2017 ROUND-UP IBS Journal December 2017 27
Mobile and biometrics are already here, and you should be glad about it
IBS Journal talks with David Dechamps, senior vice president, digital payments, Mastercard, about what’s been going on in the past year in the payments area. Wherever you look, convenience and innovation set the tone
Junior reporter Henry Vilar
W
hen I ask David Dechamps, senior vice president, digital partnerships at Mastercard, he points out that smart mobility (e.g. public transport, smart
cities) and e-government are two great examples of places where adaptability that payment companies strive to achieve.
If we look at the Mastercard data, 8 in 10 consumers in Europe find cards more convenient than cash. Globally, 61% of consumers say they would be willing to shop in a completely automated store with kiosk stations using virtual service. 52% say they prefer self-service stations to avoid waiting in lines. 2 in 3 consumers in Europe feel safer using cards over cash. And all these digital, electronic payments are a right way to reduce the risk of theft, loss and fraud. There is also an increased demand to use ACH, which has taken some banks to consider developing their account-to- account ACH payment applications in this context.
Dechamps states that we need to think about flexibility, and that means innovation. Particularly, mobiles and biometrics. Mobiles are considered to be one of the fastest evolving trends in the payments sec-tor. By 2021, Forrester Research predicts the value of mobile transactions in the EU will jump almost threefold from 2015. To avoid national silos or lock-in effects, it is essential that new services and solutions allow for European and global expansion by initial design, and that this development should primarily be market driven, focusing on standardisation across the industry. This must be done keeping cybersecurity always in mind, in spite of the fact that moving to a digital society also means we are becoming more vulnerable to online threats and data breaches. European policymakers have the crucial task of helping to combat terrorism, organised crime, money laundering, tax evasion, counterfeiting and fraud.
Technology is key, but the regulatory change is equally changing the landscape. With PSD2 due to go live in January 2018, Mastercard sees its existing, and potential, customers starting to position themselves for this change. Not only the incumbents but also Fintechs are trying to capitalise on the benefits coming from this disruptive innovation.
In the near future, we will see a major focus on the requirements under Strong Customer Authentication (SCA), which is one of PSD2’s initiatives on reducing fraud. The most significant
retailers are keen to take ownership of the checkout and payment journey, ring-fencing their customer payment journey while keeping control of transaction data and cost. In their response, they are turning to their acquirers and PSPs to support them in their efforts.
Crucial to accelerate efforts in improving the overall experience
“In the post-PSD2 world, we are convinced that contactless transactions will continue to be the best option for in-store purchases”, comments Dechamps. “Balancing safety and security with customer ex-perience for payment experiences will continue to be key in the post PSD2 world. It will be crucial to accelerate efforts in improving the overall checkout experience to deliver a great customer experience in eCommerce and mCommerce.”
“It will be important for policymakers to keep in mind the important contribution that payments are making to economic development,” he adds. “They are playing an increasingly important role in the development of “new economy” business models, in that electronic payments are an important driver for e-commerce. They also present opportunities to drive greater efficiency in the provision of government services, such as pre- paid cards preloaded with social security benefits.”
For Mastercard, its acquisition of Vocalink’s key bank account- based technology will allow it to expand beyond card-based payments to drive the major types of electronic payment transactions, enabling and enhancing payments like person-to- person, business-to-business and government disbursements.
All in all, electronic payment systems help banks to build their business by enabling them to offer vital services to their customers. From this, the opportunity arises to offer many other banking services to both consumer and business clients. And, as is the case for businesses, electronic payments also help banks to operate more cost effectively by reducing the infrastructure and costs required for handling cash.
www.ibsintelligence.com
David Dechamps
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