for bankruptcy in 2014, after more than US$400 million-worth of bitcoins appeared to go missing. She continues: “More robust security controls and regulations are required before organisations – who are typically risk averse when it comes to dealing with money – adopt cybercurrencies in their day-to-day operations.” On P2P payment systems, Gargagliano
says these “present an attractive proposition and a number of advantages to users, in terms of reducing payment fraud [and] making transactions quicker. Given the relatively low barrier to entry, there has been a plethora of companies offering P2P payment capabilities, and the industry should expect some consolidation as these organisations mature.”
THE CONSULTANCY VIEW Chillimint is a Warwick-based consulting firm advising on product strategy, primar- ily in the payments and card space. It has worked with several major financial institu- tions in the Nordics. Managing director Andrew Jones was previously UK retail product director at Barclays for five years, while fellow director Brian Cunnington was head of debit cards, travel services and retail payments at the bank. Business travellers are becoming more empowered while on the road thanks to carrying smartphones and tablets. Linked with this is the increasing adoption of bring-your-own-device (BYOD) policies by some companies. Cunnington says: “Typically, business travellers with larger corporates have corporate devices which are locked down by the enterprise. The challenge is whether you can run those sort of innovations on a handset which is locked to a corporate service.” Smaller, entrepreneurial companies are
more likely to introduce BYOD policies and are more open to using innovative payment technologies. Andrew Jones says: “The biggest companies are going to be the slowest to adopt BYOD and those are also the ones who tend to have corporate cards. Yet I have no doubt that is the way that market is going.” Risk aversion is a key factor, the pair
believe. By their very nature, many large corporations are risk-averse and will not adopt innovative new technologies, at least
24 BBT CORPORATE CARDS SUPPLEMENT 2015
“Corporates are worried about the risk… irrespective of how clever and funky the product is”
in the payments area, unless they are well- established and standardised. Apple Pay and Google Wallet are still
relatively new and there is no widespread acceptance in the way that cards bearing Visa and Mastercard logos are, for example – but it is just a matter of time says Cun- nington. “Ten years ago, people used the same acceptance argument about Paypal.” He adds: “The one thing with a lot of these innovations in the financial sector is that they are all trying to replace cards and card transactions, but what cards have is
ubiquity and an ease of use that everyone understands. To get to that stage has taken 30 to 40 years. As technology gets faster, that time frame will definitely come down – but don’t expect ubiquity quickly. “However innovative a product could
be, one of the main reasons they are not here and being used is that corporates are worried about the risk and bureaucracy of taking these on, irrespective of how clever and how funky the product is.” What about technologies like Paypal and Bitcoin, and their relevance to the corporates space? Chillimint’s Jones says: “The problem with Bitcoin and other cur- rencies is whether companies want to take that risk if the value of the currency starts to fall, as it has with Bitcoin. Procurement managers look at the cost of goods and services to the company, but also you have the cost of consumption when an employee is travelling – I don’t see Bitcoin or Paypal as a solution to the latter, but I do see them both being solutions to the former.” One thing that cryptocurrencies like Bitcoin lack is regulation and to get wider acceptance, individuals and companies need to feel that using them is not like being in the Wild West. Cunnington says: “At some point it will become regulated and until that time, digital currencies will be on the periphery because people won’t be able to rely on them.”
Acquisitions: key players buy up innovation
MASTERCARD SPENT A NET US$500 MILLION on acquisi- tions last year. At the 2014 Mobile World Congress, Mastercard announced it had bought C-SAM, which provides mobile wallet, and on-device software and services, and is particularly strong in India, Japan, Mexico and Singapore.
The
take-over will fast-track the development of the company’s Masterpass retail service.
Speaking about the ac- quisition, C-SAM’s CEO, Felix Marx, said: “The acquisition of C-SAM is a significant milestone in our company’s history. While we have enjoyed a strong, longstanding relationship with Mastercard, the team is excited to be formally joining such an innova- tive and industry-leading organisation to deliver end-to-end device-based solutions for service pro- viders around the globe.”
In May 2014, Mastercard bought India’s Electracard Services, which develops end-to-end solutions for the payments industry, includ- ing banks, financial institu- tions, retailers, exchange houses and telecoms. It has also bought Australian loyalty company Pinpoint. In February this year,
Visa announced it was to acquire Trialpay, a consum- er loyalty platform that will help it develop deeper rela- tionships with merchants.
In association with
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