop $100 on the result of who will win the next sporting event. I’d rather go out to dinner with the money.

Here is a turnaround on the topic. Casino News, a trade magazine reports that a major Australian Bank has gone a 180 degrees on payment acceptance for gambling.

• Australian bank Macquarie has announced plans to ban gambling- and lottery-related transactions on its credit cards, the Australian Financial Review
• The changes are set to take effect on July 1. Under those, any transactions that are classified as gambling under the merchant codes will be blocked when a card holder tries to conduct them.

No one is here to sell a platform on ethics, but there are some common sense issues.  You don’t drink and drive. You say thank you. Also, you don’t finance gambling, particularly on a payment card that charges 25% interest.

This is about Credit Management 101.

• Macquarie’s moves comes amid growing regulatory pressure within Australia’s gambling space and as stats show that Australians are among the world’s biggest gamblers. In addition, concerns have been raised that the portion of the nation’s population that its struggling with gambling-related problems has easy access to credit.
• According to the 2017 edition of the Household, Income and Labour Dynamics in Australia (Hilda) survey, nearly 200,000 people in the nation struggled with problem gambling. And according to gambling analyst H2 Gambling Capital’s 2017 rankings, Australia had the greatest gambling loss per head in the world, with a 24.7% gap between the country and second-placed Hong Kong.

Several takeaways. Payment systems are not designed to be personal rights or ethics watchdogs. They function to enable payments. But, credit systems need to operate to manage risk, and placing bets on open credit lines is not prudent. Despite the trend to broaden acceptance on cards, it is good to see a bank take a more conservative approach.

And, that, you can bet on, no credit card required.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

The post Gambling and Credit Cards: A Toxic Mix Gets Resistance in Australia appeared first on PaymentsJournal.

New research from GlobalData reveals a significant shift toward Artificial Intelligence (AI) and big data platform spending among IT practitioners. Brad Shimmin, Service Director at GlobalData, a leading data and analytics company, offers his view on this finding and the future of digital transformation:

“If the last few years has shown anything it’s that the Internet of Things (IoT) is a clear stepping stone along the path toward what many consider to be the next industrial revolution – call it Industry 4.0, digital transformation, or what you will. New use cases appear daily, each revealing how the simple act of instrumenting any given business process can open up exciting new opportunities.

“But the great myth of IoT, that it alone can miraculously enable factories and cities to run themselves is just that – a myth. Without a view into the business as a whole, IoT is nothing but the instrumentation and reporting of select functions. Real digital transformation requires not just IoT but IoT in context, which is to say alongside big data and analytics, all fueled by AI.

“This idea of the digital twin has not yet found traction beyond smaller, targeted IoT use cases. This is of course in no small part due to a continuing emphasis on the here and now, not the future. Within our recent  survey of over 3,200 global IT practitioners, we found that only 45% of annual IT budgets goes toward projects that might actually ‘change’ the business. The lion’s share of available funds flows into the maintenance of existing systems, to keeping everything running as is.

IMAGE FOR PUBLICATION: Please click here for enlarged chart

“Yet, within this same survey, GlobalData discovered that companies are spending heavily on laying the foundations of a company-scale digital twin — namely big data and AI. Compared with a diminutive spending increase between 2017 and this year of only two percent for IoT platforms, these two areas saw a combined increase of more than an 11 percent increase on average. Big data platforms on their own saw a massive 19 percent increase in spending over the past year with 69% of IT budget holders setting money aside for data at scale across the enterprise.

“As companies come up to speed on AI and big data, GlobalData expects to see continued efforts by IoT players in driving digital twin-enabling technologies, for example blockchain, that will help companies understand how those foundational investments can be put to work more broadly.”

The post IT budgets shifting to spend more on digital twin enabling technology, says GlobalData appeared first on PaymentsJournal.

Data for this episode of Truth In Data provided by Mercator Advisory Group’s report Faster Payments: U.S. forecast, 2017-2021 by Sarah Grotta, Director of the Debit and Alternative Products Advisory Service

The post Is Your Faster Payment Platform Global? appeared first on PaymentsJournal.

The following is a transcript of the podcast episode

Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com

Welcome to the PaymentsJournal podcast. I’m your host Ryan Mac. On today’s episode, we’re going to be talking with Peter Shore, General Manager of Transpay, about the Digital Women Survey conducted by Transpay. Peter, welcome to the podcast.

Peter Shore, General Manager of Transpay

Thank you, Ryan. Happy to be here.

Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com

Why don’t you give us an introduction to Transpay and its role within the payments industry?

Peter Shore, General Manager of Transpay

I sure will, Ryan. Transpay, is a payout company. We handle mass payouts for enterprise companies to make cross-border transactions globally for whomever they need to pay. Think of us as the accounts payable for a large marketplace, for a development company that needs to hire offshore workers or has an offshore payroll, or an obligation and voice offshore. We handle collecting those funds for those companies and in a mass distribution way paying people globally. In our specialty, we focus a lot on emerging markets, so we dig deep there. That’s the core of what we do. We feel really fortunate that we were able to partner with the Business Council for International Understanding to get this survey done.

Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com

How does Transpay differentiate itself in making those payments in the marketplace?

Peter Shore, General Manager of Transpay

Transpay has built a proprietary network, a direct-to-bank network. So we have bank relationships all over the world, directly relationships that we own, so we are able to process in the same time, the same day to real time, directly into about 90% of global bank accounts. We can bypass middlemen and know exactly the rates and fees. And so there’s no surprises in our service. It’s “What you see is what you get” as far as pricing goes. Funds end up in the person’s bank account very, very quickly and exactly what they expect.

Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com

Transpay published its Digital Women Survey, which assesses the benefits and challenges faced by women using online platforms to engage customers in other countries. Why did you conduct this survey now, and which findings were the most compelling?

Peter Shore, General Manager of Transpay

We decided to do the survey now as the digital economy has been growing hand over fist with freelancers and developers globally in a cross-borders scenario. We wanted to dive in deeper as we feel that in certain countries, there is less opportunity for women to have substantial roles in the workforce. We wanted to dig a little deeper and compare that against a survey that we compiled in the U.S. as well to be able to compare against the U.S. workforce. We thought the timing was good due to the growth that’s happening in this space. I think the most interesting things that we found in the survey were that 97 percent of the women freelancers in the U.S. and 67% of those in India identified the digital channel employment as a beneficial source for their financial well-being, so they view it as important for them to be able to get ahead. I think another one that is particularly interesting is that 40 percent of Indian respondents cite the ability to earn more via the online channel than they have as opportunity within country. So by outsourcing or being hired by an outsourced opportunity offshore, they are able to create more income for themselves and more fulfilling work that suits what they like to do.

Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com

From the survey findings, what are the greatest challenges for these women, and how do you think they can be solved?

Peter Shore, General Manager of Transpay

Some of the biggest challenges — again, we’re a payments company and we’re focused on  paying people around the world, so we asked about their work experience — but we also dove deep on how they are paid. We really dug deep on the payout side of how they earn their money in a cross-border scenario. What we found was the biggest challenges from the survey we provide was that they’re being charged fees that they are potentially unaware of, and the timing of the transaction to them is longer than they would like. What we’re seeing is the money that they are earning due to the payment channels that are accessible to them are delaying the money getting to them, one. And two, the money that is received is less than the amount that they earned based on foreign exchange markups and/or multiple parties in the mix to actually get the payments to them. A lot of the survey asked about how they’re paid and how they would like to be paid. The interesting thing was that a lot of the women have said, preferably that they would like the funds directly into their bank account. However, zero percent of the respondents we happen to have in India actually got money directly into their bank account, and 30 percent, only 30 percent, of the U.S. women that were surveyed received direct-to-bank transfers. However, 40 percent had identified that as the primary way they would like to be paid.

Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com

How do you see the freelance payments landscape evolving, particularly in India, over the next few years?

Peter Shore, General Manager of Transpay

Well, it’s been growing double digits over the last few years, and we expect that to continue. Women are more empowered than they have been in the past due to the digital economy opportunities that’s provided them. The cross-border payment volumes we see are growing to reflect the growing workforce that is being generated. It is an opportunity for a payments company like Transpay and others like us to fill. The long-term outlook for the cross-border payments space, when we asked, the respondents are less than optimistic. Only 13 percent felt that payments would become seamless in a real-time process, which does provide opportunities for companies like ours that do focus on products that make it more seamless and more real time. Conversely, 17 percent of the cross-border payments will be obsolete, replaced entirely with cryptocurrency, is what people believe. I think that that’s a fascinating statistic in an emerging market, where they believe that 70 percent of a Bitcoin or a blockchain type solution is the future for them. I would expect that percentage to be much lower, but we were surprised by that number.

Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com

So now what recommendations do you have for women entrepreneurs or freelancers who are looking to get paid overseas?

Peter Shore, General Manager of Transpay

I think the key here is educate yourself on what’s available to you. They need to make sure that they understand all of the process of how they’re paid. So the flow, if you will. How does the money get to them? What are the options for them to receive the money? What are the fees that are involved across all of those? In particular, they should be focused on the foreign exchange if there is one (and obviously in India, there is), focused on how the FX is applied and what that is against all of the different methods that are made available to them. More and more merchants or people that are hiring offshore are offering people multiple ways to be paid, which is a good thing, a good evolution for the choice by that worker. However, all of them have unique and distinct ways that fees are applied and there’s lots of times, there’s lots of hops in the middle with intermediaries, and every time, it touches somebody, there’s nobody does anything for free, right? And so their actual net that they receive is impacted. So it’s people touching it as well as the foreign exchange that’s charged.

Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com

You can’t really have a discussion about cross-border payments without talking about blockchain. So do you think that blockchain will play a role in improving payments for freelancers, for foreign-based employees? And is this new technology a challenge for many cross-border payment providers?

Peter Shore, General Manager of Transpay

Good question. The technology is incredibly interesting. It is certainly receiving lots of attention in the press and by big corporations and banks that are looking at it as a future potential solution. I think it’s still quite early days. It’s touted as a secure way to process and streamline, and transparent and secure, and all these great things. I think ultimately it’s too early to say if blockchain will play a big role. It’s certainly something to watch. The reality is to establish a real international-scale cross-border ecosystem requires a lot of collaboration of policy within the governments. You need to have special talent to understand and distribute, right? So workers need to be educated on how to actually process these things. Central governments need to decide how they’re going to deal with things. And when we’re dealing with an emerging market, right now people are struggling just how to get normal fiat currencies into their systems with currency controls and are worried about the valuation of the currency. They’re not today focused at an emerging market country level on figuring out how blockchain plays for them. There’s a real concern over, if you don’t have something that fits more universally, how do you actually provide a universal solution? One country may say it’s a derivative, and one may say it’s actual currency, and one may say something else. How does a payment provider play in that space and stay compliant across all of the regs that will come out? And regs haven’t been drawn up yet. That’s where we sit today. It’s very, very interesting. It is a fantastic technology to look at to solve some of these problems, but until you get down to the governments figuring out how they’re going to deal with it, I think that’s the number one thing that’s going to delay. And banks traditionally won’t do anything until the governments through the central banks tell them it’s okay to. Then secondarily, there has to be a way, an easy way, for these workers to actually receive their funds. It’s great to get something in digital. But if you can’t convert it to fiat, where they can actually spend it easily within country to pay payroll, to get money, to buy groceries — those sorts of things — I think while it is incredibly interesting, it’s still a long way away until we figure all these things out.

Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com

Excellent. Well, thank you Peter for taking the time today to speaking to us about the Transpay Digital Women Survey, and we hope to have you back on the podcast real soon.

Peter Shore, General Manager of Transpay

Oh, thank you so much, Ryan. I appreciate it.

The post PODCAST: Cross-border Payments for the Gig Worker appeared first on PaymentsJournal.

Bristol, UK  – 19 June, 2018 – Creditcall, an omni-channel payment gateway and EMV solutions provider, with support of Payter, the contactless payment terminal manufacturer, has given a major fundraising boost to Wallace & Gromit’s Grand Appeal, the Bristol Children’s Hospital Charity, by making it the first arts trail in the world to ‘go contactless’, via the free installation of an unattended contactless donation infrastructure, together with a new online donations portal and a charity of the year fundraising partnership.

From 2 July until 2 September 2018, 17 out of 67 sculptures, which collectively form the ‘Gromit Unleashed 2’ arts trail running throughout Bristol and surrounding area, will be equipped with unattended contactless acceptance terminals enabling visitors to donate quickly and conveniently to The Grand Appeal by choosing from three fixed-value contactless options of £2, £5, or £10.¹

As one of four official arts trail ‘Trailblazer’ partners, including University of Bristol, Renishaw and Rolls-Royce, Creditcall, with Payter’s support, has created the bespoke donation points and completed all the technical back-end integration, testing and certification processes required to enable the trail to support EMV contactless ‘tap and donate’ payment acceptance from credit and debit cards, Apple Pay and Google Pay (formerly known as Android Pay). 

“This is a fantastic local initiative that raises millions for a vital public institution,” comments Ingrid Anusic, Senior Vice President of Marketing of Creditcall/NMI. “Payment acceptance underpins every fundraising appeal, and contactless is fast becoming the public’s preferred payment method. The secure deployment of a combined card and mobile contactless infrastructure, however, requires the knowledge and technical expertise of a specialist like Creditcall. We’re very proud to be involved – our international leadership in this space can help us make a uniquely valuable contribution to a cause very close to our hearts, right on our doorstep.”

Creditcall has already installed additional donation terminals on site in Bristol Children’s Hospital, The Grand Appeal’s fundraising office and its Gromit Unleashed flagship store at The Mall at Cribbs Causeway. All donations are then routed through Creditcall’s payments gateway for instant processing. Creditcall’s CSO and CIO, Jeremy Gumbley has also privately sponsored a Feathers McGraw sculpture as part of his ongoing support of The Grand Appeal.

“We’re hugely grateful to Creditcall for its amazing support in helping to transform the donation experience for our supporters,” adds Nicola Masters, Director of The Grand Appeal. “We’re really excited to see the difference that contactless donations can make to our fundraising. Contactless technology is increasingly becoming the simplest and most convenient way to give and including ‘tap to donate’ in our charity arts trail adds a unique dimension to our fundraising event.”

Remco Willemse, MD, Payter, added: “Payter’s fixed-value donation terminals will make a real difference to the charity’s fundraising efforts. The contactless user-experience is second to none and the fact that the terminals are situated on the trail, next to the sculptures means that donation becomes a key part of the whole arts trail experience. We’re thrilled to partner with Creditcall on this project and support this very worthy cause.”

In similar implementations of contactless donation terminals in the Netherlands, Payter has witnessed average donations increase 150%, from £1.31 with cash to £3.28.² Average total donations per station / box have also risen from £57 (cash only) to £124,³ with the top performing terminals netting £701.50 to £789⁴ in just three or four hours.

