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A new voice on a familiar topic – SEPA from the perspective of ECB Executive Board Member Peter Praet

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A new voice on a familiar topic – SEPA from the perspective of ECB Executive Board Member Peter Praet 3

Speech by Peter Praet, Member of the Executive Board of the ECB, at the off-site meeting of the European Payments Council
Ladies and gentlemen,
Thank you very much for inviting me to speak at your off-site meeting today. From 2004 to 2010, with only one exception, Ms Gertrude Tumpel-Gugerell presented the ECB’s views and expectations regarding the Single Euro Payments Area (SEPA) to the EPC Coordination Committee. Today, I have the honour of taking over. I am committed to continuing the fruitful dialogue that has been established between the ECB and the EPC over the years in the same spirit of openness and trust.A new voice on a familiar topic – SEPA from the perspective of ECB Executive Board Member Peter Praet 4
Let me first discuss the SEPA project as it stands now in comparison with the situation in mid-2010. Then, I will make some remarks on cash. Subsequently, I will focus on three issues that are important for the retail payments market in general in coming years:
1.    innovation;
2.    competition; and
3.    globalisation.
In this context, it is essential that we keep up a continuous dialogue with all stakeholders, including that with the EPC, a very prominent actor.
2010-11 review: end-date for migration to SEPA, competitive European cards market, security of retail payments

Where do we stand? In 2010, the SEPA project was largely dominated by the intense debate on the proposal to set an end-date for the migration to SEPA by regulation. A great deal of time and many resources of both public authorities and the financial sector have gone into shaping the proposal by the European Commission. This has not been an easy process, and there has been some controversy between the European Commission and the financial industry with regard to the contents and coverage of the regulation, particularly the technical requirements for credit transfers and direct debits and the direct debit interchange. The Eurosystem expects the SEPA credit transfer and the SEPA direct debit, which can comply with the technical requirements, to become the credit transfer and direct debit schemes used for euro payments in the EU. Where direct debit interchange is concerned, the draft regulation now provides legal certainty.
Despite the controversy, we all share the conviction that determining a clear deadline for migration to the SEPA credit transfer (SCT) and the SEPA direct debit (SDD) is necessary to bring SEPA to a successful conclusion. Thus, I would encourage you to focus on what lies ahead, and not to be dissuaded from pursuing your initiatives and projects.
As you know, one of the areas that needs to be driven further forward by the EPC is the standardisation of cards. Last year, Ms Tumpel-Gugerell discussed three elements that are required for a move towards a competitive European payment card market:
•    first, the development of an additional European card scheme;
•    second, the separation of card schemes from processing entities; and
•    third, card standardisation.
Progress in the development of an additional card scheme has been considerably slower than hoped for. The slow progress in this area gives further weight and importance to card standardisation, which should ensure interoperability and the harmonised use of cards across Europe. Here, I would like to emphasise that the EPC should provide guidance for standardisation initiatives in the different domains (card-to-terminal, terminal-to-acquirer, acquirer-to-issuer, and certification and type approval) on which standards are to be used for SEPA. Equally important, the EPC should also provide guidance on how to implement them.
With regard to the SEPA Certification Framework, the ECB has submitted some recommendations to the EPC on how to facilitate agreement between the different stakeholders. Now that the summer break is over, we would expect to receive your feedback on these recommendations in the near future.
The third issue addressed last year was the security of retail payments. Here, the establishment of the SecuRe Pay Forum, which aims to deliver concrete recommendations on card-not-present and online payments by the end of this year, should contribute to the creation of a level playing field with a high level of security in Europe. The ECB welcomes the fact that the EPC regards the prevention of card fraud as one of its top priorities and that it has defined measures to reduce fraud and protect payment data. However, the market should be more ambitious and follow the Eurosystem’s recommendation to issue “chip only” cards and, in addition, to start with implementing intermediate fraud prevention measures such as the regional blocking of card transactions. In this respect, it is encouraging that EUROPOL has called on the United States to close this loophole for fraudulent card transactions. The recent announcement of VISA Inc. to accelerate migration to EMV in the United States and to institute a shift in liability for counterfeit card-present point-of-sale transactions can thus be considered a real breakthrough.
Cash
Before I turn to innovation, let me first say a few words about cash, taking into account that banknotes are issued by the Eurosystem itself. In practice today, cash is still by far the most frequently used means of payment for retail (i.e. point-of-sale) transactions in the euro area. Society is neither willing nor ready to do without cash.
The continued availability of cash as an easy-to-use, reliable and cheap means of payment requires a resilient and efficient cash cycle. Indeed, it is likely, both with respect to resilience and with respect to efficiency, that the bar in this respect will be raised in the period ahead.
Against this background, I welcome your efforts in this area. The standardisation and upgrading of the cassettes used for the storage and transportation of banknotes, which you will discuss tomorrow, is a case in point, serving both the efficiency and the resilience of the cash cycle.
I know that my colleagues in the cash area appreciated the constructive cooperation that you have been able to establish over the years, and they look forward to seeing further progress on these issues.

