The year 2014 was a tipping point for NFC payments says Visa Europe

Today I am delighted to be speaking to Jonathan Vaux, Executive Director, New Digital Payments and Strategy at Visa Europe. Jonathan tells us what trends impressed him over 2014, which he considers to be a really powerful year for mobile payments. We discuss the UK and European developments and Jonathan shares his views on the outlook for 2015 for digital payments in Europe and world-wide. For background see my previous blog “How payments changed in UK in 2014 and what’s next

Jonathan, thanks for making time for this discussion. Could you please tell us a bit about yourself and your remit at Visa Europe?

Contactless PaymentsReally I have two major roles at Visa Europe. Firstly, to look at emerging technologies and gauge what our involvement should be. Is this a technology so impactful we must do something about it but not necessarily be a provider? A good example of this could be authentication or identity, where it’s probably more about us adapting our product rules and frameworks to recognise emerging technologies. Alternatively, is it a service we should provide as part of our core services? A good example of this might be tokenisation, or incorporating geo-fencing into our services as a way of improving our authorisation services and improving the customer experience to approve genuine transactions and help capture fraudulent ones.

Secondly my job is to create roadmaps and conduct prioritisation exercises.

At Visa Europe my job is really to look at changes in the way people want to pay and make sure that Visa is the preferred payment method for whatever app or wallet consumers wish to use for payments.


How has Visa Europe recently reorganised to address opportunities from changes in the way we pay?

We’ve undertaken a major reorganisation recently that resulted in positioning us very well with respect to the changes we expect in payments over 2015 and beyond. We have created a dedicated digital business unit as a group of 150 people looking at the services we must provide and also delivering the services. This is a dedicated team currently separate from our “core” business.

We want to make sure we are as easy to integrate into new banking and payments apps as possible, creating the connectivity and seamless payments experience consumers require.


What are some of the key global trends you observed over 2014?

To my mind 2014 was a tipping point for NFC payments. With the launch of Apple Pay and the number of developments over the year, some technologies that had been struggling to get adoption got legitimised. There has been more emphasis on customers wanting personalised services. Also we’ve seen much more adoption of online banking and mobile banking. More than ever banks have started to engage with digital channels, as an imperative rather than an option.

We saw some important traction in the role of biometrics, with TouchID for instance, and the technologies becoming more open.

Tokenisation is another major development. Another is the evolution of players such as Stripe with an open API approach. In short, 2014 has been a really powerful year for payments innovations.


On the other hand we had so many negative incidents, such as credit cards being stolen, that in a way may also precipitate tokenisation, and make paying by mobile even safer than other methods?

We need to make sure we consider this as we evaluate how to scale any potential new technologies, although the issues did not arise due to mobile as a channel as such just re-emphasised the importance of security.

Also if you look at fraud ratio in Europe, thanks to implementation of Chip and PIN, the rates are relatively low as compared to US for instance. In Europe there is more nervousness about technologies that are seen as less safe.

The other important point is we need to ensure that the way to mitigate fraud does not impact consumer experience. It is all about creating streamlined, secure methods to pay with consumer experiences that are also great.


On the topic of focus on consumer experience, do you see digital as an opportunity for banks to safeguard against becoming commoditised and also regain consumer goodwill?

As a general point most people look to retail banks to manage funds and trust their bank to keep their money safe. If you consider core propositions in this area, the customer looks to their primary retail bank for that. I’m not sure how much the potential peripheral services, such as loyalty, have a material effect in terms of customer relationship - the crux of it is: Is my money safe? Am I protected if something goes wrong?

However, a lot of day-to-day experiences in the banking world may not be consumer friendly enough. Consumers may shift for more convenience. PayPal, for instance, have had a lot of impact as they offered such a strong customer experience.


Over 2014 we saw so much traction in the UK with Transport for London (TfL). Could you please tell us more on this?

A lot of the services fail as they don’t become habitual for the customer. What is fantastic about applications such as TfL is that for people living and travelling around London the use of such services becomes habitual very fast. The use of contactless payments on TfL extends and reinforces the use of that plastic card that I use elsewhere. It’s a new use case and it works as it is something I use regularly.

