More than 400 card experts and key speakers from 50 countries gathered in Marrakesh for the HPS PowerCARD Users Meeting last week (5-7 April 2017) to explore how they can collaborate to create the future of payments.
Payments market in full reconfiguration, HPS tells card experts at 2017 users event
Digitization is reconfiguring the payments landscape and banks, FinTechs and technological activators, such as the e-commerce giants Amazon and Alibaba, must collaborate to “fight cash”.
That’s according to the electronic payments specialist HPS.
Speaking at the company’s biennial PowerCARD Users Meeting 2017 in Marrakesh, 5-7 April, HPS chairman and CEO, Mohamed Horani, said digitization was also driving the sharing economy and new business models.
“Thanks to digitization, the customer is more connected and better informed but also more demanding,” he said.
Horani highlighted the trend to a cashless society with the number of mobile payment users forecast to increase from 250m in 2013 to 450m in 2017. Payment cards, meanwhile remain the leading non-cash instrument, growing by 11.8% in 2014; while cheques suffered a -10% decline.
Horani highlighted new payments eco-systems, which have developed in markets including Sweden and Denmark, where 80% of transactions are already non-cash; plus the latest technology trends including AI and machine learning and the interaction between digital and physical experiences.
Horani told delegates HPS was focused on three pillars: PowerCARD products, providing structured payment solutions; delivery and business models and he revealed the company invested 12% of its annual revenues in R&D.
HPS customers want agility and need to be able to future proof their businesses, he explained. “We need to harness today’s achievements together, to build the right payments model, to help you best serve your customers tomorrow.”
Sebastien Slim, head of marketing and innovation, HPS (France), presented the latest PowerCARD product enhancements and key industry trends. Slim revealed HPS has won its first US customer and has deployed NFC technology for mobile payments in Japan, a top contactless market.
“We are now trying to enter new markets,” Slim told delegates.
Mobile payments, enabled through PowerCARD Tokenization in partnership with Gemalto, a leader in digital security, will be a key future payment technology, said Slim.
The process, in which account information is replaced by an alternate value called a token means issuers, merchants and processors who use them are able to significantly reduce the risk that sensitive cardholder data may be stolen.
Connected cars, as well as cards, are already a possibility, Slim added; referencing Jaguar and Shell’s new in-car payment system, which enables owners who install the Shell app to drive up to any pump at a Shell service station (initially in the UK and then globally) and use the vehicle’s touchscreen to select how much fuel they require and pay using PayPal or Apple Pay (http://media.jaguar.com/news/2017/02/jaguar-and-shell-launch-worlds-first-car-payment-system-just-fill-and-go-your-car-pays).
PSD2 presents a further opportunity and Slim said HPS planned to partner with FinTechs in this arena to develop new PowerCARD APIs. The company will launch a portal in September to showcase the services it can provide with the aim of going live in early 2018.
The growth in the number of payment channels will fuel more transactions but presented challenges, Slim added. “Mobile means payments need to happen in real time – that’s the customer expectation,” he said. Digital technology must also be fit for all generations, including older consumers who are increasingly tech-savvy; while operators must be prepared to cope with new spikes in demand, outside of the traditional Christmas peak, such as enrollment, Slim said.
Retailers consolidate payment platforms to better understand customers and follow their journeys
Retailers are building central payment platforms in order to understand their customers better and follow their shopping journeys, delegates at the 2017 HPS PowerCARD Users Meeting learned.
Laurent D’Amécourt, consultant at payments consultancy, ADN’Co, said his company has researched leading retailers to understand the drivers for central payment platforms and their investment plans.
According to D’Amécourt, retailers want to better monitor their businesses, enhance their security, provide full management at the point of interaction and know their customers along their shopping journey.
On the technology front, D’Amécourt said retailers wanted to enhance their PoS security in order to reduce fraud; since they are liable; ensure PCI compliance and to detect and reduce fraud in real time.
