Amazon’s new Subscribe & Save Offer: Could prove sticky?

Posted on January 20, 2016 by Charmaine Oak

As I report that Amazon has been making further inroads into the UK online shopping market, I realise it is probably an under-statement. As it was our go-to provider long before the holiday season it is no wonder we got most of our gifts from them, availing of the great selection of offers during November/December. Free home delivery, the peace-of-mind from trouble-free returns and refunds and a most reliable service has made Amazon the darling of many Brits over the recent past, as can be seen from the volume of reviews pouring into the site.

I was interested therefore to notice today that their “Subscribe&Save” offer earlier launched in the US is now available in UK. The offer claims to provide regular users the ability to save up to 15% as well as gain free shipping on recurring deliveries. To me this seems to be yet another step in the evolution of Amazon from book supplier to online provider of the first resort. For UK shoppers who are now spoilt for choice of online retailer with most grocery stores offering great home delivery options, this appears to be designed to tempt us away, for purchases of a wide range of household shopping items, of which a vast array has now appeared on the site. With its legendary knack of mind-reading Amazon quickly suggested a few items that I had already bought on a number of occasions, while I was checking out the offer.

I must admit this looks promising but also from my past experience from launching digital content services in the UK, I recall the “Crazy Frog” incident where junior mobile subscribers unwittingly found themselves with costly subscriptions, I am sure there could be a number of issues that must be navigated by the marketing team to ensure that people don’t end up with deliveries they did not expect and suppliers don’t have to contend with higher levels of refund.

Within an overall great experience, I found one particularly irritating feature. Introduced over 2015, their “Add 0.01 p to get free home delivery” never fail to irritate our household, and probably a lot of UK online shoppers. A number of desirable products are priced at £19.99 (Why?). However, one needs £20 of “applicable items” for home delivery and finding out what is applicable is quite a chore. For people who would like to save around£4 delivery cost this means a thankless job of looking through “Add-on items”. The concept of Add-on is itself an admirable one as it is a way for sellers to offer small items online. However, believe me it can be most irritating to find an item that qualifies for the 0.01p required, heave a sigh of release and lug it into your online basket only to find that it’s not made your delivery cost go away.

Not to mention the additional time you are forced to spend trying to save money on Amazon must come with a health warning as one can end up buying so much more than one planned – the shopping experience is so slick that it can be quite addictive! I think the same will soon be said of a number of the online stores that are burgeoning in the UK market, and as a delighted consumer I am not complaining (yet?).

PS: For full disclosure, I am not connected with Amazon in any way, apart from being a shopper and a passionate observer of the way money is going digital, to power payments and commerce around the world.

Apple Pay comes to the most contactless ready country – UK!

Posted on July 14, 2015 by Charmaine Oak

Today Apple Pay launched in the UK - signalling the start of a new era.

Since Apple Pay launched in USA last October, a UK launch has been expected, to mark the start of a new level of use of mobile phones for contactless payment. UK is the country that is arguably the most contactless-ready in the world, with the largest number of contactless cards according to recent Visa reports. As people in the UK start to pay for goods and services around London using their iPhones and Apple Watches this could forever change the way we pay, first in the UK and shortly across other parts of Europe.

From today over 250,000 shops will accept Apple Pay across UK.

These include:

High Street Favourites: The Post Office, Starbucks, Costa, Subway, KFC, McDonalds, Pret
Retail Stores: Waitrose, Lidl, Spar, JD Sports, Dune
Department Stores: Marks & Spencer
Restaurants: Wagamama, Nando's
and most important of all, Transport for London (TfL)

As you will recall, London buses went cashless last year this time, but people were still largely using Oyster cards, with contactless payment cards still a novelty. I touched on this in my blog of December last year, “How payments changed in UK in 2014, and the perfect storm brewing for 2015”. Although mobile payments was supported by Vodafone, EE and others, consumers failed to adopt in large numbers. Now though, there is for the first time a real challenger to contactless cards.

People can now authorise payment simply by using their fingerprints, with the NFC chip on their phone communicating with TfL readers on the London underground, buses and rail networks.

The first three banks to launch today are Santander, NatWest and Royal Bank of Scotland. Barclays, having held out the longest, is also likely to shortly support Apple Pay, but HSBC and First Direct will be first with their launch later this month.

As the limit for contactless transactions increases from £20 to £30 in a few months, people can start to buy groceries through this fast new checkout method. Unfortunately I buy all my groceries online, so will have to make a special trip to the stores to check this out. Watch this space!

There are many ways to measure contactless readiness – number of terminals, number of cards, usage of contactless payments and more. Different countries top on different criteria. This month Visa Europe reported that UK leads Europe in contactless cards issued at 49.6 m cards, and 410,000 terminals, and considering that these are just figures from Visa, these figures appear to make UK the leading country, at least on some measures of contactless readiness (Your views are most welcome!). This launch is therefore a critical one for Apple, and will be instrumental in driving strategies of key providers world-wide.

With Apple Pay here now, can Android Pay be far behind?

Mobile Payments in Europe: State of Play and Future Outlook

Posted on June 26, 2015 by Charmaine Oak

In this interview Christian von Hammel-Bonten shares insights on how he sees mobile payments develop across Europe, from his key position as EVP at Wirecard AG, a technology and financial services payments company that is a leader in both acquiring and issuing business across the region and world-wide.

Christian thanks very much for your time today. Could you please give us some context of Wirecard and what you do?

Simply said, Wirecard is a global technology group that supports companies in accepting and issuing means of electronic payments. We offer services in all roles of the payment value chain: issuing, issuing processing, payment service provider, acquiring and acquiring processing. Group operating activities in our core business are structured into key target industries: Consumer Goods, Digital Products, Travel & Mobility and Telecommunications. The idea of these verticals is to understand needs of our clients and deliver focussed solutions. In my current role, I am in charge of the Telecommunications sector that includes all products & services related to mobile payments.

Europe has historically had the longest history with pursuit of mobile payments. From your experience over the years how has 2014-2015 differed?

In past years, NFC was always a topic that was discussed but had not seen solutions being commercially rolled out. This changed in 2014-2015. We’ve seen launches in mobile payments, with Wirecard involved as well. Bank activities have increased with cloud based payments involving Visa and MasterCard. On top of this, the launch of Apple Pay in the US and now announced for UK, has increased awareness and interest on the merchant and consumer side.

Would you say that mobile payments is converging or diverging?

I believe we are at the early stage of Mobile Payment and as I look at the early activities in Fintech we’re at the beginning of a disruptive era. When we started Wirecard 16 years ago e-commerce was below 1% of retail sales, no one would have predicted the size of retail sales online today. Looking back I compare it with the trend relating to digital cards.

