Urs Gubser, Head E-Commerce Strategy at SIX Payment Services, explains what is behind the Internet of Payments in his latest Reality Check.
We have become accustomed to the term Internet of Things (IoT) as more and more of us interact with an increased number of connected devices as part of our everyday lives.
Today, there are more objects enabled with Internet access than ever before – from smartwatches and kitchen appliances to vehicles. Intelligent devices can, in principle, do all sorts of things independently. But there is a problem; to act truly independently they must also be able to carry out financial transactions. The IoT can only realise its full potential by allowing devices to transact with one another – with the user’s agreement of course. For example, a connected car could communicate with the enabled payment automatically when entering a car park. This would record the time of entry and on exit issue an automatic invoice to the vehicle. Depending on the instructions of the user, this amount can then be settled manually or automatically, or it might even be possible that the car needs to ask for authorisation over a certain amount. . This type of payment system can, in principle, be extended to all connected devices – and this in fact is what Internet of Payments is all about.
Check 1: Does the Internet of Payments already exist?
The answer to this is not as straightforward as it may seem. Elements of IoP have existed for some time, not least in the areas of the IoT in which SIX is actively involved. A large-scale implementation of payment functions in the majority of connected devices is not yet a reality.
Approximately two years ago, Amazon introduced the so-called Dash Buttons, whereby customers could order certain pre-defined products simply by pressing a button. By giving consumer this auto ordering capability, in principle, any device can become part of the Internet of Payments. However, in March 2018 a court in Germany ruled that the buttons (at least in their current form) contravened German law. The reason given for the ruling was that customers would not be informed about the purchase price of the product before the transaction was completed as the Dash Buttons have no display. In addition, when pressing the button customers may no longer be aware of exactly what product they once linked the button with. Amazon has not accepted the ruling and plans to appeal. The dispute however, has revealed that fundamental issues need to be clarified before the Internet of Payments can become a natural part of our lives.
Check 2: What are the concepts for the future?
The Amazon Dash Buttons are a simple solution, but not a comprehensive one. Rather than this type of retrofitting, payment functions should be considered at the earliest point in the development of a device. Above all, they must ensure that users always retain control over purchases that machines make on their behalf.
Effective encryption and regular information for customers during the ordering process are essential elements. Integrated authentication measures, from simple PIN entry to biometrics, prevent fraud and increase customer confidence in the technology. Companies should also recognise the limitations of the new possibilities as it makes little sense to integrate payment functions indiscriminately into every device. Used appropriately, they can generate additional revenue for companies while simplifying customer journeys.
Check 3: What impact does the Internet of Payments have on market development?
One thing is certain – the Internet of Things and the ever-increasing interconnectedness of the world will continue to remain a megatrend over the next few years. Gartner’s technology analysts recently predicted there will be approximately 20 billion connected devices by 2020. Each of them is theoretically an additional touchpoint in a customer journey. Even though it does not make sense to integrate a payment function into every single device, there is still a huge number remaining where this step promises enormous gains.
Today, price is often the determining factor of a purchase however in the future customers will increasingly choose the product, which in fact they do not have to choose themselves, because the decision will be made automatically. In other words, convenience will triumph over cost! In this new world, market share will be acquired not by price but through exclusive partnerships. Providers who are not prepared for the new consumer environment are likely to suffer serious losses.
The success of the Internet of Payments (and the companies behind them) depends on the convenience it can offer to customer. The user experience is not simplified if x-digits of a PIN number must be entered to authorise each transaction.
Data protection will also play an important role. For merchants, pull-payments such as direct debit are particularly interesting because it can be automated very easily. However, customers are becoming ever more cautious about providing their personal data. Therefore in the future, push-payments, which are instigated by the customer and where they retain full control, will be automated too. Through these developments, merchants are likely to face a variety of payment methods in the future which means that solutions that can master the entire spectrum of payments and enable secure management via an integrated platform are vital.
The world of payments is becoming ever more complex and this is both an opportunity and a risk. The fact that the payment process no longer requires a physically wallet often increases the willingness of customers to spend. However, if merchants fail to adapt to the new technologies that power the payment process they run the risk of losing segments of their customer base to the innovators.
Building strong collaborative relationships with a professional service provider which has a broad spectrum of experience in different markets and industries and can provide sound advice provider can be of advantage as we move rapidly to an ever more connected and enabled world.
Oil extends losses as Texas prepares to ramp up output
By Ahmad Ghaddar
LONDON (Reuters) – Oil prices fell from recent highs for a second day on Friday as Texas energy firms began to prepare for restarting oil and gas fields shuttered by freezing weather.
Brent crude futures were down $1.16, or 1.8%, to $62.77 per barrel, by 1150 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell $1.42, or 2.4%, to $59.10 a barrel.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude oil production and 21 billion cubic feet of natural gas, according to analysts.
Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.
However, firms in the region on Friday were expected to prepare for production restarts as electric power and water services slowly resume, sources said.
“The market was ripe for a correction and signs of the power and overall energy situation starting to normalise in Texas provided the necessary trigger,” said Vandana Hari, energy analyst at Vanda Insights.
Oil fell despite a surprise fall in U.S. crude stockpiles in the week to Feb. 12, before the 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 both nations returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons.
While the thawing relations could raise the prospect of reversing sanctions imposed by the previous U.S. administration, analysts did not expect Iranian oil sanctions to be lifted anytime soon.
“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,” StoneX analyst Kevin Solomon said.
(Additional reporting by Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; editing by Jason Neely)
Analysis: Carmakers wake up to new pecking order as chip crunch intensifies
By Douglas Busvine and Christoph Steitz
BERLIN (Reuters) – The semiconductor crunch that has battered the auto sector leaves carmakers with a stark choice: pay up, stock up or risk getting stuck on the sidelines as chipmakers focus on more lucrative business elsewhere.
Car manufacturers including Volkswagen, Ford and General Motors have cut output as the chip market was swept clean by makers of consumer electronics such as smartphones – the chip industry’s preferred customers because they buy more advanced, higher-margin chips.
The semiconductor shortage – over $800 worth of silicon is packed into a modern electric vehicle – has exposed the disconnect between an auto industry spoilt by decades of just-in-time deliveries and an electronics industry supply chain it can no longer bend to its will.
“The car sector has been used to the fact that the whole supply chain is centred around cars,” said McKinsey partner Ondrej Burkacky. “What has been overlooked is that semiconductor makers actually do have an alternative.”
Automakers are responding to the shortage by lobbying governments to subsidize the construction of more chip-making capacity.
In Germany, Volkswagen has pointed the finger at suppliers, saying it gave them timely warning last April – when much global car production was idled due to the coronavirus pandemic – that it expected demand to recover strongly in the second half of the year.
That complaint by the world’s No.2 volume carmaker cuts little ice with chipmakers, who say the auto industry is both quick to cancel orders in a slump and to demand investment in new production in a recovery.
“Last year we had to furlough staff and bear the cost of carrying idle capacity,” said a source at one European semiconductor maker, who spoke on condition of anonymity.
“If the carmakers are asking us to invest in new capacity, can they please tell us who will pay for that idle capacity in the next downturn?”
The auto industry spends around $40 billion a year on chips – about a tenth of the global market. By comparison, Apple spends more on chips just to make its iPhones, Mirabaud tech analyst Neil Campling reckons.
Moreover, the chips used in cars tend to be basic products such as micro controllers made under contract at older foundries – hardly the leading-edge production technology in which chipmakers would be willing to invest.
“The suppliers are saying: ‘If we continue to produce this stuff there is nowhere else for it to go. Sony isn’t going to use it for a Playstation 5 or Apple for its next iPhone’,” said Asif Anwar at Strategy Analytics.
Chipmakers were surprised by the panicked reaction of the German car industry, which persuaded Economy Minister Peter Altmaier to write a letter in January to his counterpart in Taiwan to ask its semiconductor makers to supply more chips.
No extra supplies were forthcoming, with one German industry source joking that the Americans stood a better chance of getting more chips from Taiwan because they could at least park an aircraft carrier off the coast – referring to the ability of the United States to project power in Asia.
Closer to home, a source at another European chipmaker expressed disbelief at the poor understanding at one carmaker of how it operates.
“We got a call from one auto maker that was desperate for supply. They said: Why don’t you run a night shift to increase production?” this person said.
“What they didn’t understand is that we have been running a night shift since the beginning.”
NO QUICK FIX
While Infineon, the leading supplier of chips to the global auto industry, and Robert Bosch, the top ‘Tier 1’ parts supplier, both plan to commission new chip plants this year, there is little chance of supply shortages easing soon.
Specialist chipmakers like Infineon outsource some production of automotive chips to contract manufacturers led by Taiwan Semiconductor Manufacturing Co Ltd (TSMC), but the Asian foundries are currently prioritising high-end electronics makers as they come up against capacity constraints.
Over the longer term, the relationship between chip makers and the car industry will become closer as electric vehicles are more widely adopted and features such as assisted and autonomous driving develop, requiring more advanced chips.
But, in the short term, there is no quick fix for the lack of chip supply: IHS Markit estimates that the time it takes to deliver a microcontroller has doubled to 26 weeks and shortages will only bottom out in March.
That puts the production of 1 million light vehicles at risk in the first quarter, says IHS Markit. European chip industry executives and analysts agree that supply will not catch up with demand until later in the year.
Chip shortages are having a “snowball effect” as auto makers idle some capacity to prioritize building profitable models, said Anwar at Strategy Analytics, who forecasts a drop in car production in Europe and North America of 5%-10% in 2021.