From a marketing perspective, retailers are keen to add new payment channels to the mix and centralise their reporting and data, D’Amécourt added. From a financial point of view, meanwhile, central payment platforms help reduce PoS and processing costs and help to build trust, D’Amécourt said.
Arnaud Crouzet, secretary general at Nexo, the organization set up to drive global card payment standardization and protocols, highlighted the retailers which are launching new payments platforms compliant with Nexo standards.
They include Auchan, which has introduced a pan-European payment solution based on Nexo protocols. Crouzet said there was now demand from Auchan in China and Africa too.
Carrefour has deployed with Nexo standards in Spain and France and is targeting Belgium and Total is live in France, Belgium and Germany.
Based on ISO2022, the Nexo Retailer Protocol, interfaces between the retail PoS system and card payment application; Nexo Fast enables a uniform transaction user experience at the terminal across all payment networks ie it adapts to the user’s card; while the Nexo Acquirer Protocol addresses the interface between an acceptor and an acquirer.
Callum Gibson at IT consulting company DXC Technology, formerly HPE, showcased his firm’s work with a global multi-national retailer, which has invested in a central payment platform. A publicly-listed company, the retailer operates in 50+ countries with 26,000 merchants and posts €5bn payment card transactions on an annualized basis.
According to Gibson, the retailer had six legacy mainframes in operation, multiple operating and reporting models and it lacked commercial and customer insight.
Gibson said his client had a mission to build centralized payment platform but brand consistency was also important.
“We have to reinvent the business model going forward and be able to implement global business rules, including a retail help desk,” said Gibson. The platform was rolled out in the first retail territory in the first half of 2016 and will be introduced to multiple territories in the first half of 2017 with completion in the second half of this year.
According to Gibson, the solution has enabled an opportunity to introduce dynamic pricing across all geographies, several times a day.
Crucially, it has also driven better customer insight for the retailer. “Understanding their customer base and how they move through their outlets is critical,” said Gibson.
Instant payments look to reshape customer experience
Instant payments are the industry’s next frontier and provide an opportunity for banks to reshape the customer experience, according to David Bannister, principal analyst at Ovum. Presenting at the HPS PowerCARD Users Meeting, Bannister tracked the development of instant payments, which have been live in the UK market since 2008, and the volume growth of BACS and CHAPS payments during that time; plus new peer to peer services such as Pingit, Barclays’ mobile payment service that allows users to send and receive money using a mobile number.
Instant payments are a clear focus area for corporate SME banking functions, Bannister said. However, they are part of the digitization process and need to be looked at in the round. “It’s all about moving from the old BACS schemes to real time payments,” he said.
Archie Hesse, chief executive office at GhiPSS, a subsidiary of the Bank of Ghana, presented the company’s Instant Pay service and user benefits.
“Instant Pay is one of two key ways [the other being mobile] of moving from a cash-economy to a cash-lite one,” Hesse said.
Hesse said Instant Pay was “fighting against cash”, which is expensive to process compared with electronic payments. Instant Pay – unlike cash – also enables online transactions, he added.
According to Hesse, an GhiPSS Instant Pay transaction takes between one to two minutes to complete and it is integrated within 18 of the 35 banks in Ghana, which account for 80% of the market in Ghana – 14th among the top 20 fastest emerging economies (The Economist).
The main users are B2B, P2P, B2P and P2B customers, Hesse told delegates. The service benefits individuals because it is an easier way to settle IOUs with a reduced end to end transaction cost. Late payment fines or fees are eliminated and users are able to delay payment until the last minute, aiding convenience; plus it’s secure. The benefits for merchants include instant access to funds, enhanced cash flow, increased revenue, payment assurance and reduced fraudulent activities.
For banks, Instant Pay is a catalyst to innovate, provides a 24/7 service culture, attracts new customers, increases their float levels and delivers a reduction in the frequency of bank/branch visits.
For central banks, Instant Pay drives a reduction in the use of cash, increases the amount of money in the banking system and therefore drives better policies, said Hesse. It increases the number of bankable citizens and enhances transaction monitoring and reporting. The wider economy also benefits, Hesse claimed. Instant Pay helps drive GDP growth, results in a decrease in certain types of crime and an increase in tax receipts, provides enhanced traceability and fuels growth in the FinTech sector.