Fostering innovation: 21st century ways to pay
25 years ago, nobody would have expected that the way we work, communicate and access information and entertainment would be changed as profoundly as it has through the invention of the chip, the internet and the mobile phone. However, the diffusion of innovations in retail payments has been strikingly slow. Technological progress, which has revolutionised work, communication and entertainment media, has not had a major effect on means of payment and payment habits. The methods used for payments in Europe are still deeply rooted in the 20th century.
There are several reasons why innovation in retail payments is difficult. Consumer demand is a very significant factor in payments — the response of the general public to any new means of payment can make it or break it. It has often been argued that many consumers dislike change. Recently, the Payments Council in the United Kingdom had to cancel the target for the possible closure of the cheque clearing in 2018 due to complaints from stakeholders. Still, we should not forget that neither consumers nor merchants can generate demand for what is not on offer – the notorious chicken and egg problem. Furthermore, on the supply side, providers are confronted with the first-mover disadvantage: network externalities, the lack of critical mass and switching costs. These factors make it important that innovation is tackled in a coordinated way and that an innovation-friendly legal and regulatory environment is ensured.
It is important that these factors are considered when talking about innovation. Still, in many constituencies, the strong persistence of cash usage may not be driven only by choice, but also – due to the factors discussed above – by the absence of choice. This is particularly relevant for the unbanked or underbanked population. Innovation in retail payments might be a tool to increase financial inclusion – not only in the developing countries.
Absence of choice is also manifest in e-commerce/internet shopping. The ECB has observed that in many constituencies, the payment instruments offered for online payments are not those most suitable for remote payments. To give you a practical example, I would like to mention a web merchant in Germany that offers either prepayment, cash on delivery or payment by Sofortüberweisung (an overlay service). Such slim choice and lack of competition is clearly an obstacle to the growth of e-commerce in Europe, and I can only reiterate the Eurosystem’s call for the banking industry to engage in the delivery of suitable SEPA-wide online-e-payment solutions. Otherwise, banks may run the risk of being crowded out by other providers that have already entered the market. At the same time, merchants – both in the virtual and in the brick-and-mortar sphere – should recognise that it is in their own individual and common interests to have a secure means of payment and to adopt the necessary measures.

