January 2013 - Page 2 of 2 - Tomorrow's Transactions

That’s one for me, nineteen for you

Monday, 7 January 2013 by Dave Birch 2 Comments

[Dave Birch] Forum friend Ed Conway over at Sky has been blogging about the steady rise in cash “in circulation” in the UK. As the figures from the Bank of England clearly show, the amount of cash in the economy has been rising throughout the last decade and, it seems to me, is losing its correlation with the use of cash as a means of exchange to support commerce. As the use of cash in retail POS transactions has fallen, M0 has not.

The amount of notes and coins in Britain is now 4.12% of GDP – £63.4bn in cash terms. That’s up quite sharply from the levels of around 3% it was sitting at throughout the 90s and for most of the 2000s. Though as you can see from the graph, it’s down considerably since the 60s and 70s – largely as a result of credit and debit cards and electronic transfers.
[From Cash is Back - The Real Economy]

This theme is being explored further over at Ron Shevlin’s excellent “Snarketing 2.0″ blog, where he has written about the same dynamic in the US. I got involved in the subsequent discussion there about cashlessness. I was reiterating my usual point, that cash supports crime more effectively than it supports commerce, and I noticed this in a comment on the thread.

When I moved from a state without an income tax (Texas) to one that did (New York), and bought a house, I quickly became aware of the number of otherwise reputable contractors who offered substantial discounts for cash payments.
[From The Less-Cash Society | Snarketing 2.0]

Indeed. Their preference for cash is nothing to do with its cost or its efficiency or its effectiveness but only because of the one very specific property of anonymity. The idea that people use cash because it is “better” than other payment mechanisms is laughable. This is a comment by a US supermarket manager and is a frank reflection on the high cost of cash.

It is surprising to me the number of people who still only deal in cash. We offer a payroll check cashing to our customers. They pay a $1.00 fee for us to cash it for them (btw far cheaper than any bank would). They in turn buy money orders to pay any bills that have to be mailed(another $1.00 charge to them for each mo)… These people are leaving the store with some times over $1000.00 in cash on them. It amazes me. Who are they hiding from?
[From Adventures in cash...less?]

I would have thought the answer was obvious: the taxman, baby, it’s the t–a-x-m-a-a-a-a-a-n. The use of cash to avoid tax is one of the most serious charges against it and in the current economic climate, it’s a damming one. Like many people, I feel very strongly that one of the reasons why my taxes are so high is because as great many people are not paying their share and probably one of the reasons why I should not be allowed to blog about anything at all in the week in which I submit my income tax self assessment form and wire a huge amount of money to the government.

A cashless economy would be an economy in which I pay less tax, so there is no better reason to urge it on with all my heart. Whether we should be aiming for cashlessness (utopian daydreaming unrelated to specific technologies or business drivers) or, as Ron says, less-cash (a more realistic but less attention-grabbing option), let’s get a move on. And while we’re at it, let’s work on the slogans. It’s clear from comments on this and other blogs that a great many people (in the USA, I mean) strongly object to being told that they can’t use cash. Fair enough. I don’t think we should ban it either. I just think we should be…

Celebrating Cash Independence
[From Celebrating Cash Independence with Sovereign-Santander | MasterCard Social Media Newsroom]

That’s a lovely phrase: “cash independence”. More positive than “cashless”. Let’s not take people’s cash away, let’s help them to become independent from it.

These are personal opinions and should not be misunderstood as representing the opinions of�
Consult Hyperion or any of its clients or suppliers

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

BarCampBank London 6 is on

Friday, 4 January 2013 by Dave Birch Leave a Comment

[Dave Birch] We are pleased to announce that the 6th BarCampBankLondon “Unconference” will be taking place on Monday 11th February 2013 at the National Endowment for Science, Technology and the Arts (NESTA) at 1 Plough Place, London, EC41 1DE, with support from Consult Hyperion. (Please note that this is the day before Finovate London 2013.)

The aim of BarCampBank is to foster cross-sector communication and innovation around new business models in the world of banking and finance. It is organised on a participant-driven agenda around the future for financial services in the now-traditional unconference format. Some of the topics that we expect to see raised at this event include new technologies in the money world, the link between social and financial inclusion, financial services for the elderly and new thinking around alternative currencies.