The activities and discussions focussed too much on the term mobile payment. It is digital payment that may be delivered through the mobile but other device types such as wearables may be equally promising. One thing that is clear is that the physical element, namely the plastic card, increasingly disappears – it will be transformed into another form factor, digitized credit credentials.

But how would we extract cash in that case?

In a number of European countries we observe initiatives that are resulting in cash fading out. Take Sweden, Denmark and UK for instance. In my opinion, cash will not ever disappear in the near future but the majority of payments you receive will increasingly be digital payments going forward.

What are some peculiarities you observe in Europe versus your other activities in other regions such as APAC, UAE and South Africa?

Developments in E-commerce across all these regions differ, and even within Europe, countries are at different levels of maturity. E-commerce in Europe as a whole is highly developed, as we enjoy high levels of mobile coverage of good quality. Infrastructure is essential, of course, for the success of digital payments. Communications infrastructure becomes the highway for retail stores and effective communication networks are a pre-requisite.

Another factor is payment culture in various countries. The use cases and consumer needs differ. If you look at Africa it’s not NFC mobile payments that is needed, rather it is mobile money because of the lack of banking infrastructure. Across APAC again it differs widely. In Singapore there is a high penetration of cards and terminals, but in nearby Philippines this may be completely different. Similarly you can compare Germany and UK on these parameters. In Germany ELV solves merchant problems and consumers still prefer cash.

Success in payments comes from understanding the needs of players in all parts of the ecosystem. Paying with a mobile device may not be needed as a tool for financial inclusion where we have well-developed banking infrastructure, but in Western countries and world-wide, crowd funding, P2P lending and other services are rising up to meet unique consumer and business needs.

M-Pesa recently launched in Romania possibly as they identified a larger proportion of under banked, largely based on cash. This may be a viable solution in the Romanian market but not suitable for UK or Germany. Although there is a short distance geographically between European countries, there can be big difference in payments.

Could you share some insights from your work on mobile wallets such as with the BASE Wallet, Deutsche Telekom MyWallet, Orange Cash and Vodafone SmartPass?

We see huge differences in European markets that cause different states of readiness. In UK we have markets ready for digital payments, but Germany is somewhat behind in this respect as payment culture is different.

A good way to understand this is to study the number of terminals and the number of cards in each European market, and trace the growth of contactless in POS. Apart from UK, Switzerland is also heavily contactless. In Spain too consumers have embraced contactless payments. In other countries we have to be patient until the necessary relevance is established on the consumer side.

So we have to be somewhat patient but no one contradicts that in a few years the majority of payments will be made digitally – with a smartphone, wearable or other digital form factor.

Is it digital natives who are installing these apps or others interested as well?

It is really both. The ones who adopt are generally people who have an affinity to the service, but also towards technology. If you use your mobile phone today only to make phone calls you’re not perhaps someone who would adopt mobile banking and mobile payments.

Generation Y use smartphones heavily and rely on mobile banking for managing family finances. We also see that males are more predominantly early adopters of the new services.

Would you say there is a growing importance of the mobile number in all of this?

Yes, Certainly. Like the email address is already more important today for your communication than your postal address is, the mobile number is already a personal identifier for many activities.

The mobile number has the potential to act as a proxy for many underlying financial services. Take for example P2P transfers. It is challenging to remember bank details, more so with IBAN, so the mobile number becomes a link to your bank details in successful solutions such as Pingit, Paym or MobilePay. Also, you don’t have to remember phone numbers as the phone book does this.

Do you see SEPA as an instrument for achieving more consistency in payments across Europe?

At first people took some time to be convinced but today SEPA Credit Transfer and SEPA Direct Debit simplifies things for people making payments across Europe. It is a future enabler for a number of bank services and if banks want to stay competitive they need this form of interoperability.

The only thing missing is instant payments, and I hope this will come, European-wide. However banks are finding it difficult to set something like this up on their own. Really it should already have been made available across Europe, as UK already has Faster Payments. There are a number of banking innovations in the UK such as Pingit, Paym and Zapp (expected) and these are greatly facilitated by real time instant payments.

A good financial and payment infrastructure is crucial for supporting businesses and consumers. It is as important as a good road infrastructure and it is the prerequisite for innovative digital services.

Yes, I see how this could help to address some of the disruption to banks from FinTech, but also enable innovative new services from new entrants that compete with the banks. Speaking of this, Wirecard launched the Wirecard Smart Band based on HCE – could you please share a bit about your experience with HCE?

HCE or Cloud based payments has greatly increased the possibilities for banks, telecommunication companies and others to offer mobile payment services. In the past, almost all such projects depended on hardware-based elements such as the SIM and embedded secure elements (eSE). However, something that is hardware based has an owner who seeks control and finding collaborative models between all stakeholders delayed or prevented the launches of mobile payment solutions.

With HCE/Cloud-based payments however, such collaboration is less essential, which is its best advantage. Financial Services groups across Europe are looking closely at this technology. No solution I’ve seen is as convenient in being able to enrol users and deliver digital cards to them. Why should we buy gift cards in supermarkets, when we can just send them digitally and use gifted money through apps?

I believe the distribution of cards is about to change, and plastic cards will increasingly disappear as we have digital cards, and not just one each!

What does Wirecard do to help companies, say a UK-based retailer wanting to move on this opportunity?

Wirecard offers two different approaches. Firstly we help our partners to build up new card portfolios by issuing cards, irrelevant of the form factor as an issuing bank with licences for the SEPA region.

Secondly, we enable our partners to digitise their existing cards and it does not matter which NFC approach – SIM, eSE or HCE – clients prefer, we are technology-agnostic and support them all. So with respect to retailers, we enable them to issue digitized cards to their customers as part of their loyalty solution. This allows retailers to offer their customers a convenient and fast option for paying, in order to simplify overall checkout and at the same time leverage additional opportunities to engage with customers.

Do you also provide an app if clients don’t have one?

Yes, we have built a flexible, agile platform to cater to different environments. We offer to integrate through Software Development Kits (SDKs) with existing apps or we can provide a customized app.

All apps of our live solutions including Orange Cash and Vodafone SmartPass have been customized to meet the client’s branding and functional requirements.

What is the best path to interoperable mobile payments across the EU, for instance for a UK customer using a smartphone to pay in Spain, and what’s the outlook for 2015 and beyond?

Right now existing solutions are based on Visa and MasterCard specifications and may be used not just across Europe but also world-wide.

Your example is an interesting one, as travel is one of the biggest drivers for prepaid in the UK market. If you are going to Spain, instead of buying a card you can just go online, register and get your digital / virtual card, top-up and start to spend.