Fostering competition: striking the right balance between cooperation and competition
I would now like to discuss the prerequisites for fostering competition that benefits innovation in means of payment – and retail payments in general – through SEPA. The Eurosystem has argued from the outset that the harmonisation of standards and rules for retail payments is necessary to overcome the current fragmentation of payment instruments and infrastructure in Europe. Giving greater choice to European businesses and consumers, and opening up a larger market to payment service providers, will boost competition. The EPC plays a pivotal role in this process, and therefore also has responsibility for bringing the requirements of the other stakeholders in SEPA on board.
It has always been clear that, as a network industry, payments can only be processed smoothly if common standards and rules are available. It is also clear that standards and rules should be open and non-proprietary so as to prevent closed markets. But it is also clear that the scope for cooperation needs to be delineated carefully from that for competition.
The optimum balance between the cooperative and the competitive space is as hard to find as that between efficiency and consumer convenience, on the one hand, and security and reliability, on the other. It is of paramount interest of the public authorities that the right balance is struck between these poles. Generally, it is more efficient to foster competition on the basis of common standards than to foster competition for standards. However, it has to be ensured that these common standards do not end up as being the lowest common denominator. Therefore, public authorities regard it as their responsibility to look carefully into this balance between competition and cooperation, and interfere whenever required. That having been said, I would like to reiterate the Eurosystem’s support for the creation both of rulebooks and frameworks for retail payments in general and of a framework for, and measures to ensure the interoperability of, existing online e payment schemes in particular, provided these are based on transparent and open standards that allow other communities/schemes to join if they wish to do so.

Fostering European direction at the global level
In my final point, I will take a further step back from the level of detail of the discussion of SEPA. In the day-to-day business, we tend to focus, to a large extent, on the difficulties we are facing along the road towards making SEPA reality. When reading the documentation on SEPA, I have often found the phrase “yes … but”: yes, the indicator for migration to the SEPA credit transfer is growing, but not fast enough; yes, the SEPA direct debit is available, but it is hardly used; yes, the proposed regulation will fix a migration end-date, but it is too early; and so on. Of course, we have to deal with problems and obstacles, but for a few minutes at least, let us focus, for a change, on what has been achieved.
SEPA is an unprecedented initiative to harmonise cashless retail payments across countries, with the added difficulty of replacing existing and widely accepted national payment instruments. SEPA is not limited by the borders of either the euro area or the EU. Iceland, Norway, Liechtenstein, Switzerland and Monaco are part of SEPA, enabling cashless euro payments under the same basic rights and conditions for their citizens and businesses as in the EU. And the impact of SEPA clearly goes beyond Europe. International initiatives such as the International Payments Framework (IPF) see the SEPA schemes as a blueprint for developing their own schemes. Even in China, bankers know that SEPA does not stand only for the Chinese State Environmental Protection Administration, but for a pan-European initiative that they are watching with great interest. All this shows that we are on the right path, and that we have an international role to play in retail payments.
However, this needs to go both ways. Particularly in the area of standardisation, the coordinated presence of European payment service providers, schemes and processors is required to ensure that changes in global standards that may affect SEPA schemes, frameworks and guidelines are identified in a timely manner. In the 7th SEPA Progress Report, the Eurosystem identified a strong need for the direct and coordinated involvement of the European payments industry in global card standardisation bodies. In this respect, we welcome the EPC’s presence on the advisory boards of EMVCo and PCI, and the negotiation of Memoranda of Understanding with these two entities.
Conclusion
With the publication of the 7th SEPA Progress Report in October 2010, the Eurosystem, in its role as catalyst, provided analysis and guidance on the way forward for SEPA in the forthcoming period. In today’s speech, I have discussed some factors at a broader level: innovation, striking the right balance between the cooperative and the competitive space, and the positioning of European retail payments at a global level. To drive the future development in retail payments, payment service providers and public authorities/regulators will have to be able to respond proactively to these factors.
The three “Es” – the European Payments Council, the Eurosystem and the European Commission – largely favour the integration and modernisation of the retail payments market. While there are sometimes differences in their understanding of how best to achieve these goals, I am confident that we have managed, and will continue to manage, to successfully drive our vision of SEPA forward.
Thank you very much for your attention.

Copyright © for the entire content of this website: European Central Bank, Frankfurt am Main, Germany

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Cash was our past, contactless is our present, contextual payments are the future

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Cash was our past, contactless is our present, contextual payments are the future 5

By Jason Jeffreys, founder of FETCH

$6tn in the next five years, this is how much the world will spend through contactless payments, according to analyst firm Juniper Research. For many of us who have discovered and since relied heavily on contactless payments since its introduction in 2007, either through card, phone, or watch, or those of us who have taken a stroll down a covid-era high-street to see shop windows adorned with “card payment only” signs, this is hardly a surprise. Even the Church of England in 2018 equipped 16,000 religious sites with terminals to allow for contactless donations. So what is behind this rise? And what is next?