With new figures highlighting the increase in contactless payments, contactless cards and payments are now routinely described as the continent’s ‘new normal’ way to pay across Europe,⁵ and have introduced a quicker and simpler way for people to support charitable causes. Figures from UK Finance,⁶ published yesterday, identified that almost two thirds (63 per cent) of people in the UK now regularly use contactless. In total, across both debit and credit cards, the number of contactless payments in the UK increased by 97% during 2017 to 5.6 billion. By the end of 2017 there were nearly 119 million contactless cards in circulation, with 78 per cent of debit cards and 62 per cent of credit cards in the UK having contactless functionality.

In February 2018, Creditcall was acquired by US based payments enablement technology provider, NMI. The acquisition brings together NMI’s nearly two decades of ecommerce and mcommerce expertise with Creditcall’s industry leading support for EMV chip card, swipe and contactless enabled payment devices. It also creates the payment industry’s most versatile omni-channel payment gateway platform across North America and Europe.

¹ $2.70, $6.70, $13.40 / €2.30, €5.70, €11.40

² $1.76 with cash to $4.41 / €1.50 with cash to €3.75

³ $76 (cash only) to $166.30 / €65 (cash only) to €141.50

⁴ $940 to $1,057.50 / €800 to €900

⁵ http://www.paymentscardsandmobile.com/payment-cards-in-europe-an-update-from-the-european-payment-card-yearbooks/

The post Wallace & Gromit’s Grand Appeal Goes Contactless with Creditcall and Payter appeared first on PaymentsJournal.

NEW YORK, May 29, 2018 /PRNewswire/ — The overwhelming success of SuchApp’s Strategic Partnership with the Billionaire Society has prompted Mr. Prashant Mehta from India’s prestigious Mehta family to invest significantly in SuchApp, the world’s first blockchain messenger and all-inclusive 5G ecosphere.

The Mehta family has offices in New York, London, Antwerp, and Mumbai and have been pioneers in the diamond industry for more than eight decades. Prashant Mehta is managing Hallmark Diamonds, the largest diamond wholesale company in the world since 1999.

“We think that cryptocurrency and blockchain technology has the power to enrich the lives of businesses and individuals in a number of different ways,” said Prashant Mehta, business mogul and graduate from the Yale School of Management. “SuchApp is unique in that it uses blockchain technology to bring real value to everyday people. Once released, we believe that SuchApp has the power to not only increase communication between friends and family, but help Indian business and entrepreneurship grow to record levels.”

According to Ronny Shany, CEO of SuchApp, “we are excited to partner with the Mehta family and are grateful for their assistance in helping further mainstream blockchain adoption. With SuchApp, users enjoy a previously impossible messaging experience while being able to buy and sell goods and services using SPS tokens directly inside the app without having to go through third-party services like cryptocurrency exchanges.”

SuchApp is more than just a messaging service – it’s an all-in-one social platform that supports 4K streaming and recorded video, text chats, and VoIP communication between two or more parties. SuchApp also has a number of innovative business tools to help small and large businesses implement marketing campaigns, loyalty reward programs, and customer service initiatives.

In addition, the Mehta family also owns the top hospital in India, Lilavati Hospital, which is currently valued at $2.1 billionand has a business turnover of more than $700 million.

Visit the SuchApp website today to learn more about this revolutionary messaging service and its upcoming ICO, which is set to launch in the next few days.

About SuchApp

SuchApp brings the content of social media platforms to messaging. It’s the first-ever 5G messaging service that provides 4K video, text, and VoIP communication, content creation, marketing, and e-commerce all under one platform and driven by blockchain technology. Visit the SuchApp website to learn more about the company’s ICO.

The post Indian Billionaire Backs SuchApp appeared first on PaymentsJournal.

DALLAS, TX — Morphis, Inc., the world leader in global currency supply chain management software, has introduced Morphis●IMF™ Intuitive Monetary Forecasting. The workforce automation and forecasting solution is designed for any sized bank or credit union, includes more automation and predicts the required amount of cash needed to order for every branch and self-service device in the entire organization.

For banks and credit unions, the cost and complexity of offering easy access to cash continues to rise. Financial institutions (FIs) keep as much as 40 percent more cash on hand than required and few have successfully implemented enterprise-wide supply and demand management strategies, according to a study from Deloitte.

“Managing cash demands for ATM and branch operations is extremely complex,” says Morphis CEO Gary Faulkner. “Too little cash on hand could result in unhappy customers. Too much can result in idle cash – a wasting asset. Morphis●IMF combines easy to understand visuals with ‘tic box’ order approval for a super-streamlined ‘look at this, click that’ user experience.”

Morphis●IMF is a cloud-based solution that simplifies integration with existing branch software platforms, providing new levels of omni-channel (ITM, teller recycler, ATM, retailer) cash control by automating the four most critical elements of cash control workflow: net demand forecasting and order automation, vendor command and control, transaction activity management and report automation.

Morphis President Alif Rahman explains, “Morphis●IMF takes into consideration how much cash is deposited through all cash touchpoints ‒ branches, recyclers and ATMs that accept cash deposits, how much cash is sitting in the vaults and how much is being distributed out through ATMs and branches. We analyze the data by denomination and set daily upper and lower bound inventory targets ‒ resulting in a much more accurate net demand cash forecast.” 

“Stakeholder reporting, both ad hoc and standardized is delivered through a secure cloud-based portal providing easily controlled access to others,” Rahman continues.

“With Morphis●IMF FIs of all sizes will gain more control over their net demand cash needs, reduce or eliminate human error, save time and money, and most importantly be able to put those idle little cash soldiers back to work,” said Faulkner.

The post Morphis Introduces Cash Forecasting Software with more Automation & Omni-Channel Management for Any Size Bank or Credit Union appeared first on PaymentsJournal.

Melbourne, 28th March 2018: Australian Securities Exchange and Frankfurt Stock Exchange cross list iSignthis Ltd (ASX : ISX | DE_FRA : TA8), the world leading RegTech for identity verification and payment services, is pleased to announce that it’s Australian subsidiary, iSignthis eMoney (AU) Pty Ltd, has executed a payment aggregation agreement with American Express Australia (“AMEX”).

The AMEX service will compliment ISXPay® offerings to merchants in Australia, and will allow ISXPay to onboard merchants directly.

Under the agreement. the Company will purchase AMEX processing at a pre-agreed wholesale Merchant Services Fee (MSF) rate, and then is able to on-sell to merchants under its usual Merchant Services Fee (MSF) plus flat fee structure

The Agreement contains provisions for AMEX direct MSF management of larger or pre- existing merchants enabled via the ISXPay® network.

Card Scheme & Payment Service Update

ISXPay® is a Principal Member of three card schemes, including Mastercard Worldwide, JCB International and Visa Inc, and is able to offer card acquiring, processing and settlement services across the European Economic Area and Australia. The addition of AMEX Is highly complimentary to our core payment services.

The ISXPay® service offering is further complimented by Trustly, Sofort and Polipayments, all of which are available as a pure payment service, or in conjunction with out Paydentity™ Customer Due Diligence / eKYC platform.

Integration will commence on AMEX immediately, with approximately a 3-4 month integration and certification window before it can be made live to merchants.

In the meantime until full integration is completed, ISXPay® is able to process AMEX transactions for a flat fee, but does not receive any MSF contribution.

About iSignthis Ltd (ASX : ISX | DE_FRA : TA8)

Australian Securities and Frankfurt Stock Exchange listed iSignthis Ltd is the global RegTech leader in remote identity verification, payment authentication and payment processing. iSignthis provides an end-to-end on- boarding service for merchants, with a unified payment and identity service via our Paydentity™ and ISXPay® solutions.

