Payments transfer is a hot subject amongst investors in high-tech. The trail-blazers in Money Transfer at Xendpay have to stay abreast of any new payments technologies world-wide that might improve the experience of people sending money overseas. Jake Holloway, Head of e-Commerce writes about the realities of an “End of Cash”.
Barclays’ recent launch of Ping-it, a mobile App that allows person-to-person transfers, re-energises the talk of an “end of cash”. However is this really possible and do any of the new payments technologies, mobile apps and high-tech start-ups look like they are leading the way in the future of payments
The idea of making a payment using by tapping your phone on a reader, or perhaps even by simply looking at a camera in a shop might sound like a cool way to pay for a sandwich in Pret or at a vending machine, but could you imagine using these methods when buying a bunch of flowers in a street market, or handing out pocket-money?
Cash doesn’t need batteries or a signal. It doesn’t cost anything to use it or accept it. It’s very portable, not easy to forge and it’s accepted everywhere – so it’s a hard act to follow! However, financial institutions, mobile phone manufacturers and network operators, software suppliers and a host of interesting start-ups everywhere are working hard right now to replace the cash in your pocket with something else.
Before we start, it is worth examining the anatomy of a payment. A simple enough concept, but when you remove the use of cash it becomes surprisingly complicated. A payment without cash is a promise to transfer money, made with the assistance of at least one third party – but normally several.
We are all familiar with chip & pin credit card payments, where the payer authorizes a payment by typing their pin number into a point of sale (POS) terminal. In the chip & pin payment model the credit card issuer warrants that the identity of the user is correct, and that they have sufficient funds or credit to make the purchase. So there is an identity verification and live balance check at the moment of payment, followed by a settlement (the vendor gets paid by bank transfer – less any credit card and payment services fees).
Using a chip in your phone instead of a chip in your card is a small leap in technology – as is the replacement of the card reader with the use of NFC (near field communications) devices that work when touched to an NFC reader in the store. Some additional intermediaries may need to be involved – for example the mobile phone manufacturer, network operator, payment services providers and the supplier of any software “apps” that interfaces with the phone.
Google Wallet http://www.google.com/wallet/ is a good example of this kind of payment method – Google Wallet is an app based service that operates on their Nexus S 4G NFC-enabled mobile phone (made by Samsung) and running on the Sprint network in the USA only. It stores your credit card numbers and you can pay for goods purchased at any Mastercard Paypass checkout – of which there are about 140,000 in the USA.
Services like Ping-it from Barclays and Paypal mobile work on a different basis. Behind the ‘future of payments’ hype, the mobile app is simply used to securely communicate with your account once authorized by you – without using clever chips or NFC. So it’s simple and there is an existing customer base signed up to the service. Sending a payment instruction to another person is done by SMS or email – so it works well as a peer-to-peer payment method.
There is a lot of innovation going on in the area of identity authentication. For example, the Payments tech start-ups Square – who are primarily focused on enabling any phone as a payment terminal that accepts cards – and Facecash are proponents of facial recognition as the means of proving who you are. Your face is your signature! The possibility of just walking up to a vending machine and saying ‘I’m Jake Holloway, can I have a can of lemonade’ is completely realistic. So it’s very likely that we will be offered more and more ways in which to ‘authenticate’ – all linked to a service that debits our bank accounts or cards.
It also raises the question whether the new innovative methods of payments, be it via Banks, credit card issuers, Mobile phone companies, Payment service provider start-ups, etc… are really bringing us closer to having a new way to pay for our potatoes? In my opinion there are four problems that have to be addressed before we totally abandon cash;
Problem 1: Do I trust Google, Samsung and some Silicon Valley whizzkids with my money?
First of all, amongst all this tech-led frenzy how about something mundane and very human – trust. Recent reports suggest that the public by-and-large isn’t ready to accept new players in the payments market just yet – with only 19.6% of respondents expressing trust for Google, versus 39.6% for Visa. http://adage.com/article/digital/consumers-trust-google-apple-mobile-payments/229163/ This is not surprising considering that it took two generations before the wider public were comfortable with credit cards – and many still will not use them online for fear of fraud.