The switch from cash to contactless is a transformation of payments that is driven by four key factors: speed, security, accessibility, and hygiene. While businesses and customers alike have felt the immense benefits of the cash to contactless transition, the next iteration goes further by digitally transforming the entire transaction process. It’s that potential which pushed me to launch FETCH – technology that allows customers to order and pay from their phone, anywhere. By exploring the benefits already felt by our contactless present, I hope to show you why I’m excited to be part of the contextual payments future.

Speed

Aldi is all about low prices and this is achieved with efficiency – that is why their checkout staff are trained to scan as fast as possible, it’s why their barcodes are huge, and it’s why you can’t keep up. It’s all in the name of efficiency and cost saving, and contactless payments make this possible.

While increasing the rate of transactions has a direct impact on money through the till, there is an increase in the perceived speed which does wonders to get customers back through the door. Shoppers may have spent an hour or more in-store but their direct interactions with the shop and staff were quick and timely and that’s the experience they remember and the impression they build of the brand.

Aldi are not alone in realising this and while it is easy to point to the impact that contactless has had on the retail sector, its revolution has slowly crept into hospitality –  an industry notoriously late at adopting new technologies.

High-street coffee shops rely on getting as many people as possible through the doors and back out again. They want as little disruption to your day as possible but more importantly, they want to process as many payments per hour as possible. Cash transactions are slow in comparison to a single tap, so for the coffee shops, this means fewer transactions per hour and money lost. For businesses in this sector who rely on periodic rushes, measuring performance per hour is a necessity and maximising revenue over these short windows is so important.

For reasons obvious to anyone who has been to a crowded hospitality venue, stood at a crowded bar or waited for waiting staff during a busy dinner rush, the businesses in this space already running on contextual ordering systems like FETCH have all reported a vastly improved staff and customer experience in hospitality venues. While it may be difficult to spot how these benefits can be felt in retail, this reality is not bound to fiction or the distant future – it’s being pioneered already in retail by Amazon.

In a well documented glimpse into the future of shopping, Amazon’s latest Seattle store removes the transaction element completely. Instead, you put your items in your trolley as you go round the shop, and the sensors and cameras accurately and automatically recognise the items, keeping a track and total, before taking payment automatically and digitally through your Amazon account once you walk the trolley back out of the store. Can you imagine standing in a supermarket queue to pay once you’ve experienced the ease, simplicity and effortlessness of that?

Accessibility

Smartphones have got smarter and they have revolutionised the way we get through the day. From how we discover, connect, and socialise, to how we organise, learn, navigate and search for answers – rarely an hour goes by where we aren’t using our phones for something.

As time moved on they only grew to become more capable, responsible for managing more aspects of our lives, and it was only a matter of time before they were capable of handling secure contactless payments. The leap for people to trust their smartphones with just one additional task was tiny.

When you couple this with debit and credit cards being enabled with contactless technology by default, the rise of wearables, and e-commerce growing massively, the results are clear – people are more trusting of online payments, are more familiar with buying in this way, and have more ways of making contactless purchases, than ever before.

In fact, a Mastercard survey in 2016 indicated that Brits carry less than £5 in cash on average, with 14% of people surveyed carrying no cash at all, and 1 in 10 replacing wallets and purses altogether, opting for a simple card in the pocket instead. Figures which have no doubt grown even starker since 2016.

When we take this into consideration with 99% of 16-24 year olds, 98% of 25-34 year olds, and 95% of 35-54 year olds all being smartphone owners, we begin to see the inevitability of contextual payments as the next iteration and how the response to contextual payments will be positive and welcome; something FETCH clients and the vast majority of their customers can all attest to.

Security

Cashless payments means no cash in the till or on-site; no chance of mistakenly accepting fraudulent notes or coins; no trips to the bank to deposit or withdraw cash for the till; the end of time spent counting money every day, and the end of discrepancies which occur from this.