Implementation did not come without challenges, however. These included integration, cost, ROI and the fact that the switch was irreversible.
GhIPSS took two months to design and implement the project with an initial pilot in four banks. The service is now being actively promoted, Hesse said.
Technology and biometrics help payments industry tackle fraud
Anas Drihany, managing director of the Payment Centre for Africa, a subsidiary of the Popular Bank of Morocco, and Philippe Vinci, managing director at Vinci Advisors, showed how new anti-fraud systems and biometric technologies can help in the fight against fraud.
Drihany said fraud increased by 21% between 2014 and 2015 and fraudulent activity, which is now well planned rather than opportunistic, has migrated from Morocco to West Africa. Drihany presented the PCA’s new anti-fraud system, which provided centralised management of fraud and was built using the expertise of digital natives. The system is based on an analytical model, which monitors behaviour and fraud movement. It scores transactions against a model and will raise suspicions if behaviour deviates too far from the model. As a result, PCA has moved from a reactive to proactive approach to fraud and reduced the cost of operations management by 30%, said Drihany. Four fifths of customers have continued to use their cards over a period of five days following a disaster, Drihany said.
Vinci presented the case for biometric technologies as a logical replacement to passwords. “We all hate passwords – they are things of the past and not secure. They are not useful and need to be strong. A simpler and stronger authentication method is required.”
Smart devices, which incorporate finger print technology and can see, hear and touch you, provide an opportunity for online authentication, locally, said Vinci; adding that the diversity of sensors continues to grow.
Vinci highlighted Mastercard’s new selfie payment technology, which enables cardholders to verify their identity by using the fingerprint scanner on their smartphone or via facial recognition technology by taking a “selfie” photo (http://newsroom.mastercard.com/eu/press-releases/mastercard-makes-fingerprint-and-selfie-payment-technology-a-reality/); and Visa research (https://www.visaeurope.com/newsroom/news/european-consumers-ready-for-biometrics), which revealed 68% of European consumers want to use biometrics for securing payments and 84% would trust biometrics.
Vinci presented the use of voice print technology to tackle fraudsters who target call centres, which are typically weak and easy targets since they rely on caller ID or knowledge-based information, which the fraudster already knows; and they are predicated to helping the user. Using voice records and passive screening can identify previous fraudulent calls, said Vinci.
Banks in the US are now integrating this technology, combining biometric voiceprint and phone print technology, Vinci reported. HSBC has also incorporated voice technology for telephone banking https://www.hsbc.co.uk/1/2/voice-id.
In South Africa, meanwhile, the South Africa Social Security Association, has introduced proof of life verification, using voice activation, for beneficiaries to access their social grants.
Vinci suggested such developments looked set to win further traction since the boom of mobile and sensory technologies in devices is unstoppable. Mobile payments are also unstoppable, he said. Biometrics offer increased security and are supported by more standards, such as FIDO, he added. They also improve the customer experience and provide personalisation by offering user choice.
UK might need negative rates if recovery disappoints – BoE’s Vlieghe
By David Milliken and William Schomberg
LONDON (Reuters) – The Bank of England might need to cut interest rates below zero later this year or in 2022 if a recovery in the economy disappoints, especially if there is persistent unemployment, policymaker Gertjan Vlieghe said on Friday.
Vlieghe said he thought the likeliest scenario was that the economy would recover strongly as forecast by the central bank earlier this month, meaning a further loosening of monetary policy would not be needed.
Data published on Friday suggested the economy had stabilised after a new COVID-19 lockdown hit retailers last month, while businesses and consumers are hopeful a fast vaccination campaign will spur a recovery.
Vlieghe said in a speech published by the BoE that there was a risk of lasting job market weakness hurting wages and prices.
“In such a scenario, I judge more monetary stimulus would be appropriate, and I would favour a negative Bank Rate as the tool to implement the stimulus,” he said.