By converging payments and identity, iSignthis® delivers regulatory compliance to an enhanced customer due diligence standard, offering global reach to any of the world’s 4.2Bn ‘bank verified’ card or account holders1, that can be remotely on-boarded to regulated merchants in as little as 3 to 5 minutes.

iSignthis Paydentity service is the trusted back office solution for regulated entities, allowing merchants to stay ahead of the regulatory curve, and focus on growing their core business.

iSignthis’ and its subsidiary, iSignthis eMoney Ltd, trade as ISXPay®, and is an EEA authorised eMoney Monetary Financial Institution, offering card acquiring in the EEA, Australia and New Zealand. ISXPay is a principal member of Visa Inc, Mastercard Worldwide and JCB International.

Read more about the company at our website www.isignthis.com. For more information, please contact:

Media: contact@isignthis.com

Investor Relations, Chris Northwood, Activ8Capital, +61458 809 177, cnorthwood@activ8capital.com or investors@isignthis.com

ABOUT AMERICAN EXPRESS ( NYSE : AXP) AMERICAN EXPRESS, IS:

• the world’s largest card issuer by purchase volume
• processes millions of transactions daily as the premium network for high-spending cardmembers
• helps small business owners succeed by delivering purchasing power, flexibility and financial control
• provides commercial payment tools and expertise that help companies control their spending and save billions of dollars
• offers marketing and information management insights that help merchants build their businesses
• the customer loyalty experts with industry-leading rewards programs and platforms
• the operator of one of the world’s largest travel networks
• recognized as the most innovative company in its industries
• dedicated to serving its customers, 24/7, around the world

The post AMEX and ISXPay® execute aggregator agreement appeared first on PaymentsJournal.

The post Conversational Commerce: a New Opportunity for Card Payments appeared first on PaymentsJournal.

The post GFT: Digital Banking Expert Survey 2017 appeared first on PaymentsJournal.

The post Going Digital: The Race to Meet B2B Customers’ Evolving Expectations appeared first on PaymentsJournal.

The post Complimentary Cardtronics Health of Cash Study appeared first on PaymentsJournal.

The post 2017 Closed-Loop Gift Card Holiday Forecast: Stockings Will Get Stuffed appeared first on PaymentsJournal.

On July 10, 2017, the Consumer Financial Protection Bureau (Bureau) issued a final rule governing agreements that provide for arbitration of future disputes between consumers and providers of specified covered consumer financial products and services (Arbitration Agreements Rule or Rule).

The Arbitration Agreements Rule imposes requirements on “providers,” as defined in the Rule as persons that provide certain consumer financial products and services covered by the Rule. The Rule also imposes requirements on certain service providers who provide services regarding these covered consumer financial products and services.

Read the full report here

The post Arbitration Agreements Rule appeared first on PaymentsJournal.

In 2015, the value of mobile and online physical, virtualised and digital goods sales in Europe passed the €500 billion mark for the first time, reaching €570 billion. Overwhelmingly, the momentum for growth comes from the mobile (smartphone and tablet) sphere with these devices becoming primary mechanisms for the access, payment and (for digital goods) delivery of services.

Increasingly, transactional activity is migrating from in-store to online, while entertainment services, in particular, are transitioning from physical to digital; sales of CDs and DVDs are in decline as music and video are progressively delivered as downloads or streams.

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The post The Future of Digital Payments in Europe appeared first on PaymentsJournal.

It’s never easy understanding how consumers think. For example, 50% of consumers aged 18 and over have been notified that their passwords have been stolen,i and yet 89% feel secure with their current password creation and management habits.ii Despite the way consumers trust security, businesses and other organizations that must authenticate their identity for payments transactions and other purposes have a responsibility to protect consumers’ assets. This responsibility is especially important for payments stakeholders. Even if consumers are not yet aware of it, passwords are dead as a secure means of authentication. They were clearly vulnerable before 1 billion Yahoo user accounts were hacked, and they are totally unreliable now that the data from those accounts, including passwords, is up for sale by criminals.iii

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The post The Outlook For Biometric Authentication In Mobile Commerce appeared first on PaymentsJournal.

New research from Funding Options shows that the small business overdraft is in terminal decline and – despite the rise in alternative inance – there is still a ‘knowledge gap’ among business owners, who are often unaware of the alternative options available, or struggle to access them. Our specially commissioned survey of small businesses shows that for UK SMEs to grow, more work is required to provide access to and understanding of alternative inance.

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The post Life After The Business Overdraft appeared first on PaymentsJournal.

The post Replacing Cheques with Open-Loop Prepaid Products appeared first on PaymentsJournal.

In 2016, venture capital financing of Canadian fintechs hitCAD $186.3 million, up more than 35 percent over the previous year. Hitting thehighest-level of investment in almost two decades, Canadian fintechs arelooking for the best payments infrastructure to go-to-market – and many arelanding on the prepaid ecosystem.

At the forefront of technology, prepaid payment platformsallow program managers, fintech companies and others to implement innovativeprograms that achieve greater integration,

efficiency and control.

Access this white paper to take a deep dive into thesuccessful adoption of the prepaid

ecosystem by fintechs in the payroll, insurance and gamingindustries.

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The post Prepaid’s Ecosystem Offers Fintechs a Frictionless Path to Success in Canada appeared first on PaymentsJournal.

In just the past few years, the U.S. digital economy has generated seismic waves throughout the payments landscape. E-commerce activity now thrives due to market forces, including the popularity of Amazon, the improving ease of electronic payment, and the ubiquity of the smartphone. Both old and new providers of technology to facilitate electronic payments are competing and collaborating.

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The post The State of Digital and Mobile Commerce appeared first on PaymentsJournal.

Financial institutions have tried to cope with the anti-growth environment in different ways, none of which has been particularly successful: Product innovation is short-lived; cost-cutting is a short-term fix rather than a long-term solution; and raising customer satisfaction isn’t much of a competitive differentiator because satisfaction is already high. And while rising interest rates can take some pressure off of the bottom line, they aren’t a source of long-term organic growth. Motista believes there is a clear way forward. Our research strongly indicates that financial companies can achieve sustainable growth by accessing an overlooked, underleveraged asset: their Emotional Connection with their customers.

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The post Making the Emotional Connection appeared first on PaymentsJournal.

With the transition to EMV chip cards in the United States beginning in October 2015, most merchants believed they would gain strength in the battle against payment card fraud. Observers anticipated that the historically low rates of counterfeit card fraud at the point of sale (POS) in the U.S. would decrease even further with the shift to EMV chip cards. According to MasterCard, from April 2015 to April 2016 counterfeit fraud costs dropped 54% at U.S. retailers who had completed or were close to completing EMV adoption. But card fraud is becoming a tale of two channels now because online fraud is rising.

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The post Card-Not-Present Fraud Management For Merchants appeared first on PaymentsJournal.

Omnichannel commerce requires merchants to meet their consumers wherever they are—and increasingly, that is on their mobile devices. The mobile revolution has advanced rapidly. Smartphones are ubiquitous, and they are now a familiar part of the consumer shopping experience. To thrive, retailers have to live up to consumer expectations in this increasingly critical channel.

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The post APIs : Understanding The Business Case For Merchants appeared first on PaymentsJournal.

The Accounts Payable (AP) function is a basic, essential, and critical function: every business receives invoices, routes them for approval, and pays them upon approval. For some companies, the volume of invoices is small enough that it is a part-time function for a single person, whereas for others it is often a department staffed with several people. Regardless of size, the main objective of AP is to receive, process, and pay bills and invoices in a timely manner while using proper controls to prevent fraudulent and inappropriate payments.

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The post Payments 101: Electronic Payments appeared first on PaymentsJournal.

Corporate credit cards in AP should be an integral part of a business’s Cash Management strategy, but it’s not. The objective of this research is to assess the current state of commercial credit card use in AP.