This is a good example of how we see the future of cards. Digitization started and progresses in many areas of our life and payment cards will be clearly affected as well. Short term we will see the first big success of a mobile payment solution with the launch of Apple Pay in UK in 2015. This will spur all activities around mobile payments in Europe and bring us closer to a world of digital cards and a cash-less society.

Thanks very much Christian, it has been very useful to gain your insights on mobile payments in Europe and I take this opportunity to wish you the very best for the future.

Christian von Hammel-Bonten is Executive Vice President Telecommunications at Wirecard AG. Christian has almost a decade of experience in the online payment industry. From 2002 until 2009 he was responsible for Project Management at Wirecard. Before returning to Wirecard in October 2011 Christian worked as Senior VP of Product Management for Clickandbuy, a company of Deutsche Telekom. In his current role Christian is responsible for the Telecommunications sector at Wirecard.

Charmaine Oak

Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

The Future for Direct Carrier Billing – Views from the world leader

Posted on June 18, 2015 by Charmaine Oak

In this exclusive interview with Jon Prideaux, CEO of Boku, we explore the potential impact of recent highly important mobile payments announcements on Direct Carrier Billing (DCB), which has so far been one of the most successful means of mobile payments, putting the charges through the mobile operator bill.

I posed key questions on how we may see DCB evolve, to obtain Jon’s insights, from the perspective of a FinTech disruptor that is today a world leader in DCB. Jon reflects on key trends and shares insights and expectations on how the market might evolve over the next few years.

Jon, I recently heard you speak of “payments moving into the background”. For me Boku has been one of the first to achieve this, having since 2009 offered a great way to do this, but how might this change going forward, with all the new mobile payments services recently announced?

The basic philosophy is if you are trying to promote a new method of payment, it needs to do something additional both for consumers and merchants. I believe Payments to be in the category “If it ain’t broke don’t fix it”.

Here’s why what we do works - as more people have phones than bank accounts, and it’s easier for you to remember your mobile number than other details, we remove friction in payment and allow more sales. As merchants sell more, although Boku may not be the cheapest acquiring method, we justify our role by facilitating outreach to new customers and helping customers check out more easily.

But with the impact of lower interchange rates in Europe making card payments cheaper and availability of new bank based payment solutions, are merchants going to think “It is broke”, and they can find cheaper new ways to pay?

Ours may not be the first payment option, but certainly Facebook, Spotify, Sony and our other merchants find that by adding Boku to their suite they sell more. Our merchants could see conversion rate increase by as much as 20%, and that’s the advantage we strive for, to keep ourselves relevant. If a disruptor tries to compete just on price, this fails as incumbents have scale. A disruptor must compete on “sale”.

I see Boku as a ubiquitous single convenient acquiring payment gateway or hub between merchants and mobile operators. But is Boku looking to be more than this, has this changed?

No, this has not changed. An essential part of our value is we connect into mobile operators. While Visa and MasterCard are networks that connect merchants to banks to help them sell, our job is similar, but we connect merchants to mobile operators, to help them sell.

As customers of mobile operators are different and more numerous and geographically distributed, we provide a unique value to merchants.

Where do you see this moving over the next 2 years?

Perhaps the best way to consider how things are likely to evolve is to reflect on the recent past, where I believe there have been three main areas of change.

Firstly, it’s about the technology. Telcos do not have systems as accurate as banks. What we now have in place is a system that is important in terms of creating an enabler for merchants. This facilitates charging precise amounts, authorising, reserving amounts, reconciliation, refunding and this opens up a mature enabler for new merchants.

Secondly, mobile operators differ in each market in terms of pricing expectations, Brazil, Indonesia, France, UK, Japan all differ - but in all of those markets pay-out levels to merchants are going up, allowing more merchants with lower gross margins to participate.

Lastly, it is to do with regulatory change. With our E-Money license we already have services live in 5 European markets, and this will see further expansion.

So we started with digital content where there was no distribution cost, but the pay-outs were initially not good enough for services such as music. With subsequent changes, we can now sell content from Spotify and other merchants.

As the three trends continue to further play out, in addition to digital you will see charges for real world transactions such as parking, coffee and bus tickets. This will become one of the ways to pay for ANYTHING you are purchasing – one will be card, second will be PayPal and third will be some kind of carrier billing, normally provided by Boku.

Charging to mobile phone bills will become normal in transportation, ticketing, coffee and fast foods.

With regards to the new Airbnb, Uber type FinTech entrants, what are your thoughts on your ability to support them as Braintree and others do today?

At one level we ourselves are a FinTech company. There is a limit in terms of the amount people are prepared to put on their phone bill. Our ambition is not to be the dominant payment method for all purposes.

Braintree will continue to embrace a growing suite of payment services including cards and banking. I would like to think companies like Braintree and Stripe will add carrier billing to their portfolio. We’re not far away from being a desirable addition to their ways of charging customers.

That sounds very interesting. So the whole FinTech and API trend could work in your favour!

Sure, we are offering a single API and are connected to all mobile operators. Although we make it look as if it’s the same, under the hood it works differently. In the next generation with digital technology enhancements we are trying to offer a single card like API that removes friction for merchants, and attracts more categories of merchants.

You can charge for physical goods too?

Yes, in many European countries we operate an e-money product and can do so, although the consumer experience remains similar to carrier billing. Under the hood the consumer is buying e-money and using it to buy things via their phone bill.

Is the limit that can be charged based on regulations or is it more of a policy decision?

Under the extended regulatory structure, in the e-money world it is the decision of the carrier. Mobile operators have limits in place for risk protection reasons. Also people would not want large amounts taken from their bill so this is typically a low amount. In practical terms the limits are the same whether under our e-money license or not, and are currently set to £30 in the UK.

Could you share more on your partnerships and new services?

We currently work on behalf of a number of important merchants including Spotify, Sony PlayStation across key markets in Europe, Facebook and a number of games related clients.

In terms of our plans, we’re currently working towards bring on-board a number of important and ground-breaking merchants and a number of different projects are expected to launch in the second half of this year.

In 2014 your whitepaper projected a potential market of $6b for DCB by 2017. Do you see this changing in the light of recent developments in contactless payments and mobile payments?

If anything I think the market is likely to be higher. We’re seeing increased interest from new merchants due to trends in technology, regulatory and pricing to take this to new levels.

What changes are likely over the near future, in the light the evolving role or mobile operators in payments?

There is a lot of change. Mobile operators previously launched billing to support ringtones and downloads and then Premium SMS. Both those markets are in terminal decline and so a big chunk of their revenues is shrinking. On the other hand, the direct carrier billing side is growing and we can bill without sending SMS around.