It is interesting to see the number of transactions and also the number of people constantly using contactless cards has greatly increased over 2014.

Visa Europe predicts that, with the launch of contactless journeys on Transport for London’s (TfL) travel
network and the introduction of mobile contactless services, Brits will make 500 million contactless payments between now and December 2015.

Any update for me in terms of the use of mobile contactless payments? Now that services are available from some of the leading mobile operators, how are these being used so far?

I am not sure how much specific data I can share on that but I would say that today most transactions are still predominantly contactless plastic cards. We’ll probably see more focus from the operators in trying to capitalise on the press attention that things like Apple Pay’s launch in the US have received to grow their share of transactions and I think we’ll hear a lot more about wearables in 2015.


Within Europe, please could you describe some of the unique characteristics you have observed?

The big challenge for Europe is there are still lots of local processing systems despite Pan-European discussions. In 2014 we saw domestic regulators becoming more stringent on some issues, such as data storage required to be in the country, not overseas. This is an interesting trend that’s emerging. Over 2015 we must see how much that may counter-balance the speed rollout for global brands. It may also affect the scale of roll out of digital payments, and how that differs.


I agree it’s not just one market. I’m wondering if you have an update for me on Eastern European (EE) markets. I’m recently back from Poland and it was interesting to see the developments there.

Yes, there are a number of benefits in terms of markets such as Poland which have been very early adopters of contactless payments. There is a really high usage of contactless there. Merchants are actively leveraging technology to drive loyalty behaviour.

Nine Polish banks have confirmed plans to commercially launch Visa Cloud-based Mobile Contactless Payment services from early this year, re-enforcing Poland’s reputation as a hotbed for innovation in digital payment services.

Banking providers ING Bank Śląski, mBank, Bank Millennium, Raiffeisen Polbank, eurobank, Getin Bank, Bank Polskiej Spółdzielczości and Bank SMART will join Bank Zachodni WBK in rolling out services utilising Visa’s Cloud-based Payment specifications, enabling customers with payment apps utilising Host Card Emulation (HCE) functionality to make contactless payments quickly and safely using an NFC-enabled Android smartphone.

Poland tends to act more as a homogenous market, with more collaboration, as compared to some of the more developed markets in Western Europe. Sometimes entrenched legacy systems can actually be a constraint. So we are seeing some of the EE markets leapfrogging other European markets. They are building shared infrastructure backed by enabling rather than differentiating technology.


How do you see Tokenisation evolving – what are the promises and potential challenges?

Tokenisation already exists today and works successfully in a lot of online markets. It is important to look at the different use cases, and the ways it adds value and cost. With margins coming down markedly we need to be sure we don’t add layers of cost where it’s difficult to make sufficient money to justify this.

So if you compare the EU against US, the margins are very different in Europe. My customer asks, what’s the investment case? So there is little money to cover the costs, unless it gives significant upside.


I suppose big markets such as India and China already have their own cards roadmap. When we were in India recently we saw Rupay debit cards being issued for 53 million new accounts opened in just 2 months. What do you see in terms of global outlook?

The important thing is how do you transition quickly? It is a case of not just issuance but creating the necessary acceptance infrastructure. Time to scale of this would be a key differentiating factor.


Thanks Jonathan, this has been most interesting. To conclude, what do you most look forward to in 2015?

I think we’ll start to see material changes, new use cases and increasing adoption of the exciting new technology. As some of the things start to roll out I believe 2015 will be a really critical year as the new services become the norm and pilots go mainstream.


Which are the new technologies you would back?

You will see NFC, HCE, QR codes and more but as Visa we are agnostic. You will see these become more frequently used methods. You’re going to have very different consumer experiences. If Tesco offers a QR code app, that will be possible, just as other use cases such as NFC or HCE must also be possible, and that’s what we at Visa Europe are working hard to ensure the necessary support.