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The post 2016 State Of Commercial Credit Cards In Accounts Payable appeared first on PaymentsJournal.

Fraud is a topic that the prepaid payment card industry does not like to talk about openly for fear of spooking customers and tipping providers’ defensive hand. However, fraud will continue to hound the industry even as new defenses are developed. The best data on prepaid card fraud comes from the Federal Reserve. It ongoing surveys of debit and prepaid card issuers show that fraud continues to grow.

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The post Prepaid Fraud Prevention Is A Team Sport appeared first on PaymentsJournal.

When gift cards made their debut in the 1900s, the idea was that they were the perfect way to give someone a gift without having to worry about knowing details like the person’s size, favorite color, or other preferences. A gift giver could provide a gift of choice combined with the thoughtfulness of knowing someone’s favorite place to shop or eat.

As the gift card business has grown and changed, the cards have become more than just a way to give a present. Increasingly, shoppers are buying gift cards for themselves. Table 1 shows how the number of gift card buyers in the United States who say they have bought one for themselves has grown from less than half of gift card buyers in 2013 to just over two-thirds.

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The post Gift Card Self-Use Means Opportunities for Shoppers, Retailers, and Third Parties appeared first on PaymentsJournal.

Implementing advanced (interactive, audio-visual) terminals is a major strategic decision for financial institutions that can deliver significant cost savings, customer satisfaction, convenience, and top line growth. It should also improve branch network efficiencies and efficacy. In this paper we characterize the process as a two-pronged Logical and Physical ‘Long Game Transformation’, viewed as part of a long-term organization-wide vision.

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The post Transforming Branch Culture From the inside out appeared first on PaymentsJournal.

Bank (and credit union) branch design is currently focused on smaller footprints, but this is by no means a universal trend. The larger picture in branch design and construction shows that branches are being designed for specific marketplaces, based on which distribution channels for services are dominant in those marketplaces. Main street financial brands still recognize the importance of customer service, efficiency and convenience as differentiators, but distribution channels are fast becoming the chief shaper of how branches look and function. Retail banking has adopted myriad transformative elements over the past decade, but the influence of financial distribution channels and how they dictate branch network planning has been largely underreported. This paper discusses the ways in which new branch designs are centered on location-appropriate service channels and not just on new branch elements or configurations.

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The post The Influence of Location and Banking Distribution Channels on Branch Design appeared first on PaymentsJournal.

Why Smaller Branches? Slash Costs, Increase Profits and Delight Your Customers a solution paper from Solidus Why Smaller Branches? Slash Costs, Increase Profits and Delight Your Customers Abstract: Community banks and credit unions are moving towards a reduced branch footprint for several reasons. Chief among these is

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The post Why Smaller Branches? Slash Costs, Increase Profits and Delight Your Customers appeared first on PaymentsJournal.

Branding and merchandising are two aspects of marketing/advertising that come under the purview of retail communications. Retail communications is a field unto itself, which has evolved and grown more specialized over time.

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The post Retail Communications: Brand Merchandising for Community Banks and Credit Unions appeared first on PaymentsJournal.

Historically, commercial design and construction in the financial industry has been fraught with wasteful practices, inter-disciplinary conflicts and legal contentions. Traditional “design-bid-build” processes have therefore inflated costs and impaired the ability of financial industry CEO’s to properly analyze return on investment (ROI) when planning new builds and branch renovations. In response, custom design and construction can now be realized at low cost by the application of a “Lean” process called Integrated Project Delivery (IPD). The advantages of IPD will be demonstrated in this paper, with consideration given to cost, design, and construction for the financial industry in the information age. From its implementation as an efficiency initiative following the 2008 global crisis, the Lean construction concept has expanded its scope and is significantly transforming the retail branch.

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The post A Cost-Saving Design-Build Option for Financial Industry CEO's appeared first on PaymentsJournal.

Branch banking today is highly competitive. Banks and credit unions must design branches skillfully with customer experience and return on investment (ROI) foremost in mind. Community engagement, brand loyalty, and the incorporation of technology are all indicators of an institution’s relevance, and crucial for branch success. Simply put, the renovation of financial branches is no longer a cosmetic affair. What was once a matter of choosing the right carpets and wall color has now become a major undertaking requiring industry expertise and the coordination of numerous disciplines. A modern branch upgrade is an exercise in efficiency and cost-saving due to advances in cash handling equipment, interface redesigns, and banking communications technology. For most, if not all, of today’s branches, these renovations are first generation. All of the considerations discussed below must be properly mapped out to project realistic hurdle rates and payback periods. For instance, a branch footprint can be overestimated if mobile apps are promoted after a branch is designed. Up to 30% of transactions may be transferred to apps, reducing the spatial requirements. This paper helps guide those without the requisite knowledge to a fuller understanding of which branch elements are of value to customers, and the ways in which these elements can be configured for optimal return on investment. The focus is on community banks and credit unions in New England.

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The post Branch Transformation Isn't About Superficial Design appeared first on PaymentsJournal.

A payments integration to a gateway or processor takes a lot of resources and time. ISVs also need to assess ongoing maintenance and how to support multiple integrations. In addition, there are various industry, regulatory and compliance require¬ments (like EMV and PCI DSS) to follow, as well as value-added security features (such as end-to-end encryption and tokenization for recurring payments) to consider.

This whitepaper will evaluate the benefits and draw¬backs of integrating via a gateway versus direct con¬nections, plus the potential value a gateway partner can provide ISVs and their merchants.

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The post The Value of Gateways for Independent Software Vendors appeared first on PaymentsJournal.

Payment Card Industry (sometimes called PCI) compliance is a set of rules that govern data security across credit and debit card payments. Businesses must to comply with these requirements outlined by the PCI Security Standards Council in order for their merchant account to remain in good standing.

Every business that accepts credit and/or debit cards must comply with these standards, regardless of what processing method they use. BluePay has put together a simple guide answering some frequently asked questions as well as debunking some myths regarding PCI compliance.

Check it out:

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The post The FAQ on PCI Compliance appeared first on PaymentsJournal.

In this issue of Prepaid Law Wire MasterCard discusses various prepaid law topics that have led to ongoing changes in the prepaid industry.

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The post Prepaid Law Wire issue 4.2 appeared first on PaymentsJournal.

The fluctuations in the currency markets throughout 2015 and 2016 have made cash management tasks even more challenging, and the job of Treasurers and their teams harder day after day.

Over the past couple of years treasury, but also accounting and finance departments around the world had to adapt to a seemingly long-term resurgence in currency volatility.

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The post International Payments and FX Risk Managment appeared first on PaymentsJournal.

Canada is the North American front-runner to eliminate cheques, which is one of the many reasons the country is fertile ground for expansion of electronic payments, including prepaid.

All signs point to the nationwide decline in cheque use (at an annual rate of about 7 percent) being good for consumers, businesses and the financial system as a whole. A 2013 report estimated that Canadian businesses could save between CA$1.6 and CA$4.4 billion – each year – by moving to 100 percent electronic payments. Payments Canada forecasts that by 2020, virtually all cheques written by businesses and governments in Canada will
have migrated to electronic payments.

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The post Cheque?ing Out Prepaid's move to help Canadian businesses break the habit. Part 2 appeared first on PaymentsJournal.

Technology has already brought people the ability to shop from their homes, but soon it will bring devices in their homes the ability to shop and pay. Connected devices in the new category dubbed the “Internet of Things” are designed to make life simpler for people by automatically ordering things that they need or automatically paying bills. In the so-called Internet of Things, devices can be connected to networks to help people manage their daily lives.