“The time to implement it would be whenever the data, or the balance of risks around it, suggest that the recovery is falling short of fully eliminating economic slack, which might be later this year or into next year,” he added.
Vlieghe’s comments are similar to those of fellow policymaker Michael Saunders, who said on Thursday negative rates could be the BoE’s best tool in future.
Earlier this month the BoE gave British financial institutions six months to get ready for the possible introduction of negative interest rates, though it stressed that no decision had been taken on whether to implement them.
Investors saw the move as reducing the likelihood of the BoE following other central banks and adopting negative rates.
Some senior BoE policymakers, such as Deputy Governor Dave Ramsden, believe that adding to the central bank’s 875 billion pounds ($1.22 trillion) of government bond purchases remains the best way of boosting the economy if needed.
Vlieghe underscored the scale of the hit to Britain’s economy and said it was clear the country was not experiencing a V-shaped recovery, adding it was more like “something between a swoosh-shaped recovery and a W-shaped recovery.”
“I want to emphasise how far we still have to travel in this recovery,” he said, adding that it was “highly uncertain” how much of the pent-up savings amassed by households during the lockdowns would be spent.
By contrast, last week the BoE’s chief economist, Andy Haldane, likened the economy to a “coiled spring.”
Vlieghe also warned against raising interest rates if the economy appeared to be outperforming expectations.
“It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
Higher interest rates were unlikely to be appropriate until 2023 or 2024, he said.
($1 = 0.7146 pounds)
(Reporting by David Milliken; Editing by William Schomberg)
UK economy shows signs of stabilisation after new lockdown hit
By William Schomberg and David Milliken
LONDON (Reuters) – Britain’s economy has stabilised after a new COVID-19 lockdown last month hit retailers, and business and consumers are hopeful the vaccination campaign will spur a recovery, data showed on Friday.
The IHS Markit/CIPS flash composite Purchasing Managers’ Index, a survey of businesses, suggested the economy was barely shrinking in the first half of February as companies adjusted to the latest restrictions.
A separate survey of households showed consumers at their most confident since the pandemic began.
Britain’s economy had its biggest slump in 300 years in 2020, when it contracted by 10%, and will shrink by 4% in the first three months of 2021, the Bank of England predicts.
The central bank expects a strong subsequent recovery because of the COVID-19 vaccination programme – though policymaker Gertjan Vlieghe said in a speech on Friday that the BoE could need to cut interest rates below zero later this year if unemployment stayed high.
Prime Minister Boris Johnson is due on Monday to announce the next steps in England’s lockdown but has said any easing of restrictions will be gradual.
Official data for January underscored the impact of the latest lockdown on retailers.
Retail sales volumes slumped by 8.2% from December, a much bigger fall than the 2.5% decrease forecast in a Reuters poll of economists, and the second largest on record.
“The only good thing about the current lockdown is that it’s no way near as bad for the economy as the first one,” Paul Dales, an economist at Capital Economics, said.
The smaller fall in retail sales than last April’s 18% plunge reflected growth in online shopping.
BORROWING SURGE SLOWED IN JANUARY
There was some better news for finance minister Rishi Sunak as he prepares to announce Britain’s next annual budget on March 3.
Though public sector borrowing of 8.8 billion pounds ($12.3 billion) was the first January deficit in a decade, it was much less than the 24.5 billion pounds forecast in a Reuters poll.
That took borrowing since the start of the financial year in April to 270.6 billion pounds, reflecting a surge in spending and tax cuts ordered by Sunak.
The figure does not count losses on government-backed loans which could add 30 billion pounds to the shortfall this year, but the deficit is likely to be smaller than official forecasts, the Institute for Fiscal Studies think tank said.
Sunak is expected to extend a costly wage subsidy programme, at least for the hardest-hit sectors, but he said the time for a reckoning would come.
“It’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this,” he said.
Some economists expect higher taxes sooner rather than later.
“Big tax rises eventually will have to be announced, with 2022 likely to be the worst year, so that they will be far from voters’ minds by the time of the next general election in May 2024,” Samuel Tombs, at Pantheon Macroeconomics, said.