Jonathan Vaux is Executive Director, New Digital Payments and Strategy at Visa Europe. Jonathan is responsible for the development and execution of the New Digital Payments Propositions Strategy for Visa Europe. Key responsibilities include development of innovation agenda, development of digital roadmap and management of key partnerships and interaction with innovation partners, including startups, incubators and accelerators.

This is part of Shift Thought’s Focus on UK Series. Shift Thought provides unique, detailed and up-to-date Country Viewports on most developed and emerging markets around the world. Talk to us today at +44 (0)754 0711 848, or write to us at to learn more about how we can support your digital banking, digital payments and remittances projects.


From smartphones to super wallets: how a new breed of applications is changing mobile banking


This is an interesting time in the development of the digital payments market in Poland. The leading banks are collaborating to launch mobile payment services that potentially bypass the card schemes, allowing consumers to pay directly from their bank accounts. As a follow on from our previous blog, Transforming the way people pay in Poland Charmaine Oak interviewed Tomasz Krajewski, Head of mCommerce at eLeader. SuperWallet claims to be the first wallet to combine mobile banking, mobile payments and mobile commerce services. Tomasz shares his thoughts on the Polish payments market, as well as other markets in which eLeader has been active.


CO: Tomasz, thanks for taking the time to share with us your thoughts on the development of mobile commerce, in Poland and elsewhere in the world. To start with, could you kindly give us a short introduction on the achievements of eLeader. In which markets do you now operate, and who are your main customers?

TT: eLeader is a leading mobile software company, with experience that dates back to the origins of the smartphone industry. Our services are used in over 70 countries worldwide and clients include Grupo Santander, Unicredit Group, mBank, Danske Bank, Raiffeisen, the National Bank of Kuwait and Orange/T-Mobile.

Our innovations have allowed us to achieve a number of awards and high ranks in industry reports, including a mention in the Top worldwide mobile banking vendors report (Juniper Research, 2012), Technology Fast 50 CE (Deloitte, 2008) and the Top technology companies in Europe (Red Herring, 2013).


CO: How has eLeader gained such a leadership position in Mobile Banking?

TT: You can say that going against the current is in eLeader’s DNA. We launched in 2000 with mobile solutions to support employees to work remotely, from outside the office. In those days in Lublin, where we are based, few people had even heard about smartphones, and many felt that this was a crazy idea. And perhaps so it was, but the product was a total success.

We started to invest into mobile banking in 2006 and that was the time when people were speaking about the brilliant future of WAP protocol, forgotten today. Back then, few had heard of smartphones. The iPhone and Android had not yet made a mark. Nokia had a dominant position in the market. At that time, we believed that native apps would be the future of mobility also in the banking industry.

Our first mobile banking platform was revealed in 2007 and it was based on native apps for 3 platforms: Symbian, BlackBerry and Pocket PC. As far as we can tell, ours could well have been a world first solution, with native apps individually designed for all the major OS platforms, accounting for over 95% of the smartphone market.

Raiffeisen Bank became our first customer in Poland. I remember meeting with the President of the bank. Instead of showing a slide deck, our CEO, Dobromir Piekarski, handed him a Nokia smartphone with our banking app – without any instructions. He played with the app in silence and just asked a simple question: How much? After a negotiation of just one minute they shook hands on it. The legend is that this could have been one of the fastest decisions in the banking industry, ever!

CO: What were some of the challenges you encountered on the way?

TT: The biggest challenge was our first implementation. As mentioned earlier, we started at a time when the mobile banking industry was in its infancy. There was a lack of best practices and useful benchmarks. We had to convince the clients to use our solution, without any projects in the portfolio, armed only with cold calling. Can you imagine what that was like?

We had to design a new concept of application interface, UX and security measures.

Most banks were generally skeptical about native apps at that time; many said that we are going in the wrong direction. Fortunately very soon the iPhone changed the whole industry and attitudes to mobile apps. Native apps went main-stream, and became the norm.

Another milestone was reached when we entered foreign markets. By that time we had something to show in our portfolio, but still needed to prove that an unknown Polish company was able to make great applications and that too without any branches in the client’s country.