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The post When Your Refrigerator Needs a Credit Card: How the Internet of Things Will Change Payments appeared first on PaymentsJournal.

Mobile devices have become the predominant way for consumers to interact with financial institutions (FIs)—for everything from remote deposit capture to photo bill-pay to mobile payments. Mercator Advisory Group expects that the mobile operating system, with all of its unique advantages and constraints, will soon become the primary development environment for all consumer-facing and employee-facing bank capabilities.

Chief among these capabilities is account opening. Mercator Advisory Group’s Customer Monitor Survey Series results tell us that U.S. consumers are increasingly turning to their smartphones and tablets in order to research, compare, and purchase products and services across all industries, including financial services. However, despite this shift in consumer behavior, most financial institutions do not yet allow their customers to open new accounts through the mobile channel. For these institutions, the cost and complexity of rebuilding the account opening process in the mobile channel is simply too high.

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The post Mobile Account Opening: Unlocking the Revenue Potential of the Mobile Channel with a Holistic Solution appeared first on PaymentsJournal.

Using information gathered as part of Mercator Advisory Group’s annual closed-loop prepaid cards benchmark survey, Mercator has created a forecast of the dollar amount that will be loaded onto gift cards that are sold in stores in the United States during the 2016 holiday shopping season. This forecast focuses solely on closed-loop cards sold by issuers in the United States to customers for use in their own stores.

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The post 2016 Closed-Loop Gift Card Holiday Forecast: Ready for Santa appeared first on PaymentsJournal.

Tokenization was portrayed as the solution to all the security challenges of Mobile Payment. It has now been realized that Tokenization on its own is not enough and the mobile application needs to be protected. This has resulted in “WhiteBox” being the latest buzzword when it comes to Mobile Payment security.

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The post Securing Mobile Payments appeared first on PaymentsJournal.

The payments and retail industries are currently undergoing an important shift to secure card-present payments through the implementation of chip technology. Public awareness of the need for security to prevent fraud has mounted as data breaches occurred in recent years, and now U.S. consumers are becoming aware of the enhanced security provided by their new EMV cards and accustomed to using them as more point-of-sale terminals are equipped to accept them.

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The post Leveraging EMV For Security And Mobile appeared first on PaymentsJournal.

Latin America has seen better days. In 2015, growth inthe region declined for the fifth year in a row, to less than 1%. Growth in Mexico, Colombia and Peru hovered around 2%, while Brazil and Venezuela floundered in deep economic crisis, contracting 3% and 10%, respectively¹ . Unfortunately, 2016 has brought much of the same, as governments grapple with the effects of slack Chinese commodity demand, devaluing currencies and rising inflation.

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The post Payments in Latin America: Under Digital Transformation appeared first on PaymentsJournal.

Despite their country’s progressive financial system, Canadians, like Americans, are still writing tons of cheques. Canadian businesses and consumers wrote almost a billion cheques in 2014, valued at CA$3.9 trillion, most of which were written to and from businesses or governments,rather than consumers.

These cheque payments amounted to 46 percent of the total transaction value of all payment segments in 2014 and cost CA$2.00 – $3.85 per cheque more to originate, administer, reconcile, clear and settle than the average electronic payment. And these costs are significantly higher when one or more handwritten signatures are required on the cheque.

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The post Cheque-ing out: Prepaid’s Move to Help Canadian Businesses Break the Habit appeared first on PaymentsJournal.

Mobile devices and the cloud are enabling deeper consumer insights and new business models and fundamentally changing the point-of-sale. Smartphones and tablets have become familiar and ubiquitous. More than two-thirds of U.S. adults now have a smartphone, and device ownership is growing. Mobile devices are not only increasingly common but also used for an increasingly wide range of tasks.

Mobile devices have rapidly become sophisticated. They now provide consumers with a variety of tools backed by extensive Internet connections and immense computing power available in “the cloud.” As it evolves, mobile technology is opening the door to new ways of connecting consumers, merchants, information, and payments. As a result, merchants have an opportunity to gain a deeper understanding of consumers and the context in which they operate. This knowledge can contribute to new and game-changing business models.

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The post The Mobile Revolution: Reshaping Customer Relationships appeared first on PaymentsJournal.

Barclays Bank in the UK is renowned globally for its successful transition to digital. The 320 year old bank has transformed its business by shifting towards new service offerings such as mobile and online platforms.

The global banking giant now has 16 million personal and small business customers, with an increasing amount of those customers viewing the company exclusively as a digital bank. What’s more, over seven million of the bank’s customers are digitally active and their mobile banking app currently has a +56 NPS rating.

To learn the secrets behind their success we speak with John Berghout, Chief Operating Officer for Digital Banking at Barclays Bank.

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The post Dealing With Disruption: Lessons From Barclays Bank Digital Transformation Journey appeared first on PaymentsJournal.

America’s largest financial institutions are pondering this very question right now. That’s because payments and related services account for roughly two-thirds of their revenue, and consumers are beginning to turn elsewhere for these services.

Even among those consumers who have so far remained loyal to products like credit and debit cards, there are signs of trouble. Sometimes called the “Uberization” of payments, the trend toward automated, behind-the-scenes or invisible transactions threatens the traditional financial institution’s role in the enablement of everyday transactions.

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The post How to Stay Seen as Payments Turn Invisible appeared first on PaymentsJournal.

Mobile is fast becoming the preferred method for individuals to access critical online services. This increasingly means that sensitive personal information is being stored on mobile phones. Criminals are aware of the value of this data – which affects a wide range of industries and sectors. These criminals are intelligent and highly resourced so can exploit weaknesses in the mobile platforms, operating systems and applications.

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The post The Power and Risk of Mobile appeared first on PaymentsJournal.

Fraud impacts all stakeholders. When counterfeit or lost and stolen fraud does occur, a cardholder may lose trust in their card product, in their bank and in the merchant where the fraud occurred; the issuer will typically close the account and may risk losing the cardholder when doing so; and a merchant will lose revenue associated with the fraudulent purchase.

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The post EMV Chargeback Best Practices appeared first on PaymentsJournal.

With long-term interest rates declining without a corresponding reduction in short-term rates, a flattening of the yield curve is occurring. Financial institutions typically look at changes in the direction and slope of the yield curve to gauge the sentiment of various markets. For example, 10- and 30-year bonds are often used as benchmarks for moderate-to-long horizon lending, such as equipment lending and mortgages. Can banking channels innovations help?

A flattening yield curve often indicates that markets expect relatively slower, conservative growth in interest rates over time. Conventional wisdom suggests that expectations are subdued for the prospects of robust, long-term growth, causing some FIs to consider plans for potential future economic headwinds affecting banking in the United States. Of course, wildcards in the form of Brexit, Fed actions, and other factors may influence economic growth as well.

Amid all this uncertainty, banks and credit unions are deploying innovative channel solutions in order to better serve their customers and members. These services go beyond teller and customer service representative training, and often include branch and call center reconfiguration efforts, while melding branch, digital, and ATM capabilities.

Branches are now increasingly being used for education, with tellers and customer service representatives trained to better understand banking customer goals and needs and spaces allocated to allow consultation with subject matter experts. The fundamental role of branches and branch personnel continues to be evaluated.

Omnichannel banking is driving improvements in data management and integration capabilities at many FIs, including the introduction of customer and predictive analytics to better serve their customers and members. This includes the sharing of information about appropriate products and services while supporting increased interaction and engagement with today’s banking customers.

So, even though financial institutions can’t control the movement of interest rates and bond and note yields, they can plan for and control the efficiency and effectiveness of their operations by introducing key elements of an omnichannel banking environment. Much can be done by leveraging technology to improve the customer experience and enhance personal service. Banks seek a balance between efficiency and customer-centricity regardless of economic headwinds.