The head of Franco-Italian chipmaker STMicroelectronics, Jean-Marc Chery, forecasts capacity constraints will affect carmakers until mid-year.
“Up to the end of the second quarter, the industry will have to manage at the lean inventory level,” Chery told a recent Goldman Sachs conference.
(Douglas Busvine from Berlin and Christoph Steitz from Frankfurt; Additional reporting by Mathieu Rosemain and Gilles Gillaume in Paris; Editing by Susan Fenton)
Aussie and sterling hit multi-year highs on recovery bets
By Tommy Wilkes
LONDON (Reuters) – The Australian dollar rose to near a three-year high and the British pound scaled $1.40 for the first time since 2018 on optimism about economic rebounds in the two countries and after the U.S. dollar was knocked by disappointing jobs data.
The U.S. currency had been rising in recent days as a jump in Treasury yields on the back of the so-called reflation trade drew investors. But an unexpected increase in U.S. weekly jobless claims soured the economic outlook and sent the dollar lower overnight.
On Friday it traded down 0.3% against a basket of currencies, with the dollar index at 90.309.
The Aussie rose 0.8% to $0.784, its highest since March 2018. The currency, which is closely linked to commodity prices and the outlook for global growth, has been helped by a recent rally in commodity prices.
The New Zealand dollar also gained, and was not far off a more than two-year high, while the Canadian dollar rose too.
Sterling rose to $1.4009 on Friday, an almost three-year high amid Britain’s aggressive vaccination programme.
Given the size of Britain’s vital services sector, analysts say the faster it can reopen the economy, the better for the currency. Sterling was also helped by better-than-expected purchasing managers index flash survey data for February.
The U.S. dollar has been weighed down by a string of soft labour data, even as other indicators have shown resilience, and as President Joe Biden’s pandemic relief efforts take shape, including a proposed $1.9 trillion spending package.
Despite the recent rise in U.S. yields, many analysts think they won’t climb too much higher, limiting the benefit for the dollar.
“Our view remains that the Fed will hold the line and remain very cautious about tapering asset purchases. We think it will keep communicating that tightening is very far off, which should dampen pro-dollar sentiment,” said UBS Global Wealth Management strategist Gaétan Peroux and analyst Tilmann Kolb.
ING analysts said “the rise in rates will be self-regulating, meaning the dollar need not correct too much higher”.
They see the greenback index trading down to the 90.10 to 91.05 range.
The euro rose 0.4% to $1.2134. The single currency showed little reaction to purchasing manager index data, which showed a slowdown in business activity in February. However, factories had their busiest month in three years, buoying sentiment.
The dollar bought 105.39 yen, down 0.3% and a continued retreat from the five-month high of 106.225 reached Wednesday.
(Editing by Hugh Lawson and Pravin Char)
Portable Oxygen Concentrators Market to Register 7.8% CAGR Through 2026; Sales to Surge as Oxygen Therapy Becomes Crucial in Covid-19 Treatments
Portable oxygen concentrator manufacturers are largely concerned with the maintenance of inventories throughout the coronavirus crisis, with optimization of supply...
Cancer Supportive Care Products Market to Reach US$ 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...
Asia Pacific Plastic Additives Market Research Report by Type, by Production Technology, by Application, by Function – Global Forecast to 2020 – Cumulative Impact of COVID-19
The market report envelopes an all-in information of the global Asia Pacific Plastic Additives market and the nature of the market growth...
Comprehensive Report on Metal Stamping Market 2021 | Trends, Growth Demand, Opportunities & Forecast To 2025 | American Industrial Company, Martinrea International Inc., Magna International Inc
The market report envelopes an all-in information of the global Metal Stamping market and the nature of the market growth over the foreseeable...
Rheology Modifiers Market 2021 Segmentation and Analysis by Recent Trends, consumption by Regional data, Development, Investigation, Growth by to 2026
The market report envelopes an all-in information of the global Rheology Modifiers market and the nature of the market growth over the...
Fine Hydrate Market | Present Scenario, Key Vendors, Industry Share, and Growth Forecast up to 2026 | Nabaltec AG, Huber Engineered Materials, Hindalco Industries Limited
Future Market Insights in this report on the fine hydrate market has drawn an in-depth picture of the global market....
Ion Exchange Resins Market 2021 | Latest Trends, Demand, Growth, Opportunities & Outlook Till 2026 | Top Key Players: The Dow Chemical Company, Lanxess Ag, Purolite Corporation
An in-depth analysis of the current ion exchange resins market along with an effective evaluation of the future avenues of...
Rough Terrain Cranes Market Outlook 2016-2026| Global Growth Analysis and Forecast Report with Key Players – Liebherr Group, Terex Corporation, Tadano Ltd.
Future Market Insights presents a comprehensive analysis of the Middle East and Africa rough terrain cranes market in its new...