There will be attendees from commercial organisations, not-for-profits, social enterprise and the third sector there. There are folk from iZettle, Cashflows, Ukash, Intelligent Venue Solutions and other interesting ventures already signed up, so why not come and join them? If you have never been to unconference before, but have even the slightest interest in the future of money, banking or financial services in general then now is the time to take the plunge and join the conversation in a relaxed atmosphere where everyone learns from everyone else. Here are a few of the comments from attendees about the 5th BarCampBank last year:

“Really interesting, thought-provoking day. Will definitely attend future events.”

“Great opportunity to meet some really talented innovators. Well-led discussions about a variety of topics; I’d love to attend the next one!”

“Stimulating in parts, illuminating in many areas, very pleasant atmosphere – above all quite encouraging. Having arrived with no particular expectations, I sat back to watch things unfold and was pleasantly surprised.”

“Excellent discussion. I felt the organiser brought more structure to the sessions than other unconferences I have been to.”

“Excellent opportunity to discuss some key topics in identity, payments & banking.”

There will be a £10 charge for this event (payable via Paypal on registration or by card or Paypal on the day), which will go directly to one of the charities supported by Consult Hyperion. Please book your place early as numbers are strictly limited to 80: as some of you will remember we ended up with rather a long waiting list last year!

These are personal opinions and should not be misunderstood as representing the opinions of�
Consult Hyperion or any of its clients or suppliers

Mad men

Thursday, 3 January 2013 by Dave Birch Leave a Comment

[Dave Birch] My prediction for 2013? We’ll be in New York a lot more! Consult Hyperion have been Mad Men for a couple of months and CHYP USA Inc. is open for business. We’re at 535 Madison Avenue, New York, NY and our new joint Managing Directors there, Lanny Byers and Howard Hall will be happy to hear from you.

Lanny and Howard bring more than half a century of expertise in digital money and digital identity between them and we’re delighted that they agreed to come on board.

Lanny Byers brings over 20 years of experience in the electronic payments industry in card program management and consulting. Having held SVP and GM positions within Card Groups at Bank of America and Western Union, he has since gained 11 years’ consulting experience, first at MasterCard and more recently with his own independent consultancy delivering payment and loyalty solutions.
Howard Hall, a veteran of the start-up and early stage technology arena, has extensive background in electronic security and identity having built and sold several companies including Vericept to Trustwave and most recently Riverglass to ASG Software.

As many of you probably know, Consult Hyperion has had customers in the USA for many, many years and these have included industry leaders in the retail electronic transaction space such the major payment schemes, innovators in the mobile payment space and key players in transit ticketing. But we’ve decided to take the extra step of creating a US presence and bring on board as US team at this time because we think there are a great many organisations in the US who will want to take advantage of our wholly independent (we are not tied to any suppliers, nor do we develop our own products) help to design, develop and deploy transactional solutions.

So why now? There are three main reasons for making the decision to create a US subsidiary now:

The US liability shift and EMV migration. We know how to help organisations go from stripes to chips without wasting money. In particular we already have experience as independent consultants to US banks migrating from stripe to chip in Europe as well as experience helping Canadian organisations (including Interac) do the same. And we have specific experience in helping transit operators move to chips too.
The explosion in mobile. We know how to help organisations go from chips to devices following flexible product and service strategies. We’ve worked on mobile payments and mobile identity for some of the world’s largest telecommunications companies, including Vodafone, Verizon and Telefonica.
The escape to the cloud. We know how to help organisations go from devices to clouds without opening up cracks in the systems that might be catastrophic downstream. We’ve been chosen by start-ups and legacy providers alike to help develop new online transaction systems and perform the crucial risk analysis that such systems demand.

Transactions are hard. They have to work every time, at scale and in the face of everything that people and technology can throw at them. Making them secure means understanding the technology, the business and the social context. We have track record of doing this, stretching back to our very first assignment for the Bank of England Central Gilts Office in 1986, and are looking forward to support organisations in the US who want to do the same.

You can follow CHYP USA Inc. at @chypUSA and continue to keep up with the latest thinking at the intersection of digital identity, digital money and digital networks at Tomorrow’s Transactions, where our US team will soon be posting their perspectives on the evolution of the secure electronic transactions in the US..