What about services such as Samsung Pay, Apple Pay, Android Pay and others? We also see the various new Checkout services. I can visualise each catering to a sphere of their interest – so for instance Samsung could turn their focus to TV-related payments. Is this a concern for you?

Is it of concern - No, although I agree this is a particularly historic period of change, and these are all significant developments. In the UK context, and indeed across Europe there is a lot of interest in innovation and contactless payments is exploding across the region. These services are however largely reliant on bank-based initiatives and banked customers. Our service is meant for those who do not have a bank account, or who want to buy and charge to a bill. Who will co-operate, who will compete remains to be seen. We could be a source of funds across a number of the emerging services, to sell more stuff through this charging mechanism.

I expect that in the face of rapidly increasing fragmentation, you could represent a source of stability for consumers and merchants?

Sure, we certainly hope so. Most of the time it may not be a Boku logo but a picture of a phone, and it’s so easy for people to visualise how the payment works.

We spoke about some of the opportunities, but how about the risks for mobile operator initiatives, as a number of ambitions towards payments have failed?

Yes, it’s hard to find a mobile operator joint venture that’s worked. The fact is banks are well entrenched and it’s been hard for MNOs to compete. Mobile operators have certain core assets in terms of the infrastructure, but they have a bigger massive advantage in terms of customer base. Enabling existing customers to pay using the bill is something that really works for our mobile operator partners.

In terms of risks, a key concern could be in terms of regulation. Mobile operators don’t want further regulation as there is already a great deal from telecom regulators. Voluntarily assuming new forms of regulation is tough and that’s where we come in, to help monetise existing customer relationships to help to manage that area for them.

What do you think about proposed API access to bank accounts, new digital banks?

This is about opening up to more competition and I see this to be a welcome move from the regulator. However as far as Boku is concerned we are here to provide merchants access new customers, not really banked adults, so we stick to our task and make what we uniquely do successful.

How is the UK market different to the rest of Europe, especially in the light of recent moves towards mobile payments and also the focus on FinTech?

UK is an interesting and highly competitive market. There are more enlightened, progressive mobile network operators. Merchants have more options than they could want, comparative to rest of Europe. Germans prefer debit cards, French may use cheques a lot, and each European market has its own characteristics.

Jon, this has been very interesting. Thanks very much for your time today and wish you the very best for the future.

Jon Prideaux is CEO of Boku, a company that has since 2009 created the standard for online payments using your mobile phone, making it easy to pay for digital goods and social experiences across the web.

Jon Prideaux has a wealth of knowledge of how we pay, having held key roles at Visa and helped in the migration to Chip and PIN, when on the Executive Committee of EMVCo.

Charmaine Oak is Author of The Digital Money Game and co-author of Virtual Currencies – From Secrecy to Safety

Join me on Twitter @ShiftThoughtDM and The Digital Money Group on LinkedIn

How one Fintech start-up is rolling out mobile payments services across Europe

Posted on May 12, 2015 by Charmaine Oak

As Fintech firms continue to make breakthroughs and disrupt banking and payments services around the world, I am delighted to share the perspective of someone at the forefront of innovation in Europe.

Cashcloud has received a number of awards for its’ innovative payments service, most recently winning the Fintech Innovation Awards 2015 held here in London. I was therefore delighted to have a chance to get their story from the man who is behind much of the success, Olaf Taupitz, Managing Director of Cashcloud SA.

Olaf, Congratulations on winning the Fintech Innovation Awards 2015. Could you please give us an introduction to your company and services?

I look after all the operational entities of the Cashcloud group of companies. We have our headquarters in Switzerland. Cashcloud SA in Luxembourg is the unit through which we manage the relationship with partners & customers. We have an important operations base in Germany and Romania which has agents for customer service. We also have near-shore development teams in Ukraine and Spain.

So although we have just 35 people on board, it is an international setup focused on European markets. My partner Sven Donhuysen was the Founder of the company in 2012. By the end of 2013 we launched in the first 4 European markets where we have over 100,000 customers and over 500,000 downloads of our app.

We are proud of the award you mention, that we recently won in London. This was the third award we received in 6 months with wins in Switzerland (Nov 2014), Germany (Dec 2014) before that. These have been encouragements for us to become better and better, and provide us motivation to tackle the host of issues we as a start-up face.

Could you tell us a bit about your products, services, markets and segments, and what is behind the recent awards you’ve received?

What was particularly appreciated is how easy it is to use our application and the fact that we combine a number of things, not just payments.

Our primary segment is the “native digital” youth market, who can transfer money easily between each other, make payments at POS through NFC stickers and earn cash credits in return for buying specific goods, sharing information or inviting friends. Coupons and cashback activities have been launched in Germany and Spain.

We allow customers to easily transfer money between friends through a simple message. They can pay at POS using NFC stickers and will shortly have cards with MasterCard acceptance around the world. And importantly, people can obtain offers and bonuses for using us through Cash Credits.

Why did you decide to get into mobile payments, and how did you select the countries you’ve picked (Germany, France, Spain and the Netherlands)?

Regarding the motivation to enter mobile payments, I have a background in Telecoms and Finance and was convinced that we could make a strong play through a Telecoms+Finance+Card offer, especially as the smartphone kept getting cheaper.

Through the mobile Cashcloud eWallet we aim to offer this: a means for people to pay online with no need to enter personal data, good control over their transactions and special incentives for using our service to make payments.

Which of the four European countries showed the most take-up of mobile payments?

So far for us Spain showed most adoption. With NFC stickers, there are more NFC acquiring terminals there. As you know, card usage itself is not as popular in Germany, which is a cash-driven market. Netherlands is not bad but we don’t promote so many activities there - it is a good test market for us.

So right now if I was to go on holiday from UK to Spain, could I use your service to pay in Euros?

We primarily issue the service to citizens of the countries in which we’ve launched.

However people could receive a secondary card or sticker up to the limit of 2,500 Euro a year, beyond which KYC requirements apply. People can use the MasterCard to pay everywhere in the world.

How easy has it been for you to expand to new countries in Europe? Any plans to go outside Europe?

We had to start with one currency first – Euro based and chose 3 big markets and one small. Later this year we hope to investigate launch in other Euro-based countries as well as in UK, Poland, Romania and Switzerland in their currencies.

Going outside Europe is not on our plans right now. In our future work, we look forward to enabling remittances as well, especially as we enter the UK market.

How does your business model work, and how have customers reacted to your Freemium/Premium pricing?

We’re not about making money from payments itself. With the new rulings across Europe we anticipated that transaction fees, interchange would drop, merchants want to pay less.

