Mobey Day 2014
Sirpa Nordlund, Executive Director, Mobey Forum
I was prepared for Mobey Forum’s third annual Mobey Day event to be a lively affair. Bringing banks together with, amongst others, GSMA, chip manufacturers and mobile payment software providers to discuss the future of near field communication (NFC) was always going to ignite debate. What I was less prepared for, however, was just how far and how fast that debate has evolved in the past few months, let alone the last year.
For years, NFC-for-payment services have been hamstrung by deployment complexity and commercial power plays. This year, things are refreshingly different. Wind back the clock to November 2013; Google kick-started a wave of change by including support for host card emulation (HCE) in Android KitKat. Banks and other NFC service providers began to ask a very big question: ‘could HCE replace the SIM-based secure element?’ Or, put another way: ‘could HCE solve our technical and commercial go-to-market problems with NFC services?’ In March, follow-on announcements of support for HCE from Visa and MasterCard, together with EMVCo’s release of its first tokenization framework, confirmed for many service providers that HCE was indeed a serious contender in the market for secure NFC service models.
Wind forward a few short months to October and the HCE debates at Mobey Day have evolved almost beyond recognition. Evangelists were present on both sides, but a broad consensus became apparent on a number of previously contested themes. Firstly, that HCE is a force for good but does not signal the death of the secure element (SE) in NFC services. Neither the SE nor HCE NFC will dominate the NFC services industry, not least because both models present service providers with different sets of advantages and challenges. In 2015, we are likely to see multiple deployment models establish, where the SE (either on the SIM or embedded in the device) will both coexist and cooperate with HCE to form hybrid solutions that can provide enough security for the service in question. This puts the ball firmly back in the service provider’s court. Banks especially, for whom mobile data security has always been a zero-sum game, are now faced with a new question, one that must seem entirely alien: what constitutes ‘enough security’?
And with that the rug is pulled, once again. If banks are to abandon the pursuit of ‘maximum security’ (as delivered via the embattled SE/TSM model) in favour of ‘proportionate security’ (via a service-appropriate blend of HCE/tokenization/SE/software-based security) in order to finally get their solutions to market, they must first decide what an ‘acceptable security risk’ looks like. I fear that this expression will stick in the throat of many a bank’s mobile payments manager in 2015, as they try to explain to a frustrated board why they are now proposing to write-off a fair portion of SE-NFC investment and, at the same time, drop down a security peg in order to enable widespread deployment via an all-HCE or hybrid based solution.
Look to ApplePay and its TouchID biometric authentication for the route through the maze, advised David Birch, Consult Hyperion, who reminded us all not to get too hung up on security: ‘we’re buying coffee here, not launching nuclear missiles’ he argued with characteristic alacrity. ‘Convenience trumps security every time. Every time.’ For evidence, Birch drew on the elegant simplicity of Apple’s biometric TouchID. Sure, fingerprints can be stolen and recreated, but how often is this really going to happen? And even if it did, would the genius thief not have bigger ambitions for this new found power than pick-pocketing iPhones? TouchID’s simplicity and convenience will drive consumer adoption at such a rate that it will dwarf any issues that emerge relative to its security. Indeed so beguiling is TouchID and its ability to authenticate payments via ApplePay, that Birch believes it may hold the power to entice Android defectors back to the iPhone in swathes. Let’s see.
ApplePay featured heavily across the two days of presentations and was met with universal admiration for its model. One notably insightful comment came from Mario Maawad at Caixabank who observed that ApplePay’s value to the whole NFC ecosystem was not only in bringing NFC to all those iPhone users, but by doing so with a user experience so frictionless that consumers will finally realize that conventional forms of payment are indeed inconvenient. This revelation alone will drive a shift in the consumer mindset, he says, and heighten awareness of the mobile channel’s potential to make life that bit easier. That must surely be good for all stakeholders in the mobile industry.