Widescale acceptance of new payment methods takes time, but not as long as it takes for old payment methods to wither and die – as you can see by the delays in the end of cheques – first used in 1659 and forecast to end around 360 years later in 2018 at the earliest! http://www.guardian.co.uk/money/2011/jun/18/cheques-future-treasury-minister
Problem 2: Universality
With all the different methods available, paying for a skinny soya-milk latte in Silicon Valley is now probably the most confusing checkout process in the world! If your coffee shop is signed up with Facecash, can you use your Google wallet? Is your NFC phone the right type? Can Square take Diners Club? Or should you just pull out those trusted dollar bills from your pocket? Even Google Wallet is restricted to people with a specific phone on a specific network paying in certain shops only. These new methods and the businesses behind them are not necessarily interoperable – so pulling together a payments infrastructure with the universal acceptance of cash is probably unrealistic.
Lower tech schemes maybe have an edge. Look at M-pesa in Kenya with over 14 Million customers and 2 Million transactions a day – all on the back of basic mobile phones and, importantly, delivered through trusted community-based agents across the country.
Problem 3: Is there a demand for the end of cash?
There is no doubt that more and more people go out shopping without cash – but the queues at the ATMs don’t seem to be getting any shorter. Most of these new methods merely wrap a little high-tech magic around two existing methods; bank transfers and card payments. Will they deliver enough extra benefits over plastic to push cash out the picture? Or will they provide additional alternatives that extend the number of methods by which we can pay for things, transport and peer-to-peer money transfers?
Furthermore, what is in it for the retailer? If your smartphone tells you that the product you are just buying is cheaper next door, how many will want their customers to be quite that well informed right at the point of purchase!
Problem 4: Bad people will have a field day
Since the days of Archimedes working out how to stop people passing off base metals as gold and silver, nothing brings out the bad guys like new payments technology. While some of the new methods may indeed offer better levels of protection than cash or straight cards, the sheer volume and frenzy of scams, phishing, hacking and theft stories could throw up an almost insurmountable barrier of fear.
Losing your phone is already a nightmare. How much worse will it feel if it contains payment methods that could clean you out in milli-seconds?
Conclusion: cashless is the new paperless
Personally I am as convinced by the 21st century promise of a completely cashless society as I was by the 20th’s assurance that a paperless society one was imminent. It was never realistically going to happen, but we sure communicate a lot differently nowadays!
That new payment technologies will change how we transfer trillions of pounds worth of payments is certain. But it would take a superhuman effort of joined up thinking, systems integration, innovation and human behavioral and cultural change to remove cash entirely.
And, even if we could, do we really need to?
Jake Holloway is Head of e-Commerce at Xendpay.com.
The importance of app-based commerce to hospitality in the new normal
By Jeremy Nicholds CEO, Judopay
As society adapts to the rapidly changing “new normal” of working and socialising, many businesses are working tirelessly to ensure that they have all the necessary safety precautions in place to keep trading. One such sector is hospitality, but the way it typically operates now looks very different to what we were used to seeing prior to the pandemic.
Many pubs, restaurants and other hospitality establishments have now been open for a few months since lockdown, providing much relief and enjoyment to many consumers, as well as getting many employees back into work. However, a core component for businesses to maintain trading in these times is to ensure the crucial safety of staff and customers.
Payments are playing an important role in this and we’re seeing payment technology being implemented in new and unique ways to help make the hospitality sector as safe as possible. One such technology is app-based commerce, which allows businesses to interact with customers in ways that minimises physical contact whilst crucially still enabling engagement.
With table service now mandatory and Test and Trace measures continuing, we’re likely to see this technology being increasingly adopted in the months and years ahead. So, let’s take a look at what its use means for the hospitality industry and beyond and how it lines up with the government’s latest advice for businesses within the sector.
Understanding government guidance
Guidance issued from the UK government expands upon advice already offered by the Prime Minister to the hospitality sector, at the point of reopening back in July. It has been stated that all indoor hospitality is limited to table-service, interaction between staff and customers should be minimised as much as possible, masks are being enforced for indoor hospitality staff and the rule around groups of 6 continues.
At the same time, businesses now have a clear duty to support NHS Test and Trace by collecting names and contact details from customers so they can be reached if a customer/worker tests positive. This is a recent mandatory move having previously been guidance.
What’s more, it’s recognised that payments are a practical tool to help companies adhere to these guidelines. Throughout the pandemic it has emphasised that contactless payments are useful for reducing human interaction and touch points – such as PIN pads.
Early on, we saw the payment industry increase the authentication limit for contactless spending limit from £30 to £45 to help reduce cash purchases, cash machines and PIN pad usage. The Government are strongly encouraging the use of contactless payments in the hospitality sector, however, there’s a big part of the solution that they may have overlooked that can help hospitality businesses meet these guidelines with even greater ease – app-based commerce.
Why use apps?
