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Thought Leaders Corner Mobile Payments? Sure! But NFC first, and eCommerce second? by Henrique Di Lorenzo The NFC Obsession Over the past few years, I’ve attended various conferences on Mobile Payments, such that I can now recognize a certain pattern in most presentations. To start with, the speaker needs to convince the audience that mobile is important. He or she would show two photos of the Vatican Square. One from 2005, during the announcement of Pope Benedict XVI and another for 2013, during the announcement of Pope Francis. One could notice that most traditional photo cameras in 2005 have given place to mobile phones and tablets in 2013. The speaker would continue sharing some statistics about mobile usage among millennials. How much time they spend on mobile. That they check their mobile as soon as they wake in the morning. Finally, they would share some case studies, ranging from M-Pesa (again…), virtual shops in South Korean subways, and more recent studies comparing Apple Pay and HCE. I wonder, is there anyone who still doubts that mobile is the cornerstone of a digital bank? Having accepted the mobile first mindset, there’s an obsession with “NFC payments”, even though this is not the most relevant part of the story. I don’t believe that mobile will fully replace cards anytime soon. The majority of merchants still don’t accept contactless. And although this landscape is improving fast, it will take a while until people won’t need cards anymore. Yet, banks still need to invest on it. Why? Because an increasing number of customers expect to have this alternative. Quite often, I hear the following questions from banks: “Ok, what is better then? Should I go Apple Pay or Samsung Pay? Should I deploy my own HCE wallet or just rely on Android Pay?”. In the end, the discussion should not be about what to do. But what to do first. A bank should be wherever their customers expect it to be. The true nature of the so-called Digital Enablement, is to enable all customers to be digital, regardless of their preferences. And I can guarantee you – customers nowadays are very much spoiled with the idea of having a choice. The Tokenization (R)Evolution An extremely valuable spin-off of all recent developments in the NFC space, is the introduction of Tokenization as an enabling technology. Its powers go much beyond proximitypayments and it will change the payments landscape more than one would expect. We all know that tokenization is, in fact, not new. It has been used for more than a decade in the merchant / acceptance space (to reduce PCI compliance end enable use cases like 1-click buy). Its recent introduction in the issuing domain however, brings a change of mindset: namely, the psychological (and technical) split between a funding account and the channel or device used to initiate a transaction. The fact that we’re devaluating the “PAN” (Primary Account Number = card number) to a point where the customer does not even know that there is a number behind this transaction. This effect is more noticeable in the web-based payments space (the so-called, CNP = Card Not Present). This is in my opinion the most exciting and promising space for mobile payments. 4
Thought Leaders Corner Let me explain why. Plastic cards have been introduced more than half a century ago to enable physical PoS (Point of Sales) payments. With the advent of the internet and the growth of eCommerce, the payment industry had to find a quick solution, a dirty work around known as CNP. This was intended to be just an exceptional case, where the card (which is supposed to be present), was not present for this transaction. It’s finally time for a change. With tokenization, cards will lose its status quo in the eCommere arena. We can finally move from CNP to NCP (non-card payments)! Therefore, I would strongly recommend focusing on solutions in this space, such as in-App and in-Browser payments, the W3C Payment Request APIs, and eCommerce schemes that are based on bank-to-bank transfers, including those that will be enabled by PSD2 in Europe. (Auto)mobile Payments and Beyond A strong tokenization strategy will enable not only mobile payments, but all sorts of device-based commerce. For example, the automotive industry is heavily investing in digitization, integrating intelligent voice assistants that can help you with your groceries shopping while you’re stuck in traffic jam. Expect all sorts of interesting use cases from different industries. Can we call it a “mobile payment”? Well, probably not (at most, an auto-mobile payment… Sorry for the bad joke). But there are few components that are common to all these emerging ecosystems (1) tokenization (2) a device or hardware used as an authenticator (3) the need for simple transaction APIs and non-payment APIs, for additional services. Implementations of mobile payments that are future proof, will be able to abstract these components and use them as needed. Again: Tokenization, Authentication and Collaboration (through APIs). In the end, payments will not be something that you do. It will be something that happens. Also in the acceptance side, we see the mobile revolution. Traditional, old fashioned point-of-sales terminals are giving place to mobile-like terminals that run on open OS (operational system), such as Poynt, Albert, and others, which operates on Android. These solutions mean to bring the smartphone revolution to the merchant space. More than payment devices, these terminals are connected to a marketplace, where 3rdparty developers are invited to create powerful Apps for merchants. Such marketplaces leverage the same principles of openness and collaboration – a recognition that a huge creative power exists outside the walls of the bank. Financial institutions working on the acceptance / acquiring domain, need to be ready to drive these changes as well. Back to Simplicity Henrique Di Lorenzo Head of Innovations at UL Transaction Security His group is responsible for prototyping new products, exploring new lines of business and supporting customers with the implementation of emerging payments technologies. Henrique holds a PhD degree in Quantum Physics from Leiden University. UL Transaction Security UL guides companies within the mobile, finance, retail, transit, ehealth, and data security domains through the complex world of electronic transactions. UL is the global leader in safeguarding digital assets and ensuring compliance with standards, global interoperability between products and systems and security for all components in the ecosystem. Finally, technology always has fascinating twists. During the Mobile World Congress earlier this month, among dozens of high-tech announcements and flashy new handsets, what conquered the media attention was the comeback of Nokia 3310. In the other side of the world, in China, traditional QR-codes are taking over various payment and non-payment use cases. I strongly recommend reading an interesting article about how WeChat founder’s obsession with QR codes is reshaping the Chinese commerce, recently published in The Wall Street Journal. In the end, there’s an absolute truth, declared by Leonardo da Vinci more than 500 years ago: “Simplicity is the ultimate sophistication”! 5
Page 1 and 2: Vol 3. Issue 3 | March 2017 YOUR GA
Page 3: Contents STORIES Amir Abdin Editor-
Page 7 and 8: Thought Leaders Corner Taking the p
Page 9 and 10: Thought Leaders Corner Still at the
Page 11 and 12: LOOKING FOR A JOB? THERE’S NO BET
Page 13 and 14: expert interview (e.g. biometric sc
Page 15 and 16: Spotlight You think you have what i
Page 17 and 18: startup Spotlight PCM: Why is Payr
Page 19 and 20: Payment Collective To get a more co
Page 21 and 22: PAYMENT COLLECTIVE Kai Lindström H
Page 23 and 24: events Events The Hague, Netherland
Page 25 and 26: events Las Vegas, US Shoptalk is an

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