Beyond ApplePay, Mobey Day’s speakers offered a variety of other thought provoking insights for delegates to digest. Kristian Luoma, head of business development at Finland’s OP Pohjola Bank, made a notable distinction between how the next generation of mobile-specific social media platforms make the end-user feel. Facebook’s mobile user experience, according to Luoma, which focuses on connecting people, doesn’t feel anywhere near as good as the instant-response mobile world of WhatsApp, the handset-dedicated messaging platform, which is designed to serve groups of connected people. His point here is that mobile payments must be made to feel good, as well as operate conveniently and securely. In his words: ‘In mobile payments the winners will be those that can make the payment feel as good as sharing a selfie.’ An interesting (and ambitious) challenge for payment providers everywhere.
Despite softening the blows with FIFA and street football analogies, the hard truths delivered by Amir Tabakovic, chair of Mobey Forum’s Mobile Wallet Workgroup, about the disintermediating threat that merchant-oriented prepaid mobile wallets pose to banks, really struck a nerve. Prepaid’s growing utilization as an alternative banking platform, together with its unrestricted regulatory environment and easy integration with merchant loyalty programmes, combine to make it a defining force in the near-term future of mobile wallets, he says. Banks will ignore prepaid at their peril.
There is a string that ties all of these elements together. Mobile financial service providers everywhere now need to focus, above all, on the end-user experience. Today’s ecosystem is teeming with influential, agile and powerful stakeholders, many of which are on a mission to make the cumbersome business of paying for goods vanish completely from the consumer’s mobile shopping experience. If banks don’t move to broaden their horizons and establish a new and visible role in the end-user’s mobile experience, they may find that they too become unfortunate victims of the great ‘payments vanishing act’.
Which of the Mobey Day presentations struck a chord with you? How do you see NFC mobile payments moving forward in the coming months and years? I’d be delighted to hear your thoughts via [email protected] or tweet us @MobeyForum.
Tax administrations around the world were already going digital. The pandemic has only accelerated the trend.
By Emine Constantin, Global Head of Accoutning and Tax at TMF Group.
Why do tax administrations choose to go digital?
Among the many reasons, the most important one is the pressure to perform. Most governments complain that the tax revenues they collect are significantly lower than what should be collected. To increase the collection rate, tax authorities need better insight and access to detailed information.
Another key reason for tax digitisation is the need to address cross-border challenges and the issue of value creation.
“Where is the right place to tax cross-border transactions – is it the country of residence or the country of consumption?” has been a topic of discussion for some time. Adding another level of complexity, many cross-border transactions take place online. For tax authorities, the challenge is the lack of information about the users and the amount of payments made for the activities facilitated by the online platforms. Without such data, identifying the place of consumption is very challenging
Where is tax digitisation at?
Most tax administrations are currently implementing e-reporting (enabling the submission of tax information in an electronic format) and e-matching (correlating the data received from different sources: e.g. both customers and vendors submit information on sale and purchases and the two sources of information are checked and agreed to identify discrepancies). Through e-reporting, tax administrations are able to:
- Obtain real-time or near-real-time data submissions. Instead of waiting until the end of the month for summary tax information, each invoice is electronically communicated to tax authorities when it’s issued. This moves compliance upstream. Tax assessments are supported in real-time or close to it, instead of assessing transactions that have happened in the past. TMF Group’s research has found that 24% of countries surveyed globally require companies to issue tax invoices using technology and send them to tax authorities electronically, without any form of manual intervention. The percentage gets higher in the Americas (where more than 50% of countries have such requirements) and in APAC (where 36% of countries have no adopted this method).
- Share best practices and boost cooperation with other tax authorities. According to a recent OECD report, 15 of 16 tax authorities surveyed use data analytics to drive audit case selection. With national implementations of BEPS (Base Erosion and Profit Shifting) and global tracking and monitoring, digital is a new focal point for the OECD. Tax administrators learned the value of such collaboration from previous projects and are putting that experience to good use by sharing approaches and leading practices.