What we are able to do is to obtain aggregate knowledge on consumer trends and profile typical customer shopping behaviour. This is very important for the emerging campaign management and advertising models.

What key technology decisions did you have to make since 2012 and how have these contributed to your success?

Two key decisions we made from the start have proved right, and helped in our success. Firstly we decided that our service must be mobile and supported Android and iOS from the start. Secondly, from the start we focused on building a platform – an online API that would help us integrate and be a part of other ecosystems and use cases.

What is your view on the competition especially Apple? How would a startup service fare against such global competitors?

Actually we welcomed the Apple Pay launch as it supported the NFC solution. We are happy to see the success in the US. We anticipate it will take longer to launch in Europe, perhaps it could take another 12 months for the pieces to be put in place.

What’s been the most difficult challenge for you so far?

I’d say we found it easy from the issuing side, but it was the acquiring side that is harder for us to control. As the acceptance network rolls out across Europe we expect this to be resolved.

Secondly it has been a challenge to build strong drivers for adoption. This is the problem faced with mobile payments in developed countries where people already have good banking and card services. I think the role of the mobile phone as an authentication device is now being acknowledged and we expect better take up due to this.

What are your plans for 2015 and beyond?

We are hard at work on our plans for expansion. Apart from more countries across the Eurozone, we are investigating in market launches in the UK, Switzerland, Romania and Poland – so will have to support a number of new currencies.

It has been fascinating speaking to you Olaf. Thanks for sharing your story that I hope will be an inspiration for the many Fintech startups, across Europe and around the world. I wish you the very best of success in your plans!

Olaf Taupitz is Head of Product and Innovation and a Member of Board at cashcloud.

Olaf is in charge of managing all initiatives of the company and he oversees the development of cashcloud’s application and technical set up, including management of outsourced partnerships. He brings to his role key expertise from his experience at IPS International Prepay Solution AF, CALL4T, Tele2 and his other work at the intersection of Telecoms, Payments and Card services.

Charmaine Oak

Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

http://www.linkedin.com/in/charmaineoak

Join me on Twitter @ShiftThoughtDM and The Digital Money Group on LinkedIn

Why markets tumbled today on Global Economic Prospects report

Posted on January 14, 2015 by Charmaine Oak

According to the Global Economic Prospects annual report from World Bank just released, growth in 2014 was lower than expected. Global growth is expected to rise moderately to 3% in 2015, while high-income countries will see a smaller growth of 2.2%. Developing countries fare better with a 4.8% increase.

Having just studied the report I thought I should share highlights to help explain why today Asian markets sank in early trading, copper prices fell and shares plummeted across Europe. Markets reacted to the World Bank’s decision to cut its economic forecasts for this year and next, in the Global Economic Prospects report just out.

Global trade has been weak in post-crisis years, growing less than 4% a year during 2012-2014, well below pre-crisis average annual growth of around 7%. Major forces driving global outlook include:

Soft commodity prices
Persistently low interest rates and divergent monetary policies across major economies
Weak world trade

Recovery in 2014 in high-income economies was uneven. As many high-income grapple with fallout of global financial crisis, USA and UK have exceeded pre-crisis output peaks. The Euro Area and Middle-income economies face structural slowdown but low income economies are expected to enjoy a more robust growth.

Since mid-2014 the sharp decline in oil prices helps oil importing developing economies but dampens growth prospects for oil-exporting countries.

In the graph below I show last year’s forecasts in the dotted lines and this years (just released today) in solid lines. It is clear from this why markets reacted badly to the latest forecasts that show lower than expected figures across both high income and developing countries. Global growth is expected to rise moderately to 3 % in 2015. However high-income countries are likely to have a smaller growth of 2.2%. Developing countries will fare better i 2015 with a 4.8% increase.

The slowdown in global trade has been driven by cyclical factors such as persistently weak import demand in high-income countries and structural factors such as the changing relationship between trade and income.

Countries show divergent growth rates

But how does this potentially impact on your market selection plans and strategy for this year? In the chart below I’ve shown the projections for key countries, with estimates for 2014-2016 annual percentage change in GDP.

To my mind this further calls into question the BRIC categorisation we use to describe emerging markets. Jim O’Neill of Goldman Sachs first used this term in 2001 to describe a group of countries that expanded rapidly in the 1990s. Today though, these countries increasingly show very different growth trajectories noted by some experts recently, and as I see exhibited in their recent economic profiles.

While in 2016 both India and China are likely to have a 7% percentage change in Real GDP, China arrives here on a decline, while India works up to this. India is expected to show a steady increase while a “disorderly slowdown” is expected in China. Brazil faced a steep decline in growth due to declines in commodity prices, weak growth in major trading partners, severe droughts in agricultural areas, election uncertainty, and contracting investment. Recession in Russia further distances this country from the BRIC group. Activity slowed to 0.7% in 2014 with on-going tensions with Ukraine, sanctions, falling crude oil prices and structural slowdown.

Growth in Europe and Central Asia slowed to a lower-than-expected 2.4 % in 2014 due to slow recovery in the Euro Area and stagnation in the Russian Federation. In contrast, growth in Turkey exceeded expectations despite slowing to around 3.1 %.

Geopolitical tensions, currently concentrated in Eastern Europe, the Middle East, and, to a lesser extent, South East
Asia, could rise in the short- and medium-term. In low-income countries, growth remained robust at about 6 % in 2014 attributed to rising public investment, robust capital inflows, good harvests (Ethiopia, Rwanda), and improving security in a few conflict countries such as Myanmar, Central African Republic and Mali.

Remittance flows still resilient

The good news is that remittance flows are expected to continue to exhibit a much welcome upward trend. As the risk to private capital flows to developing countries increases, the relative importance of remittances continues to grow. World Bank notes that during past sudden stops, when capital flows to developing countries fell on average by 25%, remittances increased by 7 %.

The forces driving the global outlook and the foreseen risks pose complex policy challenges according to the World Bank. Developing countries face major challenges. For one thing monetary and exchange rate policies will need to adapt as conditions return to normal. They also need to implement structural reforms to promote job creation. This is expected to help mitigate long-term adverse effects from less favourable demographics and weak global trade.

More detailed analysis of the latest economic prospects for each country and region is available in our “Digital Money in 2015” country reports. Drop me a line at contact@shiftthought.com if you’d like more information. The full Global Economic Prospects report and other resources are available at the World Bank website.

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

Posted on January 7, 2015 by Charmaine Oak

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 Payments Really 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 contact@shiftthought.com to learn more about how we can support your digital banking, digital payments and remittances projects.