Public debt rose to 2.115 trillion pounds, or 97.9% of gross domestic product – a percentage not seen since the early 1960s.
The PMI survey and a separate measure of manufacturing from the Confederation of British Industry, showing factory orders suffering the smallest hit in a year, gave Sunak some cause for optimism.
IHS Markit’s chief business economist, Chris Williamson, said the improvement in business expectations suggested the economy was “poised for recovery.”
However the PMI survey showed factory output in February grew at its slowest rate in nine months. Many firms reported extra costs and disruption to supply chains from new post-Brexit barriers to trade with the European Union since Jan. 1.
Vlieghe warned against over-interpreting any early signs of growth. “It is perfectly possible that we have a short period of pent up demand, after which demand eases back again,” he said.
“We are experiencing something between a swoosh-shaped recovery and a W-shaped recovery. We are clearly not experiencing a V-shaped recovery.”
($1 = 0.7160 pounds)
(Editing by Angus MacSwan and Timothy Heritage)
Oil extends losses as Texas prepares to ramp up output
By Devika Krishna Kumar
NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather.
Brent crude futures were down 33 cents, or 0.5%, at $63.60 a barrel by 11:06 a.m. (1606 GMT) U.S. West Texas Intermediate (WTI) crude futures fell 60 cents, or 1%, to $59.92.
This week, both benchmarks had climbed to the highest in more than a year.
“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.
Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.
“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.
Oil fell despite a surprise drop in U.S. crude stockpiles in the week to Feb. 12, before the big freeze. Inventories fell by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]
The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.
“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.
(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Jason Neely, David Goodman and David Gregorio)
UK might need negative rates if recovery disappoints – BoE’s Vlieghe
By David Milliken and William Schomberg LONDON (Reuters) – The Bank of England might need to cut interest rates below...
UK economy shows signs of stabilisation after new lockdown hit
By William Schomberg and David Milliken LONDON (Reuters) – Britain’s economy has stabilised after a new COVID-19 lockdown last month...
Dollar extends decline as risk appetite favors equities
By Stephen Culp NEW YORK (Reuters) – The dollar lost ground on Friday, extending Thursday’s decline as improved risk appetite...
Bitcoin hits $1 trillion market cap, soars to another record high
By Gertrude Chavez-Dreyfuss and Tom Wilson NEW YORK/LONDON (Reuters) – Bitcoin touched a market capitalization of $1 trillion as it...
Shares rise as cyclical stocks provide support; yields climb
By Saqib Iqbal Ahmed NEW YORK (Reuters) – A gauge of global equity markets snapped a 3-day losing streak to...
Battling Covid collateral damage, Renault says 2021 will be volatile
By Gilles Guillaume PARIS (Reuters) – Renault said on Friday it is still fighting the lingering effects of the COVID-19...
Portable Oxygen Concentrators Market to Register 7.8% CAGR Through 2026; Sales to Surge as Oxygen Therapy Becomes Crucial in Covid-19 Treatments
Portable oxygen concentrator manufacturers are largely concerned with the maintenance of inventories throughout the coronavirus crisis, with optimization of supply...
Cancer Supportive Care Products Market to Reach US$ 32 Bn by 2030; Sales Limited by Complications for Cancer Patients Through Covid-19 Infections
The cancer supportive care products market is anticipated to reach a valuation of US$ 32 billion by 2030. The industry is expected...
Bronchoscopes Sales to Rise 1.5x Between 2018 and 2028; Potential Covid-19 Diagnostic Applications to Generate Lucrative Growth Opportunities
Bronchoscope manufacturers remain focused on development initiatives to improve product functionality and accuracy for higher adoption amid healthcare facilities. The bronchoscopes...
US$ 1.1 Bn Hypoparathyroidism Treatment Market Still in Infancy
Mushrooming incidences of thyroid cancer have amplified the number of thoracic surgeries, thus stimulating growth of hypoparathyroidism treatment market. Future...