- Increase the coverage of the tax audit. Tax authorities request more and more data and more and more details during tax audits. Such requirements are not limited to technology companies that may host a platform where their users trade with one another. In some cases, companies have been asked to provide data files. In others, they have even been asked to install tax authority software on their systems.
When it comes to digitisation, it’s important to understand local and regional trends because the level of maturity can be quite different.
In Europe, countries are increasingly adopting SAF-T (Standard Audit File for Tax) submission requirements — long described as the closest to a consistent approach for managing tax audits.
Portugal, France, the Netherlands and Luxembourg are just some of the countries where SAF-T submission is now mandatory.
Digitisation brings benefits but also challenges for companies. In Spain, VAT refunds are suspended until SII (Immediate Supply of Information) submission is fully compliant. In the Czech Republic, the introduction of VAT control statements has led to many formal and informal queries by tax authorities with a required response time of 5 working days. All these requests put pressure on taxpayers to provide accurate tax data to avoid further enquiries.
LATAM is the most mature region in terms of tax digitisation. Latin American countries have adopted a “layering” approach, splitting tax and accounting data into “slices,” each with its own submission schedule, scope and format. Brazil is one of the most advanced countries in this respect. Virtually all accounting and tax data is communicated electronically.
In APAC, China and India have also started their journey towards fully-fledged electronic reporting.
A positive shift
Digitisation makes the tax journey easier, not only for the tax authorities but also for the taxpayer. One obvious benefit is the reduced tax return filing burden. For example in Poland, the submission of the VAT return was replaced by the SAF-T submission.
Based on the amount of data collected, tax authorities in Spain and Australia have created virtual online assistants to help answer tax questions. In India, the authorities are looking at pre-populating the GST return, reducing the amount of time that taxpayers spend preparing it.
Implications for companies
When responding to the electronic requirements of tax authorities, companies have some key considerations.
Data requirements – what will companies need to report, and how? What we see in practice is that:
- Data sits in multiple places and companies need to either aggregate it automatically or reconcile it before extracting it manually.
- Data is inputted manually and – as such – is prone to errors, inaccuracies and incompatibilities.
- Some of the data needs to be manually adjusted outside the normal transactional cycle (e.g. output VAT on goods provided free of charge)
If a company faces any of the situations described above, the challenge will be to aggregate and validate the data before reporting it.
Processes – do current processes allow companies to collect all data that is needed? Often, the data collection processes do not allow for consistency or for storage of all relevant data. Processes might need to be adjusted to make sure that the right level of data is in place.
Technology – are the company’s current systems appropriate for reporting purposes? Existing software might not allow for accounting records to be digitally linked.
Tax reporting process – is the tax reporting process fit for purpose? As described above, tax resources need to be moved to the front-end of the accounting process: data needs to be accurate when entered into the system.
Companies that wish to mitigate these problems should follow these steps:
- Understand local requirements.
- Identify the required data sources and strive for a global standard. Looking for local solutions will not help you deal with the digitised world.
- Create a library of tests – it’s believed that 70% to 80% of national revenue authority requirements are similar.
- Prepare to respond to tax queries – as tax authority scrutiny and testing moves into real or near-real time, so must the response.
Digitisation is very much a global trend, more and more countries are introducing it, and it’s seen as a safe solution to reduce the tax gap. In the short-term digitisation may bring complexity, because it will affect how a company’s accounting and tax functions are organised. But in the long term, once processes are automated, it will save companies time and effort – and allow them to stay ahead of the demands of tax authorities.
The ever-changing representation of value
By Vadim Grigoryan, Partner, Lunu Solutions
Ask a selection of people about cryptocurrencies and you’ll likely receive a wide range of answers. Some will wax lyrical about the huge potential of the underlying infrastructure that supports them, while others will dismiss them as nothing more than a worthless speculative bubble.