The Jenson Button – What bankers should do next

Posted on January 3, 2015 by Charmaine Oak

These days it is not often that one can find something good to say about banks. So I was delighted at how well a recent campaign in the UK went for Santander.

In Windsor in the UK, Santander gave their customers a wonderful surprise this Xmas. When customers withdrew money at the ATM they were greeted by Jenson Button handing them their money through the ATM, plus an extra £100 and a hamper after they pressed the "Jenson Button".

Santander's Secret Santa Jenson Button campaign was very well received as the world champion engaged in the community in different ways including visiting people in their homes. The campaign video got more than 1.2 million hits on YouTube.

Earlier it was TD Bank that used a similar campaign, thanking people at the Automated Thanking Machine and engaging in conversation with very unique ways of thanking each customer as in the image below.

For some back-to-work-after-a-long-holiday fun I thought we could give bankers our ideas on other such lovely surprises they could think of to re-engage with customers and win back badly needed goodwill around the world. After all, why make this just a once a year exercise? This is also in self-defence, as I'm not sure I'd want someone's head popping out at an ATM, and I'm concerned that as this worked so well it could easily become the surprise of choice for banks going forward.

So what do you think your bank should do to give you that little extra pleasant surprise?

How can they start to create some much needed pleasant memories to rebuild relationships with their valued customers and start to reclaim some lost ground in The Digital Money Game.

Charmaine Oak

Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

http://www.linkedin.com/in/charmaineoak

Join me on Twitter @ShiftThoughtDM and The Digital Money Group on LinkedIn

How payments changed in UK in 2014, and the perfect storm brewing for 2015

Posted on December 31, 2014 by Charmaine Oak

We in the United Kingdom already use so little cash that we could easily have gone the way of the Nordics, where consumers have such good payment systems that mobile payments took a back seat. Yet this year the UK pulled ahead in The Digital Money Game. At the player category level too we saw major upsets to the apple-carts of more than one category of providers, and a perfect storm is now in the brewing for others.

While the acceleration happened on several levels, in this blog I focus on how mobile payments took off this year and consumers now enjoy a raft of payment services on the go. It is fortunate that the Payments Council, Vocalink and Zapp had time to get a head start, as the likes of Apple Pay and Alipay prepare to descend on the UK in early 2015.

What do British consumers really need?

In the UK with a population of 64 million, we have over 84 million mobile connections and more than 72% of these are smartphones. An increasing number of ‘phablets’ are rapidly coming into use. We have 90.5% banked and a high penetration of internet services of over 84%.

We take internet banking for granted, and have enjoyed bank transfers in minutes for years now, thanks to Faster Payments. An estimated 5.7 million mobile banking transactions take place daily in the UK. We expect to pay everywhere with cards, with over 55 million credit cards and 95 million debit cards issued over the last year.

So do we really need mobile payments? We may feel overcharged by our banks, and while we may resent surcharges on card payments at some merchants in general domestically the use of cash is more of a lifestyle choice than a necessity. I can’t recall when I last used a cheque book. Yet survey results this month claim that enthusiasm for mobile payments has skyrocketed over the last 15 months, with 44% of those polled prepared to even switch accounts to access mobile payments.

London transport goes cashless

Absence of a real need may be one reason why the promise of NFC remained unfulfilled since 2005, but neither consumers nor merchants quite invited it in- until recently. I have been closely involved in projects involving mobile payments and NFC since the early days when Transport for London (TfL) was considered to be the major prize that everyone worked hard to win. Yet it took a decade before mobile payment services on the TfL network launched and even today while it is possible to pay using mobile phones, people are just beginning to use their contactless cards. While in theory mobile payments are available on EE and Vodafone, in practice some elements of the consumer experience remain to be ironed out.

Contactless payments – here at last!

It was quite a novelty to see the new Barclaycard contactless payment gloves trialled for Christmas shopping at some stores this season. The Barclaycard gloves have an embedded contactless chip that is linked to a credit or debit card to pay for transactions of up to £20. Contactless payments are also supported by the Barclaycard PayTag on London buses, McDonalds, Pret, Starbucks and many other chain stores.

We’ve had contactless payments infrastructure building up for years now, accelerated by the 2012 Olympics, attracting major investments from Visa Europe and others. Today across the UK, an estimated 300,000 terminals accept contactless cards. There are over 48.3m contactless cards issued, with a quarter of all plastic new cards being contactless-enabled. Over 2014 UK consumers are expected to spend £2 billion through contactless payments,

What does it mean for the consumer in everyday life?

As a British consumer, paying for things has now become easier. Apart from the danger of card clash, for which we have been most soundly educated, we have to be savvy to protect ourselves from a constant stream of marketing offers. From the consumer perspective, the winners are those who use the new features to shop smarter, save money and stick to their budget.

We now need even less cash, and at stores there are many more self-service checkout points that there were in 2012. You won’t have to tote around a load of loyalty cards either – Tesco has already begun to trial their PayQwiq service at 32 stores. Triallists use the online grocery service and add card details for use through the app. In store they buy up to £400 a day, sign into the app with a four-digit PIN and pick the card they want to use. A QR Code appears on their phone which the till scans to take payment and credit them with Clubcard points.

Life has become easier in many ways. Just as you can easily hail a cab and pay for it through the Uber app, something that London black cabs have not been too pleased about, expect more “Uber-like” innovations wherever there are pain points to be found.

New ways to pay: Pingit, Pay-em or Zapp-em?

This April the Payments Council launched an important service called Paym. This allows convenient transfer of money between participating UK bank account holders. Earlier, Barclays supported Pingit, since 2012 as a great new way to send money in minutes using a phone, but Paym is integrated into customers’ existing mobile banking or payment apps as an additional way to pay, making it possible to send and receive payments using just a mobile number.

Customers register their phone number and the account they want payments made into with their bank or building society and people can then pay directly into the account using just a mobile number – no sort codes or account numbers are needed.

How Paym works

To send a payment, you select the mobile number to pay from your list of contacts, along with an amount and a reference. Behind the scenes the sender’s bank accesses the Paym database to confirm that the recipient is registered with the service and to retrieve their bank or building society account details.

The app helps to confirm details and receive immediate confirmation. The real magic behind this is managed by the Faster Payments Service or by the LINK network, whether or not the recipient phone is on or within coverage. In most cases the payment reaches the recipient account almost immediately and they see it in recent transactions on their account.

How Zapp proposes to work

Zapp, announced early in 2014 now claims partnerships with major merchants including Asda, Sainsbury, House of Frasers and more. People will be able to pay for goods and services using Zapp, authorising the transaction from their mobile banking app. The payment will be made directly from their bank account, with the use of tokens to offer better security.