Apps provide a whole host of benefits and are the perfect tool for not only minimising contact, but also ensuring customers are contactable at a later date, if needs be.
While contactless payments eliminate the need for customers to pay using cash, or touch PIN pads, apps can remove physical human interaction at the point of sale altogether. This is because they enable customers to pay ahead or at the table, meaning they don’t need to leave their seats or regularly interact with staff. And done well they can even be a boost for business, enabling more convenient transactions and higher levels of repeat purchase.
When it comes to ensuring that customers are contactable, apps and e-wallets have a real advantage over traditional card-based transactions and anonymous cash payments. They allow companies to retain details about who has attended an establishment at a given time, enabling them to know whether a customer was present while a person known to be carrying the virus was in the vicinity. The communication advantages of apps also allow establishments to manage their footfall and customer flow.
The role of app-based commerce in the new normal
Apps will become more and more important for all types of businesses, as consumers shift their behaviour towards digital. They represent a new ‘real estate’ for retail and other businesses to manage – to present their brand in the right way, to engage customers and drive transactions.
Recently, we’ve seen Apple support this move towards app-based commerce with the launch of App Clips, further bolstering its use as we emerge from lockdown and encouraging safer and hygienic ways to pay.
App Clips are a great way for consumers to quickly access and experience what an app has to offer. They are fast and lightweight so a user can open them quickly and start and finish an experience from an app in seconds. And when they’re done, the business can offer the opportunity to download the full app from the App Store.
We are also seeing a number of hospitality businesses warming towards the use of app-based commerce and doing a great job of implementing it. The technology has already become central to the safe trading operations of big names in the industry such as Caffè Nero and The Young’s Pub, which are great examples of how to make apps work for your business.
As the industry steadily navigates its way through a new normal of operating, we expect that app-based commerce will skyrocket. In fact, we’ve already seen a great number of businesses throughout different industries expressing interest in the payment method, suggesting that it will play a pivotal role in moving forward. It certainly is a great way for businesses to keep staff and customers safe.
Why the FemTech sector might be the sustainability saviour we have been waiting for
By Kristy Chong, CEO & Founder Modibodi ®
Taking single use plastics out of circulation is no easy feat, but the answer might lie closer than we think
FemTech: The Beginnings
The term FemTech was initially coined to describe the powerful offering from tech start-ups as they ventured into developing revolutionary products centred around women’s health needs. Whilst the beginnings were humble, we have seen a whole host of innovations enter the market which have changed the game for women and business leaders around the globe.
Fast forward to 2020, FemTech is an industry predicted to be worth $50 billion by 2025 and a powerhouse that is not just tackling women’s health issues but also helping to solve major environmental and sustainability crisis that we face today.
The fearless female entrepreneurs have founded and grown businesses that are continuing to help women across the globe deal with issues such as fertility, periods, sexual wellness, pregnancy and many others. And the best is yet to come.
It is a Man’s World
Traditionally, both technology and medical sectors have been very slow in tackling women’s issues and notoriously lagged in developing products and tools that address issues predominantly affecting women. Whilst figures show that women spend 29% more on healthcare than men, only 4% of overall R&D funding goes towards developing products for the women’s sector therefore the market is ripe for disruption.
As a woman, a mother and entrepreneur I knew that like many others I had to take matters into my own hands.
Following an incident with incontinence whilst training for a marathon in 2011 after the birth of my second child, I recognised the need to innovate apparel that offered a dignified, supportive and sustainable solution for women to manage leaks from periods, incontinence and everything in between. After two years of product development and over 1000 scientific tests, I founded Modibodi in 2013 with a long term view of breaking taboos, opening minds and offering a reusable, sustainable option for sanitary products that’s not just for women – but for the benefit of all bodies on this planet and the environment too. Now, we’ve expanded on that notion to support all people, including men who suffer incontinence, sweating and chafing, providing them with a reusable, sustainable option with our Modibodi Men range.
As you can imagine, this was far from simple not just due to tech and business sectors being notoriously dominated by men, with figures showing that 98% of VC funding goes towards male founded products but also because we were not just selling a new brand of lipstick or gym-wear, we had created a whole new product category based on talking about things that made people and retailers uncomfortable.
As a social advocate for women’s health issues and rights I knew that I needed to persevere because the amalgamation between technology and feminism is a major force of social change and one that can have wide scale impact on our world.
The Sustainability Story
The sustainability agenda has really taken off in the last couple of years, especially in our war against single use plastic. But it occurred to me very early on that we are not doing enough and there are still areas that need urgent review.