It limits the levels of theft, switches businesses over to an accurate, secure and efficient system, and gives business owners their time back. It makes tax returns, financial planning and forecasting and more all possible, easier and quicker and in short, it makes businesses stronger.

Jason Jeffreys

Jason Jeffreys

Contextual payments go further by offering really insightful data of what happens before and after people decide to part with their money; for example, how long they spend browsing before ordering, what they look at, what they’ve missed, when they order next and more. This means you are informed and can redesign and improve the user journey so it works better for you and your customers, all based on accurate, relevant and timely data.

As contactless payments evolve to contextual ordering, it’s important to choose a system that easily integrates with the wider business and your systems so you can continue to access the benefits of contactless. That’s why from day 1 of building FETCH I put so much emphasis on ensuring it integrates with one of the biggest and most popular POS systems in hospitality.

Hygiene

Initial adoption has long been the biggest barrier to widespread, sustained use of new technologies and going cash-free is no exception.

Given that the coronavirus thrives and passes through human contact and shared surfaces, going cash-free and contactless was a small, easy and obvious change to implement for businesses to become covid-secure and safer for customers and staff.

FETCH and other contextual payment systems are being used to go beyond this, to keep staff and visitors safe by limiting human contact beyond just payments. In our case, we have allowed hospitality customers to continue to browse, place their orders and pay, just as before, but without the need for repeated human contact at every single stage.

Given the health imperative and coercion from governments, local authorities and health bodies to switch to contact-free operations, businesses who may have once been years away from this change are laying down the infrastructure today out of necessity and it will be no surprise if contactless becomes a staple long after the coronavirus has left.

Post-coronavirus, contextual ordering offers businesses the chance to let the technology take care of these minor tasks, giving staff the space to instead dedicate their time, talent and energy towards elevating the overall experience. It’s the health imperative that acts as the gateway to this.

What does this transition mean for businesses? With visible consideration and effort put into hygiene, you are making your customers feel safe and cared for; by making transactions quick and painfree, you are giving your customers time to spend on the experience they came out for in the first place. In the process, you have created the ideal conditions for consumers to spend money and given them the confidence to do so.

I’ll end with the picture UK Finance data has painted through multiple annual payments reports: in 2006, 62% of all payments in the UK were made using cash; three years later it dropped to 58%; in 2016 the proportion had fallen to 40%; and just two years after that, cash formed just 28% of all UK payments. With a pre-covid prediction envisaging that by 2028 fewer than 1 in 10 payments will be made by cash, the widespread, covid-induced encouragement, adoption and enforcement of cashless policies in retail and hospitality has surely brought that many years forward.

Contextual ordering is the next inevitable iteration and if you were one of the few who reaped the benefits of going contactless early, you have the chance to be ahead of the curve once more. A welcome future for a multitude of industries is being set around us today.

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The Rise of Contactless Payments

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The Rise of Contactless Payments 6

By Bilal Soylu, CEO of XcooBee

Today, banks involved in the issuances of credit cards, and companies at the nexus of merchant services, are experiencing a rare event in the industry.

For years, digital payment innovators fought a hard battle to adopt contactless systems and create standards. The effort and push came from companies with much of the effort directed at consumers to adopt their methodology. Whether it is Samsung Pay, Google Pay or Apple Pay they all had to overcome similar hurdles – consumers were reluctant to adopt a technology that did not have a sufficient number of merchants; thus, the progress was slow.

The COVID-19 pandemic rewrote the script in a whirlwind. All of a sudden, consumers began to demand contactless payment experiences in every way imaginable. The supply side push has turned into a demand side pull and the adoption rate is spiking.

This left banks, originators and companies involved in the eco-system with an interesting dilemma – fast decisions have to be made as to which digital technology to invest in and do they bind themselves, for multiple years going forward, to a specific infrastructure.

