Notes from America

UK-based micropayments venture tibit (IBS Journal’s very first Startup of the Month) launched in the US last week at the Online News Association’s Denver event. Carl Beetham, Business Advisor, brings you this post from his travels

I’m the least-travelled of individuals and the daily commute to Peckham still fills me with an equal combination of trepidation and excitement. So you can only wonder at my feelings when faced with the joyous prospect of a business trip to the US – imagine a midget ginga Mickey Rooney-esque individual playing the Eddie Murphy character in Coming to America and you won’t go far wrong.

Apple stays in the payments picture

Apple, good products, horrible company…The EU ruling that Apple must pay over $14 billion in back taxes to Ireland has been hogging the headlines, but the tech giant’s increasingly hostile face off with Australia’s banks is equally as compelling a story. In a nutshell, all of Australia’s big banks (except ANZ which is rolling out Apple Pay) are looking to gain access to the inner workings of the mobile payment platform. If successful, third parties would be able to bypass Apple Pay and create their own apps.

Apple has countered by arguing this would compromise the iPhone’s security, reduce innovation and hamper its entry into the Australian payments market. It told the Australian Competition and Consumer Commission (ACCC) that “allowing the banks to form a cartel to collectively dictate terms to new business models and services would set a troubling precedent and delay the introduction of new, potentially disruptive technologies”.

Why it’s time to embrace the big opportunity of Open Banking

Earlier this month, the Competition and Markets Authority (CMA) published the final report on its retail banking market investigation. By requiring banks to implement Open Banking by early 2018, the report claims it is paving the way for a revolution. While debates rage on about the specifics of the report and how far (or not far enough) it goes, it accelerates and supports the UK’s move to a transformed banking landscape based upon a foundation of Open Banking.

Before I go on, let’s be clear – the CMA’s Open Banking programme is not a new concept. It is based on the HM Treasury initiative, powered by the Open Banking Working Group (OBWG), who are determining the open API standards for Open Banking. The timeline has already been set in the Open Banking Standard. Add to this the API mandate of the European Commission’s upcoming revised Payments Services Directive (PSD2), and it’s clear that a tour de force of regulation aimed at bursting open the banking industry is already on its way.

PSR announcement ushers in new era for payments innovation

The Payments Systems Regulator (PSR) has this week announced that the UK payments infrastructure will undergo a reform, in order to increase innovation, competition, and ultimately seek to better serve consumers.

This announcement seeks to break down the current payments status quo which has remained stagnant in this country for too long. The best case scenario is that we now see a flood of innovative competitors coming to the fray, where the needs of consumers, and not the needs of the major payment players, will drive the sector forward.

Three decades of automated payments – but what next?

In 1986 Barclaycard was the first payment provider to introduce Process Data Quickly (PDQ) technology, which allowed in-store transactions to be processed faster and more securely than ever before. I joined Barclaycard in 1972 and was working in the Business Research team when we embarked on a huge project to transform how retailers take and consumer make payments.

Before PDQ technology was introduced retailers relied on “zip tap” technology, which involved taking an imprint or carbon copy of a customer’s card to create a voucher, which was sent to the appropriate bank to process. This system was not only admin heavy but also susceptible to human error and with ever increasing volumes desperately in need of modernising.

Reality check: What has brought Android Pay to Europe?

Should cash be abolished? To further fan the flames of the debate, Google has dared to step across the pond and launch Android Pay in the UK – the first European country that the service will be available. 

Eight banks and eleven retail chains are being supported by MasterCard to participate in the launch. It’s a strong line-up but how does Android Pay compare with its competitors Apple Pay and Samsung Pay?

A Tale of Two Wallets

Wallets, or purses, have been around since bartering was replaced by the exchange of goods for currency of whatever variety. Therefore they were handy means of carrying that currency in case you needed to ‘buy’ something on your travels. 

Centuries, if not millennia, have passed and we are now in the electronic, or digital, age. The wallet and/or purse are still with us albeit with that all important prefix the ‘E.’ 

Payments is so hot right now

There was (as is often the case with such industry gatherings) a huge amount of hot air generated at Money 20/20 Europe, which took place in Copenhagen this week. Twitter was awash with people raving about how various new fangled offerings are going to rewrite the payments rulebook. Virtual reality headsets are the next big thing. Biometrics is a must have. Social has changed everything, blockchain technologies rock, etc etc.

Mondo gets the public Beta blues

Who’d be a challenger bank, eh? Getting that cool digital offering to market is a long and winding road with many a treacherous turn as mobile-only newcomer Mondo has been finding out. Earlier this month, it was forced to reboot a crowdfunding initiative after an initial demand for participation overwhelmed Crowdcube’s servers.

And now the startup (tagline: Finally, a bank as smart as your phone) has been experiencing teething problems following the launch of a public Beta, inviting iPhone users across the UK to download its app from the App Store.

Throwing good money after bad

Clearing house Bacs has said that it is working on a number of initiatives to boost the UK’s struggling Current Account Switch Service (CASS), following intervention by the Financial Conduct Authority (FCA).

Cash continues to make a splash

Look away now, banks, card schemes and all the other proponents of a cashless society. It seems that notes and coins are not going away just yet. LINK cash withdrawals from UK ATMs in 2015 amounted to a record £128 billion. The total number of cash withdrawals only grew slightly in 2015 (by 0.8%) with the value of these increasing by 2%. The amount cash machine users took out also went up – with the average value rising from £61.25 in 2014 to £61.93 in 2015.

The 'Pay' model is strong but the banks are still in play

The big guns – Apple, Samsung and Google – are dominating the mobile payments news cycle now that their respective ‘Pay’ platforms threaten to disintermediate the world’s banks. 

They won’t have it all their own way, though; banks are responding with their own platforms. But is it too little, too late?

Payments: what is going on behind the scenes?

The payments space has been the most frustrating to report on over the years. There is a collective groan in IBS Towers when the big payments conferences come around again. It feels like the same old people talking about the same old things. There will be lots of focus on the high-level issues, including that ‘FedEx’ comparison once more (we can see our parcels at any point in their journeys, why can’t we do the same with payments, particularly as these are electronic so should be easier to track than physical goods?). But when was the last time you heard a detailed case study at one of the events from a bank that has actually addressed and solved the issues?