The post Banking Channels Innovations Can Offset the Challenges of a Flattening Yield Curve appeared first on PaymentsJournal.

Financial Fraud Action UK (FFA UK) is responsible for leading the collective fight against fraud in the UK payments industry. Its membership includes the major banks, credit, debit and charge card issuers, and card payment acquirers.

FFA UK publishes the full fraud statistics reported by its members twice yearly. The figures cover payment card, remote banking and cheque fraud losses.

As of 2015, all fraud loss figures, unless otherwise indicated, are now reported as gross. These represent the value of fraud including any funds subsequently recovered by a bank.

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All global payment networks have acquirer host and EMV chip terminal testing processes to help maintain and ensure the integrity of the payment network infrastructure and a near frictionless cardholder acceptance experience. The American Express, Discover, MasterCard and Visa testing requirements are global and are therefore also relevant to the U.S. market in order to reduce any potential interoperability issues in production. These processes follow the EMV specification, which is the generally accepted industry standard, and each global payment network’s application specification, with an objective of ensuring interoperability between all host systems, payment devices, and cardholder devices.

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The post EMV Testing and Certification White Paper: Current Global Payment Network Requirements for the U.S. Acquiring Community appeared first on PaymentsJournal.

New developments in security software and hardware force criminals to search for other ways to crack network security and steal sensitive information. Where are the least secure parts of organizations? The workforce.

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The post 5 Tips to Train Workforce on Social Engineering appeared first on PaymentsJournal.

The Fast IDentity Online (FIDO) Alliance has attracted more than 250 members with a vision for simple, secure online user authentication. Leaders from multiple industry segments are working together to create an interoperable environment in which users can access online services through web sites and mobile device apps with a high degree of security but without compromising usability. To this end, the FIDO Alliance has established foundation principles on which to base specifications for authentication protocols. Allowance is made for interoperable products from multiple vendors that implement different technologies.

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The post Smart Card Technology and the FIDO Protocols appeared first on PaymentsJournal.

This year, as we have for the past five, we polled thousands of retail banking customer around the world to gauge their attitudes toward their financial service providers. The most startling insights to emerge from this-survey-the largest of its kind in the-industry-have to do with the undeniable inroads fintech firms are carving into banking’s core business.

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The post World Retail Banking Report 2016 appeared first on PaymentsJournal.

EMV Implementation: An Integrated Strategy to Drive Payments Transformation Abstract An integrated EMV implementation strategy is the key to effectively respond to a disruptive payment paradigm. With chip technology at the epicenter of transformation, EMV offers financial institutions the potential to achieve market

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Tokens are used in a number of environments to replace and protect the underlying value of credentials. In the payments world, tokenization is primarily used to secure payment card data. This can be done using EMVCo Tokenization for card payment transactions or Payment Card Industry (PCI) Tokenization for card-on-file data, which is stored in merchants’ or acquirers’ systems after a transaction is completed.

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While mobile payments and digital wallets have been in use for some time now, industry experts believe that the tipping point has not yet arrived. Apple’s entry into the mobile payments space using Near Field Communications (NFC) technology has generated a lot of debate. Considering the introduction of tokenization guidelines by EMVCo in early 2014, Apple Pay’s entry into the payment landscape in September 2014 seems quite well timed. With some US banks and three major payment networks driving this initiative, industry stakeholders are speculating on its likely success and its impact on the payment industry.

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What is trust? In economic matters, trust is often invoked with little explanation. In parts of the world where the electric grid is usually stable, we trust that the lights will turn on — and stay on — when we flip the light switch. When it comes to people, we may trust a neighbor to borrow our cell phone to make an emergency call, but not necessarily a stranger, who could run off with it. Sometimes we have to learn to trust new technology providers or financial institutions. If you move to a new region that requires a different mobile service provider, you might feel the advice of a new colleague is more reliable than the sales pitch of a service agent. Or you may look to a nation-wide network with a long and consistent reputation rather than take a chance on a cheaper provider you’ve never heard of before. And then there are life and death matters, when we put trust in a multitude of others. Driving a vehicle on a busy highway requires a certain faith that other drivers will follow the rules of the road, if only because they, like us, want to arrive at their destinations safely!

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Mobile phones have increasingly become tools that consumers use for banking, payments, budgeting,and shopping. Given the rapid pace of developments in the area of mobile finance, the Federal Reserve Board began conducting annual surveys of consumers’ use of mobile financial services in 2011. The survey examines trends in the adoption and use of mobile banking, payments, and shopping behavior and how the emergence of mobile financial services affects consumers’ interaction with financial institutions.

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The post Consumers and Mobile Financial Services March 2015 appeared first on PaymentsJournal.

Digital technologies have considerably transformed the banking and financial services industry by creating new channels for customers toconnect with their banks and conduct routine banking activities. The Internet of Things (IoT) promises to further disrupt the financial servicessector and revolutionize the way businesses operate today. Apart from benefits like improved operational efficiency and reduced costs, theIoT offers fresh avenues of growth and revenue through new digital products and services.

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This paper discusses the features of a blockchain technology solution that can cater to the needs of financial services firms, and proposes an approach for its deployment in the capital markets domain to optimize processes in the areas of issuance, corporate actions, clearing, and settlement.

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The post Blockchain Technology – Transforming Transaction Processing in Capital Markets appeared first on PaymentsJournal.

The global payments industry has witnessed phenomenal growth over the last couple of decades. Significant technological advances have resulted in the entry of non-traditional players, like payment service providers (PSPs), into the ecosystem. Regulators across the globe felt the need to control the payments landscape because of the rise in the volume of business as well as the number of players.

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The post Payment Services Directive 2: Creating Opportunities and Driving Innovation through Regulatory Reform appeared first on PaymentsJournal.

Not long ago, consumers who took advantage of online payments typically used their PCs or laptops and e-commerce applications. That practice began to change significantly with the advent of smartphones, which made mobile payments via Web browser a reality. And that was soon followed by merchants’ mobile apps, which were designed specifically for smartphones and provided a streamlined process. Consumers have moved along that evolutionary path with considerable speed—and the evolution continues.

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The post On-Demand Payments: Understanding the Merchants' Opportunity appeared first on PaymentsJournal.

Cryptographic key management is an umbrella term which refers to the various administration processes that govern the life cycle of keys and the keys’ associated crypto material and metadata. Key life cycle stages include, but are not limited to, generation, certification, distribution and revocation, archival and destruction, and each of these stages brings with it particular administrative tasks that must be performed securely in an auditable manner. The exact processes vary depending upon a number of factors, such as key type (symmetric or asymmetric), environment in which they are used and industry.

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A key question for merchants and other payments stakeholders is whether Bitcoin technology or any of the Bitcoin alternatives, which are referred to as altcoins, has the potential to achieve mainstream adoption for everyday payment needs. Bitcoin evangelists face the double challenge of not only having to convince consumers to use Bitcoin wallets online or their smartphones at the point of sale (POS) but also trusting a completely new source of funding—one that doesn’t involve their banks or card networks. Table 1 lists the pros and cons of card-based retail transactions and compares them to the use of Bitcoin for POS transactions.

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The post Blockchain Application for Merchants and Corporations: Payments and Beyond appeared first on PaymentsJournal.

Porto Alegre, January 2016 – PagBrasil Research is permanently analyzing new developments and trends. Its latest white paper addresses the question of whether the Internet of Money will help humanity return to a global and all-encompassing barter trade, which will be digitally based, simpler, smarter, and more humane than anything one could have pictured over the last few centuries.