While previously the belief was that this could be explored over a longer period of time, the current reality is that these decisions are forced on institutions “overnight”. In this light, there are many different aspects to contactless payments and originators, and banks need to make smart bets on which type should be supported.

So, let’s look at all the relevant elements of contactless payments to explore a better model for institutional support.

General Drivers of Contactless Acceptance Growths

Safety

Physical safety from virus infection by avoiding touching 3rd party equipment or allowing safe distancing from other people and/or equipment is the main driver today. It has been emphasized by many epidemiologists as a basic requirement for conducting business. Consequently, it will be no surprise that safety is the factor that underlies the rapid adoption of a number of contactless payment technologies by once reluctant consumers.

We expect this to be a primary driver well into 2021. Thus, any technology to be rolled out in the short term should enhance safety in some form or contribute in a way to the improvement of safety.

Security

An early benefit highlighted and emphasized by contactless technology providers was the data-security aspect that surrounds the transaction. Rather than exchanging the actual credit card number, for example, a tokenization is performed to create transaction specific tokens that are then used to complete the transaction. Even when intercepted, these tokens cannot be used outside this transaction and, thus, the approach is considered to be more secure.

Although the data-security value was incessantly marketed to consumers, most had, and still have, a limited understanding of the implementation of the technology. Thus, the appeal to the consumer with this benefit was not successful. However, the increased security elements were a clearer benefit for merchants and issuers. Hence, a steady growth of terminals and accepting merchants was the result.

In general, the tokenization approach to security has been chosen for many types of contactless payment systems, this includes NFC based card chips, digital payments like Apple Pay, Google Pay or Samsung Pay. However, for QR payments the use of tokenization should be verified as there are no current standards that govern its use consistently.

Convenience

Convenience was the aspect of many contactless payments system that appealed the most to consumers prior to Covid-19. The ability to either very quickly conduct a transaction or very flexibly conduct a transaction drove consumer adoption. For example, being able to load many payment methods onto a mobile device that users carry with them anywhere increased the appeal of use to consumers.

Thus, when evaluating a particular contactless payment technology with a longer-term outlook the convenience aspect should be emphasized. Given the historical basis, consumers are very likely to be attracted by this aspect as the main driver of adoption again. A financial institutions’ post-Covid planning and investment models for contactless technology should consider this to be a major aspect.

Contactless Payment Categories

When we speak of contactless payment systems, we normally refer to any payment technology that can trigger a payment transaction in the physical space with direct consumer presence, but without direct contact with merchant equipment. Thus, we would exclude online and ecommerce transactions for this purpose.

We will focus on the two mainstream contactless technologies, NFC and QR payments, and review them here. Other contactless payment technologies exist but have not reached widespread adoption so we will only provide brief overview of those.

NFC Payments

Technology

Near Field Communication (NFC) payments are the earliest form of contactless payments that found acceptance in the markets. Generally, two devices are needed and must be near each other to communicate via radio signals. Both the reader (interrogator) and sender (tag) must be within 4cm (1.5in) for the transaction to be initiated. ExxonMobile’s Speedpass is widely believed to be the first implementation of this touch and go type of pay experience that has come to exemplify NFC based contactless payments.

There are two common sub-categories from that technology today; The single card-based sender (tag) and the mobile-phone-based sender (tag). The mobile phone-based application tends to be more flexible allowing consumers to combine multiple cards into one mobile-wallet that is secured with some form with biometric access.

Market

However, NFC signals are not uniform and different standards are used in the Far East (i.e. Japan) rather than in Europe.

NFC payments found early success in developed western markets where the population already had easy access to banking and bank issued card-based tags. However, in countries where the banking system developed later and card-based payments were not common, NFC payments did not flourish.

Thus, today, the market for NFC is mainly concentrated in Europe, Japan, and US.

Activation

The roll out of NFC requires hardware on the merchant and consumer side. The merchant hardware is normally The Rise of Contactless Payments 7leased, and leasing programs have been steady revenue generators for those companies. Whereas, today, the global contactless Point of Sale (POS) terminals market is poised to grow by $5.54 bn during 2020-2024, progressing at a CAGR of 16% during the forecast period, according to research done by Technavio.