Very early on in the development stage of Modibodi I knew that sustainable sanitary products could be a game changer in eliminating single use plastics from circulation and whilst the world and respective governments were focusing on plastic straws, I felt the change needed to come from numerous angles and streams of consumerism.
The proof of concept was starring us right in the face, the average woman uses an average of 11,000 disposable feminine hygiene products in her lifetime and these convenient products come with an inconvenient environmental cost. They take 500 to 800 years to biodegrade, which means the first ever tampon and pad is still in landfill. Even more alarmingly, 8% of all waste that enters water treatment works comes from period waste, including non-flushable items such as pantyliners.
This is why I believe that the revolutionary innovations that are born out of the FemTech sector have capabilities to be one of the key drivers of the sustainability agenda. There is something remarkably special about a group of purpose driven businesses that can connect with consumers through a collective set of values to drive change and be a force for good.
As most purpose driven business leaders will tell you, the fight never stops as the world evolves and continues to change. The sheer growth in the FemTech sector and the capabilities developed to date have changed millions of lives around the globe.
As an industry and a movement, we’ve also managed to play our part in driving the sustainability agenda and I will argue that actually the wide scale change and unity needed to continue making strides in eradicating single use plastic from our circulation will come from within the powerhouse that is FemTech.
The sheer capacity for change can be easily demonstrated if we look at the granular data and its potential for growth. If just 100,000 young girls use Modibodi alone from the start of their menstrual cycle, this would prevent 1.1 billion disposable hygiene products from ending up in landfill or 1.5 million garbage bags of waste. As of May 2020, our global base of 500,000 customers alone have prevented an estimated 2.5 million garbage bags of disposable hygiene waste from ending up in landfill or flushed into the ocean.
With the FemTech industry growing at a racing speed, I have no doubt that we are at the tipping point of pioneering wave of inventions that will take the agenda further and have the capacity and means to lead the movement. It is up to the trade organisations and world leaders to recognise the potential that such businesses and brands carry in order help to facilitate its growth trajectory.
Limitless possibilities: Delivering disruption with IoT
By Nick Earle, CEO of Eseye
In the past decade, digital companies like Amazon and Netflix have used data to reinvent products and services in ways no-one imagined possible. Shopping and films were not new concepts, but these companies and many others built hugely successful businesses by disrupting existing industries through connected, personalised, data-driven services.
We are on the brink of a similarly disruptive revolution, as the Internet of Things (IoT) starts doing the same for ‘physical’ businesses – from tennis rackets to coffee machines and industrial machinery – allowing them to offer connected, data-driven, differentiated experiences. This is sometimes referred to as the ‘next Internet’ and IDC predicts that in total there will be 41.6 billion connected IoT devices or “things” by 2025.
Access to this incredibly detailed data on every aspect of how the physical world works will create endless disruptive innovations – from both new and existing companies. This presents limitless opportunities, but also severe threats to companies that wait too long.
A decade ago, many predicted this revolution, but it has taken longer than expected. Despite pockets of innovation, many have struggled to deliver successful IoT projects. We have yet to see the IoT equivalent of Netflix.
There are some obvious reasons for this. Many companies with a long heritage in the physical world find digitisation hard to navigate. Moving from selling units via a capex model to managing a continuously connected, data-driven relationship via an opex model is a big shift – involving new technologies, business processes, skills and management metrics. Concerns about how to do this can cause management paralysis where the outcome is often ‘do nothing and wait’. Arguably a worse approach than trying and failing.
It’s also a culture issue. We don’t like change, it’s difficult and we only do it when we have to. The problem is that when you are the market leader your existing financial metrics often disguise the change that your competitors are implementing in the market. A large installed base of customers will keep generating revenue for a long time and it’s often hard, if not impossible, to recognise the new disruptive business models that are winning the next generation of customers. But as the old saying goes, you overtake on the corners not the straights, and the COVID-19 pandemic has accelerated many digital initiatives not slowed them down. Your business model is being disrupted whether you can see it or not and it’s almost certainly accelerated during 2020.
Another reason is much more basic. Due to the fragmented nature of the Mobile Network industry, where multiple players compete with each other with their proprietary SIMs, the holy grail of ubiquitous global cellular connectivity for each and every device via a single embedded eSIM has not been possible. The reality is no network SIM, even from the largest Tier 1 operators, can deliver more than 90% global coverage, even with extensive roaming arrangements. You don’t want a connected lawn mower which is invisible in 10% of cases, or a connected health monitoring device that misses 10% of emergencies. And to fill that connectivity gap you don’t want to have to use a different operator’s SIM – that just adds complexity, cost and kills the business case. If this connectivity barrier can be removed, then the savings in manufacturing and supply chain costs that can be delivered from moving to single global product SKUs will more than justify the investment in IoT pilots and new product rollouts. This is the problem that Eseye solves and we are currently doing it for more than 2,000 customers worldwide.