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The post A New World Currency System Emerges appeared first on PaymentsJournal.

As 2015 recedes from view, it is important to remember it as the first full year of a new mobile payment regime. The concept and reality of point of sale (POS) mobile payments gained new legitimacy as Apple Pay continued its broad rollout, Android Pay and Samsung Pay were first announced, along with a host of other smartphone-based consumer payment services. Early evidence is that smartphone-enabled consumers are trying these services and finding important value in them. Broad consumer adoption will take time and effort, however, on the part of all payments stakeholders.

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The post Clearing the Path for Mobile Payments appeared first on PaymentsJournal.

After two years of declines in 2012 and 2013, gift cards loads in the holiday shopping season returned to growth in 2014. In the 2015 holiday shopping season loads will continue to increase. Mercator Advisory Group is forecasting that the total loads on gift cards from Nov. 1 through Dec. 31 will increase by 6%, even though some of the signs might seem to indicate that gift card loads would be slower or even down from 2014.

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The post 2015 CLOSED-LOOP GIFT CARD HOLIDAY FORECAST: GROWTH RETURNS appeared first on PaymentsJournal.

After two years of declines in 2012 and 2013, gift cards loads in the holiday shopping season returned to growth in 2014. In the 2015 holiday shopping season loads will continue to increase. Mercator Advisory Group is forecasting that the total loads on gift cards from Nov. 1 through Dec. 31 will increase by 6%, even though some of the signs might seem to indicate that gift card loads would be slower or even down from 2014.

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The post 2015 CLOSED-LOOP GIFT CARD HOLIDAY FORECAST: GROWTH RETURNS appeared first on PaymentsJournal.

The global payment industry is rapidly evolving as technology continues to transform. Driven by mass adoption of cashless methods, payment schemes are making a significant contribution to improving convenience and customer experience. There are many examples: the expansion of China UnionPay outside of its home market, new European mobile schemes funded by current accounts, the disruptive entrance of wallets and other non-traditional players — these and many others continue to accelerate growth in cashless payments, and not just domestically but also across borders.

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The post Payment Platform: Enabling Enterprise Transformation Through Actionable Data appeared first on PaymentsJournal.

This whitepaper has been created to provide an overview of the key elements of blockchain and the types of applications (sidechains) that can effectively utilize the blockchain framework. The paper touches upon a few of the critical issues facing the global financial economy in an effort to provide context as to why leaders across the world are looking to leverage blockchain as a means to address key concerns.

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The post BLOCKCHAIN It’s not currency. It’s a framework. appeared first on PaymentsJournal.

Everyone expected that mobile payments would grow rapidly, but technical and business complexities slowed adoption to a crawl. As time progressed, the payments industry recognized that adoption would require a kick start from an industry giant. Google couldn’t move the market, several mobile carriers that banded together to ignite the market were unable to do so, and early efforts by the global brands failed. But when Apple, the global brands, and several large banks announced Apple Pay, low and behold the market opened and a new model for mobile payments based on tokenization appeared. This Mercator Advisory Group white paper explains tokenization technology in general, the Apple Pay implementation unique to Apple, and the new payment industry business arrangements constructed around Apple Pay that may shape the payments landscape well into the future—albeit with consequences.

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The post A MARKET STATE EVALUATION OF TOKENIZATION appeared first on PaymentsJournal.

A great deal of attention has been paid to the Apple Watch and its ability to easily “tap and pay” to make purchases in stores. But it’s important to understand that this device is part of a larger trend—the emergence of practical, wearable computers.

Wearable computing represents the next wave of personal computing, one that is likely to be as disruptive to our everyday lives as the standard bearer of the last wave, the iPhone, was. Mercator defines wearables as “continuous, ultra-portable computing devices that give users context-specific insights to enable better decision making with minimal conscious effort.” The capabilities implied in that definition are what distinguish wearables from previous forms of personal computing, and make them a revolutionary new interface.

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The post Wearable Computing: Understanding the Next Wave of Customer Experience appeared first on PaymentsJournal.

The Canadian Payments Association (CPA) has embarked on a multi-year initiative to modernize Canada’s national clearing and settlement infrastructure to better serve the payments needs of Canadians. Adoption of the ISO 20022 payment message standard is at the foundation of this important endeavour and is expected to generate positive outcomes spanning the entire payments value chain. These outcomes include (i) improved efficiency in payments processing; (ii) enhanced domestic and global interoperability; and, (iii) opportunity for innovation throughout the payments value chain. As such, the anticipated economic benefit to Canadians from ISO 20022 adoption is wide in scope.

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Everyone here knows that companies must innovate to thrive. You may not know that the same is true for central banks, even if we’re the one kind of bank you wouldn’t imagine going out of business.

Just like private companies, central banks are often focused on immediate issues. This is hardly surprising, given what has been thrown our way these past few years: a financial crisis, the Great Recession and then the oil price shock. And a central bank exists in the first place to set a solid foundation for the economy and the financial system.

In recent years, we’ve kept inflation low and stable. This has made it easier for people and companies to recover from the downturn. Working with other authorities, we also avoided major disruptions in our financial system.

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Mobile devices are more than just a way of communicating. Mobile devices are used for email, social media, gaming, banking, photos. Mobile devices are used for both business and personal use, and today mobile phones are used more widely than personal computers. Mobile ID can replace plastic cards, badges, and ID cards and allow users to complete identification, authentication, payments, and even digital signatures. Previous methods of physical personal identification can be stored or accessed in the mobile device, eliminating the need to carry a wallet, or wait for replacement cards to come in the mail.

As the ubiquity of mobile devices changes how people engage in day-to-day activities, it also increases security concerns about the information stored or accessed by these devices. To be trusted, Mobile ID schemes call for the enforcement of privacy and security requirements.

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The post Mobile ID: Realization of Mobile Identity Solutions by GlobalPlatform Technologies appeared first on PaymentsJournal.

Banks have a notable history of extending financial services to an increasingly large segment of the world’s population. Still, more than a third of the world’s adult population and numerous small companies make little or no use of formal financial services. The majority of this population are found in low- and middle-income emerging markets; though in high-income countries, large numbers of people also do not draw on banks to help meet their day-to-day financial needs. From a business standpoint, it was reasonable for banks to leave such

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The post Billion Reasons to Bank Inclusively appeared first on PaymentsJournal.

The growth and dynamism of the financial service sector is crucial to Toronto’s future economic success. Long viewed as one of the most stable and secure sectors in the Greater Toronto Area’s (GTA) economic structure, the financial industry currently faces a growing number of challenges, chief among them is the rapid pace of information technology innovations (Fintech) that are altering the way financial services are delivered. The risk for established financial institutions is that they will lose many of their most profitable lines of business to the new competitors, while the new Fintech companies establish themselves as the trusted intermediaries between them and their customers. Technically, these dual threats are now called unbundling and disintermediation.

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The post Current State of the Financial Technology Innovation Ecosystem in the Toronto Region appeared first on PaymentsJournal.

Global Agenda Council on the Future of Financing & Capital The Future of FinTech A Paradigm Shift in Small Business Finance October 2015 WORLD ECONOMIC FORUM, 2015 – All rights reserved.No part of this publication may be reproduced ortransmitted in any form or by any means, includingphotocopying and recording, or by an

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Fintech is changing the face of global payments. Global investment in fintech ventures tripled in 2014 to US$12 billion.1 As new payment capabilities come to the fore, cutting-edge technology is transforming how transactions are initiated and processed. This is no longer just a case of new currencies or faster payment methods, but an entire rethinking of transfers of “value” and how these are undertaken. This presents both a challenge and an opportunity for banks.

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