However, with the pandemic, the speed of system activation has been a key criterium for selection of the technology. In this context, delivery of hardware, setting up of POS systems and testing connectivity slows down rollouts and potential revenue.

Similarly, requiring consumers to be equipped with supporting hardware may also introduce a friction element, especially in markets where NFC has gained less momentum.

QR Payments

Technology

QR codes are like 3D barcodes. The user scans the QR code via a smartphone and the smartphone, then interprets the barcode and a related website or application may complete the payment process. Like NFC, this can be done very quickly without any contact between smartphone (reader) and the item or display using the QR code.

Normally, QR codes are immutable, meaning that once generated they do not change. However, there are now dynamic smart QR codes, like the ones Xcoobee offers, that can overcome this limitation.

Market

QR codes found strong distribution in markets where banking reach was limited in some form through government or market forces. The QR payment process, in many markets, also exemplifies a jump to direct digital payment, bypassing much of the banking system for purchase transactions. Especially when QR payment systems are connected to mobile wallets the provider of the wallet handles all transaction steps in-system, reducing friction and creating an ease to use and adoption. They have found popularity mainly in China, where AliPay and WeChat pay are gaining dominant market shares.

However, with the advent of COVID and the speed advantages in implementation and cost, other non-traditional markets such as EU and US are seeing dramatic increases in use of QR payments as well.

Activation

Activation of QR code payments commonly requires merchants to simply print codes, which can be accomplished with less hardware. The integration into bank systems is handled via merchant or bank app and the consumer simply requires a smartphone.

While bank offerings in this segment tend to be limited, given the simplified requirements, QR implementation can be quick for merchants to roll out.

Other Contactless Options

There are other contactless payment technologies that are currently competing for market attention and can be grouped into a biometric group and a technology group. The biometric group includes such options as voice, facial or palm recognition-based payments while the technology group includes options like Bluetooth and Farfield-type technologies.

None of these have gained sufficient market share or have execution or security advantages that would push them ahead without concerted efforts from large market-players. Similarly, there is no consumer advantage that would drive a consumer demand-based distribution for these technologies.

NFC vs QR

Which one should you choose to support? Each one of these contactless payment methodologies has advantages and disadvantages. NFC can be nominally faster to use for consumers and more lucrative for banks, but QR codes currently reach a wider market since more phones can read them than those that can read NFC tags.

Operational simplicity and speed also favor QR code activation, but if there is already and existing NFC infrastructure this may become a secondary consideration.

Simply speaking, we are living through unprecedented times, consumers are demanding contactless payment and creating a demand side wave in exchange for safety. How each institution answers this call best will depend on circumstances and context.

Overall, it may be advisable to hedge bets and support both methodologies and offer services based on both. Evaluate customer input, and then, adopt and activate the best option for your financial institution.

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Predictions 2021: The Path To a New Normal Demands Increased Business Resilience and Cost Efficiency 

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Predictions 2021: The Path To a New Normal Demands Increased Business Resilience and Cost Efficiency  8

By Jussi Karjalainen at Valtatech

A global pandemic, wild bush fires, a stock market crash, a presidential impeachment, and presidential elections – 2020 has been a year like no other and the impact on some businesses has been devastating. 2020 has highlighted how vulnerable many businesses are, and what they need to improve to survive and thrive – a topic that I recently wrote about. The key focus for businesses moving into 2020 will be on how they recoup their losses from 2020 and set themselves up for success. With that I mind, here are my 5 predictions on what 2021 will bring for businesses and what they need to be thinking about as we head into a New Year.

Continued Business Disruption – There are some serious global headwinds that businesses are set to face next year. Many countries are likely to go in and out of lockdowns, which will impact on local and global supply chains, consumer, and business spending, as well as overall business confidence. There is also the unknown of how the results of the US Presidential election and final transition of the UK out of the EU will impact global trade relations. Recent talk of a vaccine to stem the COVID-19 pandemic may provide some reprieve, but we predict continued business disruption heading into 2021.