These are personal opinions and should not be misunderstood as representing the opinions of�
Consult Hyperion or any of its clients or suppliers

Zettle down – we’re not yet on the fast shuttle

Tuesday, 1 January 2013 by Dave Birch Leave a Comment

[Gary Munro] Mobile point of sale is stepping up a gear in the UK, if announcements made at a couple of events I attended in December are to be believed. Both the Adyen launch of Shuttle (I went to the London event but there were simultaneous launches in Berlin and Amsterdam) and the recent Vendorcom meeting gave me plenty to think about over Christmas and suggest that there could be some significant changes to the card acceptance market here in months to come.

However it’s not all full speed ahead. For a start, Visa and MasterCard are not yet in the same place with regards to acceptance. MasterCard allows low cost chip and signature solutions for mobile POS, such as iZettle and SumUp (both of which provide free chip card readers and charge a flat 2.75% transaction fee, although iZettle also charges a £20 upfront ‘fee’ which then entitles the merchant to £20 of free transactions). Visa however does not allow its cards to be accepted in these devices.

At the recent Vendorcom Cards and Payments Thought Leadership Conference, Visa Europe’s Head of Mobile POS and Acceptance, Caroline Drollet, explained the Visa position. Visa’s rules for mobile POS acceptance are:

honour all cards;
do not reduce the security proposition;
ensure a consistent user experience.

To meet these conditions, PIN entry must be possible in Chip and PIN markets and the reader must be able to read mag-stripe cards from migrating or mag-stripe markets (i.e. the US).

One solution is to use e-commerce solutions in face to face environments, as long as the card details are entered into the cardholder’s phone and not the merchant’s phone. This allows iZettle and SumUp merchants to accept Visa cards providing the customer has a data enabled smartphone and is prepared to enter their card details. However this means higher interchange fees and liabilities than a card reader solution.

Some device manufacturers claim that it’s unfair to expect them to provide PIN security because of the costs it adds, making the device too expensive for micro-merchants. However both Dan Wagner of Powa Technologies and Stafford Masie of thumbzup were keen to point out that they are well on in the process of bringing Chip and PIN solutions to market at sub $50 manufacturing costs.

First to come to market in the UK in mid-October were Payleven. They are aiming to address the micro-merchant market, matching iZettle on transaction fees. Just as Adyen do, they are utilising the Miura shuttle device for their solution.

Adyen’s approach is a little different to that of Payleven though. Coming from the e-commerce world, Adyen’s customer base are looking for integrated multi-channel solutions. They want one place for their card transactions whatever the channel. Adyen claims their platform can accept any card payment anywhere in Europe, which must be attractive to merchants who operate in more than one country.

Adyen says it sees mobile POS as being more than just a way to address the mobile merchant, Adyen’s customers are looking to use mobile POS to change the way they interact with customers in the high end retail environment, creating tablet assisted payments, making payment a more personal experience. When asked about electronic receipts in a retail environment, Adyen said that the feedback was mixed, so they will also provide a Bluetooth printer option for customers who require a paper receipt. Whilst Adyen are happy to sign up individual or small merchants, they are more focused on providing a complete payment service. This payments as a service is reflected in their pricing structure, where the mobile POS reader is purchased for €99, there is then a €10 per month service fee, with transactions charged on an interchange+ basis.

Powa are taking a similar approach, Dan Wagner told the Vendorcom meeting, with mobile POS being seen as a way of allowing retailers to change the way they interact with their customers, providing instant payment, or personalised payment in store. Just like Adyen, Powa are from an e-commerce service background. They see themselves more as an infrastructure supplier and enabler, providing white label solutions to existing acquirers or companies looking for a face to face POS solution. FNB have already signed up to mPowa for their solution.

Intuit, who is an established player in the US mobile POS market, has also announced that they are to pilot a UK Chip and PIN mobile POS solution, integrating with its QuickBooks small business accounting package.

So, from being under-served in the mobile POS space, the UK’s micro and mobile merchants are about to benefit from a wealth of options, with a wide spread of different approaches on offer, and security, convenience and trust being the key elements. But will Visa and MasterCard align their stances? Their current differences cause uncertainty and that does not help the merchant or cardholder communities.