Fintech Payments Security

Looking back at Money20/20 2015

Looking back at Money20/20 2015. Photo: ING Nederland

Zilvinas Bareisis provides his key takeaways from attending a busy Money20/20, including tokenization, biometrics, and mobile payments.

Last week, my colleague Dan Latimore and I were at Money20/20, which, in four short years, has become a must-attend event in payments and fintech. I’ve been there at the very beginning, and it has been exciting to watch it grow from about a thousand of us in the first year to over 10,000 this year. Congratulations to the Money20/20 team for this incredible achievement! And thank you to all of those who took time out of their busy schedules to meet with us.

As I was reflecting back on the last week, I realized it’s no longer possible to take in all of Money20/20. In the first year, even with parallel session tracks, you could absorb a lot of what was happening ‘by osmosis’ simply by walking the floors of Aria. As the event grew and moved to a much more spacious Venetian, somewhat paradoxically the experiences got more individual, depending on which sessions and keynotes you attended, which booths you visited and who you met. Here are some of my key takeaways:

 Perhaps the biggest and most talked-about announcement of the show was Chase Pay and its partnership with MCX. Chase is developing a wallet that will be available to all of its 94 million cardholders to use in-store, in-app and online. The wallet isn’t planning to use NFC at the POS, with QR codes set to be a most likely method, and as a result will be available on any smartphone device irrespective of its operating system.

On the merchant side, Chase is offering fixed fee processing, which will make merchant costs more reliable and predictable, with an opportunity to ‘earn it down’ based on volume. Partnership with MCX gives Chase Pay access to the largest merchants in the country. In addition to a standalone app, Chase Pay will also be available as a payment option inside CurrentC, the wallet that MCX has been piloting in Columbus OH, the results of which were presented and greeted with tentative applause during another keynote at Money20/20.

The mobile payments market in the US is becoming more complex, with Apple Pay, Android Pay and Samsung Pay already there, more ‘pays’ on the way (eg LG Pay), and now Chase Pay and revived expectations of CurrentC. Make no mistake, while most ‘pays’ look similar, they offer a different customer experience (eg how to trigger payment, where it’s accepted, and so on) and require issuers to adapt their processes to each of them. At the show, I picked up strong signals from issuers that they want to have more control over digital payments and are looking at various options, including HCE wallets, to achieve this.

 The tokenization panel was one of the best sessions I attended, with panelists from the networks, issuers, merchants and processors sharing their views on how tokenization will evolve. It includes tokenization for cards-on-file and ecommerce transactions (Visa and MasterCard announced tokenization of their Checkout and MasterPass wallets respectively), new approach to 3D Secure, introduction of Payment Account Reference (PAR) – a non-transactable ID that ties together all the tokens, and tokenization for DDAs that The Clearing House is working on.

According the panelists, tokenization is the much-needed ‘abstraction layer’ that will be a ‘foundation for the next 20 years of innovation’.

 Biometrics are entering mainstream, with Fido alliance laying the groundwork for how to deploy biometrics for authentication. Sorting through a myriad of biometrics providers and approaches (eg fingerprints, hands, voice, eyes, and so on) is a headache, and eventually it will be consumers that will decide which approach works best for them. Fido alliance delivers a standard irrespective of what the consumers choose. Looking into the future, the panelists envisaged a behavioral approach where the providers use a number of data points to constantly verify that the user behavior is consistent with a typical pattern and authenticates automatically in the background, a process called ‘ambient authentication’.

 Conversations about cryptocurrencies have matured enormously over the last 12-18 months. The focus is now very clearly on blockchain technology and how the financial services industry can best deploy it. A number of exciting partnerships are emerging in this space, from TD Bank and RBC working with Ripple on domestic and cross-border P2P payments, as well as more efficient transfers between subsidiaries, to Nasdaq’s partnership with Chain, to the R3 consortium.

Perhaps the most exciting demo I saw was Visa’s connected car experience, where the driver could review the new leasing document on the screen, sign it, register it on a blockchain and drive off. Time will tell if this is how we’ll get to drive cars in the future, but it only shows the opportunities out there.

Innovation and customer experience

Finally, I’ve been asking others at the show what they thought were the key themes. Interestingly, two themes came up consistently: innovation and focus on customer experience. The latter manifests itself in so many different ways, from making it easy and intuitive for consumers to pay, to solving very specific merchant problems, whether it’s around acceptance and security (Verifone, Ingenico, Poynt), conversion rates (BlueSnap, Affirm), lending (PayPal, LendUp) or seamless integration of payments into the overall proposition (Stripe, First Data).

The third theme seemed to be a little more contentious. Some said it was all about disruption, while others talked about collaboration. I actually agree with both. To me, they’re two sides of the same coin. The disruption in finserv is real, but many find that the way to deal with it is through collaboration. Few (if any) have talked about demolishing the world as we know it today. Instead, all are focused on how to make it better.

I know I only scratched the surface here. For example, there were also some very interesting announcements about domestic P2P/push payments such as Early Warning buying clearXchange, Dwolla partnering with CME Group, and The Clearing House working with Vocalink. And companies such as Earthport, PayCommerce and Ripple are making an impact on cross-border payments. But as I said, it’s impossible to take it all in, and no write-up can do full justice to Money20/20. You just have to be there. See you next year in Vegas, or perhaps even in Copenhagen at Money20/20 Europe!

– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. You can read the original article here. Image: ING Nederland

About the author

Zilvinas Bareisis

Zilvinas Bareisis is a senior analyst with Celent's Banking practice and is based in the firm's London office. His research focus is on retail payments, including cards, ecommerce, and mobile payments.

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