So, how can your business prepare for disruption? Business resiliency is key. Namely your business ability to rapidly adapt and respond to business disruptions. 2020 taught us that finance and procurement operations are key to driving business resiliency. Getting a view and a grip on where your business is spending its money? What can be consolidated and what can be reduced? Having full control and visibility over your finance and procurement operations are key.

Cost Efficiency Should be at the Top of Everyone’s Agenda – If 2020 has shown us anything, it is that we need to have greater control over our cost base. Not least because sales are, largely, harder to come by than ever before. Every organisation should be looking at the return that they are getting for every dollar invested – a simple equation of your total spend divided by your total revenue will give you a high-level overview. The focus for businesses will be on how to improve this ratio. For example, for every dollar spent enables $1.60 in revenue – increasing that number can have a huge impact on your overall profitability.

You can take a few approaches to getting this right: There is the 1% improvement approach – how can you make each process 1% more efficient and reap the benefits of the cumulative impact of those 1% gains. The alternative is to assess a specific process in more detail. Take your procure to pay process as an example. Map out your current process, identify the pain points that take the most time, and build out a business case to drive greater efficiencies in that process. It is a process we have undertaken with several businesses to deliver real bottom line value.

Jussi Karjalainen

Jussi Karjalainen

Konica Minolta Business Solutions Asia recently outlined the results of their procure to pay digital transformation project which “helped us to reduce costs, identify risks and improve value delivery across the business; while providing the visibility and insights my team and I require improving risk mitigation, due diligence processes and governance.”

Public Sector Spending Spree – Most national and state governments have announced large economic stimulus packages to get their economies going again. This will likely continue heading into 2021, with many tenders and grants being made available. Businesses wanting to take advantage of this spending spree need to be mindful of the likely compliance requirements for public sector contracts and grants. To qualify for many public sector contracts or grants, businesses may need to prove they comply with regulations around supply chain sustainability, modern slavery, buy local and national initiatives, diversity, and inclusion, for example.

In order to prove you qualify it helps to have systems and processes in place that can make supply chain mapping and transparency much easier giving you clear visibility over your entire supply chain. This enables you to know exactly where your goods are coming from in your supply chain, from who whilst being able to capture important information relating to compliance around sustainability, modern slavery etc.

Data, Data and even more data – As businesses seek to ensure their business resiliency, the demand and need for more accurate and timely data across business processes will greatly increase. Businesses that can track efficiency at a process level are going to become more cost efficient and future-proof their business. Equally, as business disruption continues, the demand for business agility can only be fulfilled through executives having access to accurate and timely data, which will put more pressure on teams to supply that data.

An effective combination of people, processes and technology can provide hugely valuable and actionable data insights. Considering the source to pay process, having access to data insights, such as invoice processing times, percentage of purchase orders and invoices sent and received electronically, and percentage of managed spend (e.g. spend going through contracts, preferred agreements etc) can reveal some real opportunities to drive efficiencies in your process.

Technology being the answer, rather than the enabler – It is only when the right processes and people are combined together with technology that real transformation can occur. Too often businesses look to technology as an answer to a problem, rather than an enabler to help solve the problem. Picking the technology before truly understanding the process that they are trying to transform has led to many failed and ineffective technology projects over the last 20 years. As businesses find themselves under more and more pressure heading into 2021, businesses will likely continue to make pressured transformation decisions based on fancy, shiny technology, rather than a clear understanding of the outcomes that they are hoping to achieve. Creating unnecessary and avoidable risk into their transformation activities.

Instead, why not conduct an in-depth analysis of your current business requirements through key stakeholder interviews and current process reviews? This can help to deliver valuable insights and resources such as:

  • Key insights into the current processes
  • Identification of key pain points
  • Identification of key levers to drive user adoption
  • Identification of key areas and drivers for financial return on investment
  • Identification of quick wins and longer-term development areas
  • Current state technology landscape map across your processes
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