CO: In what way is Innovation in mobile banking held back by compliance requirements?

TT: Did you know that when the financial crisis came to Poland none of the banks have announced bankruptcy?It seems that none of them have even been in danger of such a situation.

To some extent this is thanks to Polish banking supervision which is very strict in terms of control. However, on the other hand regulations are so far-reaching that they do not allow banks to overstep clearly defined and legally imposed limits. This extends also to the sphere of innovation. You can say that from the regulator point of view, banking is for banks, and deviations from this principle are not allowed.

For instance, take the most used mobile banking functionality – checking one’s bank account balance. Because this is considered disclosure under banking secrecy, bank should require that the user authenticates before gaining access to balance information. Some of banks will ask you to login. Other banks will show you only the percentage of funds left in your account. There is also a bank which lets users choose which of the options would suit them best. You may say this is not a big innovation, but it clearly shows that users want the simplest solutions possible.

Non-bank start-ups are not subject to banking regulations, which is undoubtedly their competitive advantage in the market.


CO: In what areas do you see mobile security improving over the next 3 years?

TT: The trend to watch is certainly biometrics. My voice will be my password to mobile banking. Gartner predicts 30% of organizations will use biometric authentication on mobile in 2016 so this is worth watching.


CO: What has caused the Polish market to develop more rapidly than some other European markets in recent years?

TT: Polish people don’t use checks, and we never did. When in the 90s Poland entered capitalism after the communist era, emerging banking industry implemented only the newest IT solutions, leap frogging the old payment systems. This is one of the reasons why today we lead in contactless payments globally, and can transfer money from one bank to another in just 30 seconds, thanks to the Elixir Express standard.

Contactless penetration in Poland is higher than anywhere else in Europe or the Americas. This is largely because Visa and MasterCard have invested to subsidize contactless readers, so as to transform Poland into a showcase market for contactless payments. We are at the forefront not just in penetration of cards with a contactless function (20 million, 57.7% of all cards on the market) but also in number of POS accepting contactless payments (in the fourth quarter of 2013 this was already 170 thousand, or 52.1% of all the devices on the market).

Other important favorable factors for Poland include the high mobile and internet penetration, the highly educated society and our continued economic growth. According to Person’s ranking our education is ranked 10th in the world and the last time we had a recession was at the beginning of the XXIII century.


CO: How does eLeader expect to continue to play a leadership role in Europe, and elsewhere?

TT: The year 2014 is critical for us, as it is the time for us to launch the new mobile solutions that we have developed through our focused Research & Development over the last few years.

The product we are now introducing to the market is the SuperWallet. It is a combination of m-banking, m-commerce and m-payments. The biggest innovation of these is our embedded in-app commerce services. These services allow users to, for instance purchase public transport tickets, shop for groceries with home delivery, pay for cinema tickets, order taxis and pizzas or book flights.

Our aim is to transform mobile banking into the first choice financial app for smartphone users by supporting them to perform all their daily activities. Recent SAS studies point out that, above all, users perceive mobile wallets as a way to buy goods online, pay bills and check bank accounts. All of these and much more can be achieved by one SuperWallet app.

Together with an ecosystem of integrated merchants, the SuperWallet is offered as a white label solution for banks in a PaaS (Payments as a Service) model.

This has already been successfully deployed by the biggest Santander Group bank in the CEE region, Bank Zachodni WBK, and is gaining popularity among its users. Because the SuperWallet has very flexible architecture and a wide array of capabilities, we are greatly excited to see how it will be used by banks from outside the CEE region.

I believe that the SuperWallet is at the cusp of an emerging market trend. Solutions that are similar but limited to in-app purchases can be found in ICICI Bank and PrivatBank offers.


CO: Tomasz, thanks for your time today!

This has been incredibly informative, and provided us with interesting insights into the payments scene in Poland. Above all, what you have achieved at eLeader is most inspiring and I take this opportunity to wish you the best of success with your plans for the SuperWallet and beyond.