What is most interesting really is the effect this will have in enabling payments to small businesses. Shaving off pennies on each transaction can bring welcome relief to a number of traders and servicemen who can expect to take payments using their mobile phones.

A perfect storm brewing

If you are a provider, this is no time to be complacent. Consumers are set to “select and forget” their means of payment and many will make their choice in 2015. Merchants too are selecting their partners just now.

With Paym, banks continue to compete through P2P services that bear their own brand and can be differentiated in some ways. Zapp, on the cards for (delayed) launch in early 2015 will further put the banks in the driving seat as far as payments go.

Weve, a joint initiative of mobile operators in the UK was to roll out Pouch but has already announced it would close the wallet this year. With the HCE initiative announced by the card schemes in February this year, mobile operators no longer dictate terms with regard to NFC services, and in the UK also have the larger consideration of M&A on their minds, with the proposed acquisition of EE by BT on the cards.

With Apple Pay, already in use in the US and preparing to enter the UK market, I think we may expect a mega-battle on the cards for 2015. Google Wallet, Amazon and others are already highly active in the market.

Besides, we have not even begun to discuss the wider digital money picture. This includes a host of innovation from newly funded players including not just Fintech startups but well-funded Alipay, richer by $25 billion with the largest IPO having come through this year, and WorldRemit and Transferwise, expanding rapidly in remittances.

UK then is the place to watch. Shift Thought continues to do in-depth research on this market. Our detailed interviews with leading UK providers will shortly be published. Do drop me a line at contact@shiftthought.com if you have further questions.

Photo Credits: Promotional material from Barclaycard, Apple Pay, Zapp and Paym

WorldRemit share the secret to their success and rapid scale-up over 2014

Posted on December 17, 2014 by Charmaine Oak

WorldRemit has enjoyed a rapid trajectory with a number of launches recently. Ismail Ahmed started up this company with the vision of providing a low-fee digital service, moving the agent model of money transfer to an online one in the $580 billion remittances market.

Curious to understand how WorldRemit grew so rapidly into digital channels, I caught up with Jeffrey Alan Pietras, Vice President, International Product Development at WorldRemit. As the year draws to a close Jeffrey reflects on the progress made this year and their ambitious plans for 2015.

Jeffrey, please could you give us a brief background about yourself and an introduction to WorldRemit?

WorldRemit was founded in 2010 by Ismail Ahmed with an idea of changing the money transfer industry, having experienced a degree of expense and inconvenience first hand. WorldRemit began as an online service that enabled people to send money to friends and family in other countries. Customers can today use WorldRemit anywhere, anytime on their computer, smartphone or tablet. For those receiving money, WorldRemit offers a range of options including bank deposit, cash collection, Mobile Money, and mobile airtime top-up.

This year WorldRemit has seen significant expansion, with new products, channels and partnerships in important corridors around the world.

I joined WorldRemit this year, and bring to my role a combination of experience from working with global players and growing start-up companies. I have worked within the converging financial services, payments, mobile & digital commerce industries at global players including J.P. Morgan, Western Union, Nokia and Yahoo!. This is complemented by my transactional experience with growing start-up companies.

WorldRemit has been expanding rapidly recently. Could you please give us a background, and a summary of your current footprint?

Yes, WorldRemit’s international reach has grown significantly in the past year. Our service is now available to senders in 50 countries, up from 35 earlier in the year. Last month WorldRemit launched in the United States, which is expected to become one of the company’s largest markets, once fully online in 2015.

The number of countries to which people can send money with WorldRemit’s platform has also increased significantly over 2014, growing from 100 to 117. Among the new additions were 15 countries in the emerging Central & Latin America region.

Those are significant achievements indeed. What has driven your recent growth?

A critical enabler has been the $40M investment by Accel Partners (an early backer of Facebook, Dropbox and Spotify) in March this year. We have since been steadily growing our staff as well as our market presence. We now have over 110 employees and plan to open a new US office in Denver, Colorado shortly.

From a product perspective, we recently launched a successful version of our mobile App for iOS as well as Android. We continue to be one of the most flexible remittance platforms in terms of service interoperability, providing more choice for the way in which senders and receivers can conduct their transactions.

We have a growing number of mobile partnerships to enable instant mobile wallet transfers which have seen great traction in 2014. We currently enable mobile wallet transfers to EcoNet Wireless subscribers, as also to Safaricom, Globe, Smart, MTN, and Vodafone to name just a few.

Jeffrey, what has been the secret to your success?

In my opinion there are two things that set us apart in our industry:

1) the interoperability of our digital money transfer platform and

2) our customer satisfaction rates

As I mentioned before, the WorldRemit platform is one of the most flexible in terms of the interoperability which we offer – this allows us to stay relevant to senders as well as receivers in facilitating the means by which they would like to conduct their transaction.

For instance, aside from cash pickup and bank account transfers, the WorldRemit platform easily integrates with mobile operators to tap into quickly evolving payment ecosystems whereby we can enable mobile wallet transfers. Our platform provides us the flexibility to offer new send and receive options in alignment with partners to truly service the evolving needs of the international remittance market globally, as “one size fits all” does not work in this changing industry.

And on a related note, our flexible money transfer platform & business model equates into a high level of customer satisfaction. Without an agent intermediary (like in the traditional money transfer business), WorldRemit can be truly customer-centric and tailor a money transfer service that delivers speed, convenience, and low-cost to the sender and receiver.

In an era of declining brand attributes for the traditional money transfer business, WorldRemit continues to garner great positive feedback on our service and a high level of customer retention.

What are some of the main challenges for the remittances industry?

The evolution of the international remittance market is fragmented and multi-dimensional – a real challenge in creating a consistent norm for a global scale business which is disrupting the traditional MTOs. In some markets the remittance ecosystem is dominated by financial institutions. In other markets, the ecosystem is driven more by retailers and mobile operators as traditional financial players have not touched the majority of consumers with their services. This fragmentation has led to a number of externalities which influence the evolving ecosystem country by country (e.g. regulatory bodies, mobile operating systems, retail point of sale infrastructure, etc.).

Another challenge in the evolution of the business are new regulations. Especially of interest at the moment are APMs (alternative payment methods) like BitCoin and the influence this will have on the industry.

Digitization is another huge challenge in this industry. How do the traditional MTOs modernize their agent-based model when digital money transfer platforms are cannibalizing the trade (especially with multi-channel offers)? And, what roles will digital consumer services (e.g. social & messaging) play in the consumer to consumer money transfer space?

What are some of the key changes you have observed in the money transfer industry over 2014?

