Imagine taking a regular smartphone and turning it into a payment acceptance device with a simple app download. That’s the utopian dream many companies are chasing today and it could bring huge benefits to the payments ecosystem, merchants and consumers as card and mobile payments continue to grow.
For small transactions, accepting a payment could work in much the same way as traditional terminals do for contactless card or mobile payments; using the RF/NFC rails with no need for an additional PIN pad or external device. For larger transactions, the security of the transaction needs to be strengthened by enabling PIN entry on the mobile device itself. This is commonly known as PIN-on-Mobile or PoM, as Visa and Mastercard have referred to it, or as PIN-on-Glass.
Targeting Micro Merchants
Historically, if you look at the micro merchant space where people are doing a few transactions a week or even month, they don’t want to spend a few thousand dollars on a full-blown POS or a few hundred dollars on a payment terminal but accepting cards is increasingly important to maximise sales.
This makes micro merchants the ideal candidates for turning a regular mobile phone into a payment device. They deal primarily in cash so getting them to accept payments would open a new market to the card issuers. Additionally, micro merchants tend to process low-value purchases which typically have a low amount of fraud. When you also consider that as of April this year there are already 108.4m contactless cards in circulation in the UK alone it’s no wonder the card issuers see this as a significant opportunity.
Jeremy Gumbley, CTO at Creditcall
Card Issuers Seek to Defend Territory
For further evidence of this opportunity, we can note how Visa and Mastercard have relaxed their stance on PIN standards, which have historically progressed hand-in-hand with PCI PTS (PIN transaction security) — an onerous, heavy-weight, albeit important, security standard. The brands have always deemed PIN security important and there was a time when the notion of accepting a PIN on a consumer mobile phone would have been difficult to talk about, let alone get approved.
It’s possible that some of this willingness to evolve is being driven by the Asian market, where we see alternative and unique payment methods being adopted and becoming very popular. With the widescale adoption of mobile phones, and the use of NFC and QR codes for payments, the card brands most likely see a threat to their business model and, in a defensive move against potential disruptors, are wisely embracing the spirit of mobile.
Obstacles to PIN-on-Mobile
Let’s start with the technology, one of the biggest (and most obvious) challenges with mobile devices is that they’re insecure. iPhones and Android phones can be jailbroken/rooted. How can we make these devices secure or be confident enough that a consumer device can accept PIN entry?
Companies are working on a wide range of ideas and the winning formula will likely combine numerous layered security measures to limit the attack surface as much as possible. For instance, scrambling the numbers on a screen’s PIN pad makes it more difficult for malware to understand what tap on the screen corresponds to what number. This, combined with measures like point to point encryption and utilising the hardware security already present in many devices will also be key. We also see the success to payment tokenisation for mobile payments being extended to cards as this would negate the effect of any malware on the device, rendering any data captured useless to fraudsters.
Additionally, the industry is still waiting for data from trials that will reveal how customers perceive this change. We can invent all the technology we like, but if consumers don’t feel safe, don’t know how to use it, or it’s too radical, the project will end before it begins.
Finally, such a move can be frightening to the companies involved. Encouraging shoppers to enter sensitive information on standard consumer devices may have huge benefits, but the first time someone compromises it, it’s going to be toxic news that will harm reputations.
So, what’s next?
Fundamentally, close collaboration is essential to the successful future of this technology. We need to look very closely at the data from the trials in Australia, Poland and the UK to identify the best route forward, the potential security challenges and consumer attitudes. Larger trials can then follow. It is important to remember though that this technology will be subject to all manner of attacks, both ethical and otherwise. So, it is important that the industry learns from each of these and adapts quickly.
Beyond the business opportunity, though, we’re all consumers ourselves and this shift is just another example of the continuous evolution of the payment technology industry. We can all appreciate improved ease of use and new functionality that enhances our daily lives. PIN-on-Mobile is poised to do both, we as an industry just need to get it right.
Sunak to use budget to expand apprenticeships in England
LONDON (Reuters) – British finance minister Rishi Sunak will announce more funding for apprenticeships in England when he unveils his budget next week, the government said on Friday.
Employers taking part in the Apprenticeship Initiative Scheme will from April 1 receive 3,000 pounds ($4,179) for each apprentice hired, regardless of age – an increase on current grants of between 1,500 and 2,000 pounds depending on age.
The scheme will extended by six months until the end of September, the finance ministry said.
Sunak will also announce an extra 126 million pounds for traineeships for up to 43,000 placements.
Sunak’s March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown, but he will also probably signal tax rises ahead to plug the huge hole in the public finances.
Sunak is also expected to announce a “flexi-job” apprenticeship scheme, whereby apprentices can join an agency and work for multiple employers in one sector, the finance ministry said.
“We know there’s more to do and it’s vital this continues throughout the next stage of our recovery, which is why I’m boosting support for these programmes, helping jobseekers and employers alike,” Sunak said in a statement.
(Reporting by Andy Bruce, editing by David Milliken)
UK seeks G7 consensus on digital competition after Facebook blackout
LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.
Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.
“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.
“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”
Dowden said recent events had strengthened his view that digital markets did not currently function properly.
He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.
“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.
Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.
“Nick strongly agreed with the Secretary of Stateâ€™s (Dowden’s) assertion that the governmentâ€™s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.
Britain will host a meeting of G7 leaders in June.
It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.
The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.
Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.
(Reporting by William James; Editing by Gareth Jones and John Stonestreet)
Britain to offer fast-track visas to bolster fintechs after Brexit
By Huw Jones
LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.
Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.
“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.
Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.
Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.
The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.
“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.
Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.
The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.
It also recommends more flexible listing rules for fintechs to catch up with New York.
“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.
“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”
Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.
“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.
A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.
“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.
The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).
“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.
($1 = 0.7064 pounds)
(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)
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