Tomasz Krajewski

Tomasz Krajewski is Head of mCommerce/Superwallet at eLeader. He is responsible for development of SuperWallet, which claims to be the first wallet to combine mobile banking, mobile payments and mobile commerce services, thus adding value to mobile banking. The first SuperWallet was deployed in November 2013 in BZ WBK (the biggest bank of Santander Group in CEE). eLeader is one of the world's top mobile innovators in the smartphone business software market, used by global and national companies in over 70 countries worldwide.


Transforming the way people pay in Poland

With the sun shining over Europe, I am about to leave pretty England for Poland. In the run up to my visit I’ve had a chance to speak to some of the people of Poland to understand how they pay and how this has changed recently. As Santander became the latest to launch their mobile payment service app last month, I learn what consumers think about newly launched services.


Poland’s Central Bank Narodowy Bank Polski (NBP) express their mission simply: “We protect the value of money”. Indeed as the European Union sank into recession in 2008,  Poland stood out as one country that seemed to be getting it right. Since accession to the EU in 2004, Poland has made considerable progress, though important sectors still need modernisation.

With neighbour Ukraine facing a grave crisis, we recently completed our study of Payment systems in Russia, just ahead of the recent furore over card payments. We have been deeply interested in the progress made by each of the countries in Emerging Europe, and this is part of the work we undertook to understand more about how money is going digital in Poland.

In July last year six of the largest banks in Poland got together to build a mobile payment service. We knew it was important as it involved Alior Bank, Bank Millennium, Bank Zachodni WBK, BRE Bank, ING Bank and PKO Bank Polski, who together reach 70% of the banked customers. They set out to create an open, interoperable bank-based payment service that would support cash withdrawal, mobile money transfer, mobile payments and more. While elsewhere in Europe mobile operators were gearing up for a leading role in payments, Poland stood out as a bank-led market. But would things take off, or would this be just another case of business model paralysis?

imageGuess what, it seems big changes are indeed afoot.  One of the interesting developments people spoke to us about was mobile payment at discount stores. Poland’s largest discount store Biedronka ( Polish for “Lady Bug”) has recently given their customers something pretty important – a non-cash way to pay for their goods, where normally only cash was accepted. What is interesting to me is that this development does appear to be a case in point of “protecting the value of money” as NBP wants to do. It appears that the move away from cash is because a business model has been found that allows the chain to offer an alternative without this inflating cost to the store, and ultimately to customers.

Jeronimo Martins Polska SA owns the largest retail network in Poland, Biedronka. With over 2,400 stores in 900 cities, Biedronka, The Discount Shop of Poland is the biggest, enjoying an estimated 60% of the discount market. People like to shop here in large quantities, for provisions that can last 1-2 weeks as they receive good offers that way. However until recently the store accepted only cash. People were unable to pay using their cards.

imageNow this is set to change. Customers can pay using their mobile phones. Recently this large retail chain has adopted PEO PAY. PeoPay supports non-cash payments in shops, as well as fast money transfers, online payment and cash withdrawal from Bank Pekao SA ATMs.

Customers of Getin Bank and Alior bank use IKAS. IKAS is a free app that works on most phones and does not just rely on smartphones. The service is available across mobile operators.

And now there is BZWBK24, the latest mobile banking app from Bank Zachodni WBK, part of the Santander group. The cryptic name does not refer to a top secret project – it is a mobile wallet given by the bank to their customers for making payments across a wide range of services.

So what do customers make of all this? It seems they do fairly large purchases at these stores, to last them a week, or even two. They trust banks as the providers for payments, and it seems these services could meet an important need, while helping the store maintain their reputation of delivering value for money – no “costly” card payments here.

Read more about these and other services in our soon to be launched “Digital Money in Poland 2014” viewport.

Charmaine Oak will be speaking on “The transformation of money – new perspectives for payment services” at the Poland Payments Summit Warsaw on the 21st of May 2014 at 11 am. If you plan to attend, we look forward to meeting you there. We’ll have highlights of our research of 2014, and you can trawl through the premium content of our portal and see latest copies of our reports.