I’ve spoken exclusively to IoT industry leaders from Microsoft Azure, EY, Thales, Relayr, and The Chasm Group, to understand the opportunities that IoT offers for companies to create disruptive products and services, and the lessons they’ve learnt delivering digital transformation and disruption through connected devices.
Dr Miroslaw Ryba, Global IoT Leader at EY, explained that: “Disruptive IoT is about taking the sum of thousands of IoT sensors – say in a factory – and combining data to deliver transformational insights. And that the next, exciting phase, will be a new data economy.
“There is [already] an agreement that the user gives up their data in return for a service. Imagine what will happen once that data expands to real-world activities. It will allow the development of whole new classes of products and services aligned to customer needs.”
Tony Shakib, Global IoT Business Acceleration Leader, at Microsoft Azure believes that we’re at an inflection point where some companies are taking investment in IoT infrastructure seriously, allowing them to capture meaningful data, and integrate it into their workflow management systems. Here they can start delivering, and acting on, real-time insights.
He said: “Gradually we’re crossing from the experimental phase to mass adoption” he explains. “Once we get there, we’ll see real change. Once you start connecting devices and using data intelligently, the amount of innovation you can do becomes exponential.”
When moving from incremental advances to big disruptive IoT-driven transformation, Shakib believes the key is cultural change.
He explained: “Tech is not the bottleneck – devices, security, connectivity, and cloud platforms are all there if you know where to look. The problem is people struggling to understand the art of the possible.”
VP of IoT at Thales, Andreas Haegele, unpacks the points of consideration including, security, connectivity and process when trying to maximise the benefits of IoT.
“Most business models of the past – and many today – are ‘sell and forget’. IoT connects your products, which changes what you offer. It creates an ongoing connection between you and the customer allowing you to deliver ongoing services and collect data which provides valuable insights.
“However, there are other factors to consider, namely around process and security. Eseye, for example, offers out-of-the-box connectivity which you can embed in an IoT device and it just works, there is no need for setting up new networks, security protocols, certification with mobile network operators (MNOs), etc. IoT needs security to be embedded from the start as security is very hard to retrofit. There must be a unique identity for every device so they can be managed during their lifetime. And you need to make sure software updates can only be accepted by trusted sources.
“Also, built-in connectivity is central to IoT. Each device needs to consider the right type for them, but I expect most will use cellular eventually, since it removes many roadblocks to uptake. If devices over-complicated connectivity, that’s a major turn off for customers who expect seamless, convenient experiences.”
While Peter Van der Fluit, Principal at Chasm Group, said: “Any company that currently makes or operates a physical product needs to be thinking about IoT. If you don’t connect your product to create a differentiated offer, someone else will.
“To be successful in embracing IoT, or any disruptive technology, companies should divide their business into four ‘Zones’ – an approach established by Geoffrey Moore in his book Zone to Win. Two of these Zones focus on innovation, and two on the core business. Each needs a different leadership style, culture, financing and governance.”
With so much disruption and change thrust upon companies, business models are inevitably going to evolve. Josef Brunner, CEO at Relayr, explained to me how IoT is disrupting business models, forever.
Josef said: “IoT is creating whole new ways of thinking for those who manufacture products, enabling them to change how they sell in a way that works better for them and their customers. This is often talked about as moving from selling products to selling services. We’d go further and say that at its best, IoT is about selling outcomes. Rather than charging an hourly or monthly subscription, the manufacturer can sell the value that is delivered.”
But there are pitfalls to be avoided when switching to a model that sells outcomes. Josef explains: “The main mistake companies make is to think of IoT as a technology project, looking at what tech is available and working out where to deploy it. Instead, they should start with the business problem.
Start by looking at what assets you have, and how they could be used to deliver a better experience for customers. Put the customer need at the centre of that offer. Then look at how tech can enable it.”
The inventors of the internet could never have predicted Uber and Netflix. Likewise, we can only guess at what IoT entrepreneurs will come up with once they have access to data from trillions of devices capturing rich data on every aspect of our lives and businesses. But it’s likely to be an even bigger wave of innovation than the first version of the internet unleashed. There really are no limits.
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