Cryptocurrencies have often been described in this way, mainly because – according to their opponents – they aren’t backed by tangible value. This is an argument that could easily be dismissed as very short-sighted, particularly if we remind ourselves that our current currencies all rely on trust – not exactly the most tangible of assets.
As Kabir Sehgal, a bestselling author and former JP Morgan vice-president, said: “In order to deal in money, humans must be able to think symbolically”. Financial history teaches us that money, in its first intent, was almost never meant to have intrinsic value – but to be a representation of it. For example, the porcelain-like shell of the cowry circulated around the globe for 4,000 years – longer than any other currency in the history of money. And its value was perceived not on its intrinsic utility, but on its beauty. Indeed, intrinsic value has long stopped be a measure of the real value of money. Let us not forget that each individual banknote costs a fraction of what it’s worth to produce – a $100 bill costs around 12 cents.
Money first appeared from the original evolutionary need to eat and survive by exchanging energy with another. That is why money has become whatever represents that energy: first food commodities – such as barley, cacao beans or salt – and then the tools to cultivate them. The symbolic distancing of money from its real value has developed over the years into coins, paper currency and mobile payments. Since money is fundamentally a mental abstraction of symbolic representation of value, what money is and what it will be can be is limited only by human imagination. Could something as invisible and intangible as cryptocurrencies be the next step?
Building value through trust
Something that has value should check two boxes: scarcity and utility. Scarcity of cryptocurrencies is often guaranteed by their design, in terms of a finite or limited supply (e.g. Bitocoin has a set cap of 21 million coins). Their utility is already embedded in the divisible nature of cryptos (unlike gold, which is very difficult to use transactionally, you can buy a coffee, a ferrari or a house with bitcoins). As such, the potential of cryptos to be a more efficient currency than what we already have would further increase with the wider adoption of digital currencies in retail.
We know that the representation of value has changed over time and is a fast-moving one in our society. That’s one reason why the concept of ‘money’ is much more abstract and complicated than most people realise.
But one thing that has never changed throughout the long evolution of money is the importance of trust. The reason money works is because people trust in its value; this is a key rationale behind most currencies – including cryptos. In fact, one of the key selling points of cryptocurrency is that it is built specifically on trust.
Although they lack the legal and institutional backing of traditional financial services, cryptocurrencies provide trust through technology. Blockchain technology enables the use of a distributed and immutable ledger of records, providing total transparency and making every transaction tamperproof. Data is decentralised and encrypted so that it can’t be interfered with or changed retrospectively. The crypto sphere is also intrinsically democratic. There is no central authority and no individual entity can change the rules of the game, which protects against government interference and makes it almost impossible to lobby private interests.
So, with this in mind, why are cryptocurrencies still largely used as an asset rather than a means of payment? It’s mainly because the real-life economy is still lagging in terms of providing crypto-based payment solutions. Many stores still fear accepting cryptos as a means of payment – whether due to technical limitations or concerns around fees and exchange rates – creating a vicious circle reinforcing the speculative nature of cryptos as assets that are just bought and sold.
We believe it’s time to break this circle and move towards a new financial model that accepts cryptos as a means of payment. It’s time for cryptocurrencies to be appreciated for the value they provide.
Recognising crypto personas
Our research into the ever-growing crypto community has uncovered an ecosystem of global citizens that share a philosophy; one pegged to a thirst for freedom, equality, inclusion and global interaction. For example, they are actively involved in social causes and place a high value on social responsibility for individuals and companies.
We also identified several different persona groups within that ecosystem, all of which have varying degrees of influence in the community.
- Hamsters: this group is enthusiastic about cryptos, but lacks either the wealth or knowledge to shape the market or effectively navigate it.
- Geeks: comprised of tech-savvy specialists who expect others to be up to their level of technical expertise
- Cool cucumbers: a group of wealthier individuals focused on the investment opportunities and less emotionally involved with cryptos as a way of life
But the most powerful and engaged of the various user groups we identified, is the one containing individuals who have the financial capital and technical knowledge to drive and shape the future of the market – the Apostles. They are the community gurus, the public figures and the influencers who aren’t afraid to voice their opinions. Indeed, their minds have the power to drive widespread adoption of cryptos.
