26 June 2015
Last month, our Senior Payments Advisor, Jade Ford, attended the annual Cards & Payments Conference in Melbourne. Jade found the conference insightful and her key takeouts from the many presentations and panel discussions can be broken down into four main themes:
A consistent theme throughout the conference was the rapid pace of change.
Former Magento (USA) President Bob Schwartz made the point that although billions of dollars have been spent developing it, the internet still only has five to ten percent of total sales, signalling significant growth to come.
The payments industry faces a real challenge in keeping up.
For instance, FIS Australasia Managing Director Richard Palmer warned of payments innovation in general falling behind customer expectations, especially with millennials, even though industries around the world are doing better than ever before.
Australia’s New Payments Platform is an exciting development in this space. As well as being faster, the anticipated versatility of this new payments infrastructure means that clever partnering between banks and technology companies should drive innovation and keep up with customer demand.
Big data means retailers know more about their customers than ever before. But knowing is not enough: they must respond to that knowledge. This was former Tesco (UK) CEO Sir Terry Leahy’s lesson. Launched in 1995, the Tesco Club card was one of the first examples of harnessing big data by bringing the voice of the customer into the business.
The payments industry has changed rapidly over the last ten years. So too did the concept of shopping with the introduction of online shopping.
Both on and offline, technological developments in payment methods means less personal interaction at the point of sale. Indeed, Tom Conlon of Verifone predicted the end of conventional payment terminals, spurred on by the replacement of cards with mobile phones. And consumers expect merchants to provide an integrated personalised experience.
The mobile phone is at the heart of this move to bring together the on and offline shopping environments. As Barclays Head of Mobile Innovation Julian Wilson emphasised, the mobile phone has become a large part of the payments ecosystem and consumers want to use it.
As technology removes traditional security barriers to enable a smooth and easy consumer experience, it also needs to be used to make the consumer feel secure.
Equinix (USA) Senior Vice President and Global Head of Payments John Knuff noted that the payments industry is in a unique state, with a lot of innovation coming from new technology startups who are creating new networks and new methods to move money. He also emphasised that in this exciting new environment, battling fraud remains a number one challenge to the industry.
David Singh of Commonwealth Bank explained that ‘Lock, block and limit ®’ is one such example. The mobile phone app allows the consumer to block certain credit card functions, including online purchases and ATM withdrawals. It also enables a temporary lock on lost or stolen cards. ASB New Zealand offer their customers ‘ASB Card Control’ which is similar.
Tokenisation is becoming a key method of authentication in payments. It is a way to replace physical account number information but requires significant infrastructure changes to adopt (i.e. adding new fields to authorisation messages). Mark Nelsen, Senior Vice President, Global Risk Products, Visa Inc. believes tokenisation will strengthen digital commerce security by removing sensitive payment data from the ecosystem.
The payments and retail landscape is launching into a new era of emerging technology, regulation, new players, disruptive strategies and changes in consumer behaviour; and it’s switching up the game for all players.