In line with increased regulation in the industry, particularly around the KYC (know your customer) and KYA (know your agent) element of the business, many traditional firms have incurred high compliance costs to try to modernize antiquated offline procedures.

With the added costs of doing business in the offline world, margin compression remains a constant concern for some players. With more consumer choice in money transfer providers (both online and offline), customer acquisition and retention costs are a big marketing concern as brand alone might not be enough these days. I expect to see these concerns continue to play out into 2015.

What are some of the trends you expect to see over 2015 and beyond?

The most exciting trend I anticipate in 2015 (hopefully or in the years to come) is some “reverse innovation” in the payments and remittance space.

The media seems to have bias on the way that consumers would embrace a Western mobile payments ecosystem (e.g. ApplePay) as a global standard. However, with a head-start, many emerging or developing markets in Asia and Africa have robust mobile payment ecosystems already.

While there are some inherent development reasons behind these, I am excited to see what influence these ecosystems in Africa or Asia might have on the evolving consumer mobile payments space in the US and Europe.

Jeffrey Alan Pietras - Vice President, International Product Development at WorldRemit

Responsible for all business development, partnerships, and new market opportunities for WorldRemit. Jeff has extensive knowledge of strategic product & partnership development with a particular focus on consumer mobile & online services within the emerging markets.

Jeff holds an MBA from London Business School and a BS in Finance from the McIntire School of Commerce at the University of Virginia. He has lived in several European countries, North America, and Middle East and speaks several languages including French and Spanish.

Charmaine Oak is Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

http://www.linkedin.com/in/charmaineoak

Join us on Twitter @ShiftThoughtDM and The Digital Money Group on LinkedIn

Christian thanks very much for your time today. Could you please give us some context of Wirecard and what you do?

Europe has historically had the longest history with pursuit of mobile payments. From your experience over the years how has 2014-2015 differed?

Would you say that mobile payments is converging or diverging?

But how would we extract cash in that case?

What are some peculiarities you observe in Europe versus your other activities in other regions such as APAC, UAE and South Africa?

Could you share some insights from your work on mobile wallets such as with the BASE Wallet, Deutsche Telekom MyWallet, Orange Cash and Vodafone SmartPass?

Is it digital natives who are installing these apps or others interested as well?

Would you say there is a growing importance of the mobile number in all of this?

Do you see SEPA as an instrument for achieving more consistency in payments across Europe?

What does Wirecard do to help companies, say a UK-based retailer wanting to move on this opportunity?

Do you also provide an app if clients don’t have one?

What is the best path to interoperable mobile payments across the EU, for instance for a UK customer using a smartphone to pay in Spain, and what’s the outlook for 2015 and beyond?

Thanks very much Christian, it has been very useful to gain your insights on mobile payments in Europe and I take this opportunity to wish you the very best for the future.

Jon, I recently heard you speak of “payments moving into the background”. For me Boku has been one of the first to achieve this, having since 2009 offered a great way to do this, but how might this change going forward, with all the new mobile payments services recently announced?

But with the impact of lower interchange rates in Europe making card payments cheaper and availability of new bank based payment solutions, are merchants going to think “It is broke”, and they can find cheaper new ways to pay?

I see Boku as a ubiquitous single convenient acquiring payment gateway or hub between merchants and mobile operators. But is Boku looking to be more than this, has this changed?

Where do you see this moving over the next 2 years?

With regards to the new Airbnb, Uber type FinTech entrants, what are your thoughts on your ability to support them as Braintree and others do today?

That sounds very interesting. So the whole FinTech and API trend could work in your favour!

You can charge for physical goods too?

Is the limit that can be charged based on regulations or is it more of a policy decision?

Could you share more on your partnerships and new services?

In 2014 your whitepaper projected a potential market of $6b for DCB by 2017. Do you see this changing in the light of recent developments in contactless payments and mobile payments?

What changes are likely over the near future, in the light the evolving role or mobile operators in payments?

What about services such as Samsung Pay, Apple Pay, Android Pay and others? We also see the various new Checkout services. I can visualise each catering to a sphere of their interest – so for instance Samsung could turn their focus to TV-related payments. Is this a concern for you?

I expect that in the face of rapidly increasing fragmentation, you could represent a source of stability for consumers and merchants?

We spoke about some of the opportunities, but how about the risks for mobile operator initiatives, as a number of ambitions towards payments have failed?

What do you think about proposed API access to bank accounts, new digital banks?

How is the UK market different to the rest of Europe, especially in the light of recent moves towards mobile payments and also the focus on FinTech?

Jon, this has been very interesting. Thanks very much for your time today and wish you the very best for the future.

As Fintech firms continue to make breakthroughs and disrupt banking and payments services around the world, I am delighted to share the perspective of someone at the forefront of innovation in Europe.

Olaf, Congratulations on winning the Fintech Innovation Awards 2015. Could you please give us an introduction to your company and services?

Could you tell us a bit about your products, services, markets and segments, and what is behind the recent awards you’ve received?

Why did you decide to get into mobile payments, and how did you select the countries you’ve picked (Germany, France, Spain and the Netherlands)?

Which of the four European countries showed the most take-up of mobile payments?

So right now if I was to go on holiday from UK to Spain, could I use your service to pay in Euros?

How easy has it been for you to expand to new countries in Europe? Any plans to go outside Europe?

How does your business model work, and how have customers reacted to your Freemium/Premium pricing?

What key technology decisions did you have to make since 2012 and how have these contributed to your success?

What is your view on the competition especially Apple? How would a startup service fare against such global competitors?

What’s been the most difficult challenge for you so far?

What are your plans for 2015 and beyond?

It has been fascinating speaking to you Olaf. Thanks for sharing your story that I hope will be an inspiration for the many Fintech startups, across Europe and around the world. I wish you the very best of success in your plans!

Remittance flows still resilient

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

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

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

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?

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?

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

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?

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

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.

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

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?

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

Which are the new technologies you would back?

What do British consumers really need?

London transport goes cashless

Contactless payments – here at last!

What does it mean for the consumer in everyday life?

New ways to pay: Pingit, Pay-em or Zapp-em?

How Paym works

How Zapp proposes to work

A perfect storm brewing

Jeffrey, please could you give us a brief background about yourself and an introduction to WorldRemit?

WorldRemit has been expanding rapidly recently. Could you please give us a background, and a summary of your current footprint?

Those are significant achievements indeed. What has driven your recent growth?

Jeffrey, what has been the secret to your success?

What are some of the main challenges for the remittances industry?

What are some of the key changes you have observed in the money transfer industry over 2014?

What are some of the trends you expect to see over 2015 and beyond?

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