Over the coming years, this cohort of individuals will continue to grow and impose its expectations on retailers and stores. They understand the concept of money as a representation of value and recognise the role that secure, decentralised and globally connected cryptocurrencies can play in the existing economy.
If money is a symbol of value, this community appreciates the need for other symbols that represent other values in the world of tomorrow – such as transparency, empowerment and the end of the abuses of power that we have seen in the past.
Ultimately, although cryptocurrencies have been inching their way into the mainstream steadily since their introduction in 2009, the main stumbling block has been how to use them in everyday life. The good news is that we are during a transition. Trust is continuing to build, and the ‘value’ barrier is slowly being overcome. There is light at the end of the tunnel – driving cryptocurrencies and other forms of digital money forwards as the next step in money’s ongoing evolution.
Revolut Junior introduces Co-Parent – teach children about money together
- Premium and Metal customers can invite a team mate to jointly manage their child’s Revolut Junior account
- Setting Tasks, Goals and topping up up Allowances can also be done by a Co-Parent
- Lead and Co-Parents both have full visibility and oversight of the child’s account
Revolut has today announced that parents can now add a Co-Parent to supervise their child’s Revolut Junior account and make learning about money easy and fun together, because teamwork makes the dream work.
Those on paid plans (Premium and Metal) will benefit from the new Co-Parent feature at no extra cost. The lead parent can invite a Co-Parent to join Revolut on any plan, including a Standard plan. The Co-Parent can be another family member, carer or guardian who is responsible for the financial wellbeing of the kids.
Parents and guardians can use Revolut Junior to teach their little ones important lessons about finances and responsibility so they become more informed with each passing day. Both the lead and Co-Parent can use Tasks to teach children the value of money, Goals to help them learn to save and top up Allowances when they deserve a reward or just their weekly pocket money. Both will have full oversight of the child’s Revolut Junior account.
To add a Co-Parent to Revolut Junior, the lead parent can head to the Junior tab to find the Co-Parent invite link at the bottom of the screen.
Revolut Junior’s five top tips for parents/guardians to make learning about money fun
- The power of together: Utilise the power of your joint experience and arrange a time or schedule a regular monthly meeting to sit down as a family to answer any money questions your kids may have.
- Set your own Goals: Learning the usefulness of savings is a valuable life lesson that will benefit kids when they hit adulthood. So if your child has been begging for a new game or toy, then encourage them to create Goals to save up faster and more steadily. Parents can add to it or children can choose to fund it from their allowances or by completing tasks, giving them some financial independence, but with full parental oversight!
- Sharing is caring: Show your child your app and how you use it to manage money so they see how the ‘grown-ups’ do this. Perhaps take a look at Budgets, and explain your reason for using this.
- Cherish your belongings: Get your child to put their top 10 favourite possessions in front of them and ask them to tell you why they picked each one. Explain the importance of selecting items they really like instead of comparing them with what their friends have.
- Money matters: Inspire your child to take some time for themselves to go through their purchases and expenditures in-app and use this time to reflect on if they still use all these items or if the buys were a good use of money.
Felix Jamestin, Head of Premium Product at Revolut, said: “We have added the Co-Parent feature to Revolut Junior so parents, guardians and carers alike can come together to teach their kids valuable skills for life. We have made sure that those with unconventional or multigenerational families will also be able to use this, so not only parents but grandparents, carers or members of their wider family can also support their child through their financial education with Revolut Junior.”
Revolut Junior’s Co-Parent feature is currently available to all Revolut Premium and Metal users in the EEA and the UK. It’s designed for kids aged 7-17, providing an account for children to use, controlled by their parents or guardians. So far over 270,000 kids have signed up to Revolut Junior. Revolut Junior has just launched in Australia, and plans to launch the product in Singapore and Japan in the near future.
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