Simon Pepper, Head of Product at Tola
The second Payment Services Directive, more commonly known as PSD2, marks a significant change for the payments landscape as we know it, and subsequently, the digital commerce ecosystem. It will allow for the integration of Third Party Providers (TPPs) into the FCA’s regulatory framework, which will bring new levels of transparency and security in online money transfer, and provoke a fresh wave of competition and innovation in payment services.
We’ve seen a real shift in the payments landscape in the past few years, with each development making payments easier and quicker, possible from any location and via range of difference devices. As the mobile phone becomes an essential item for most people today, it’s no surprise that it’s become a key method of choice for making payments. In fact, 74% of British consumers manage their money or make payments using a mobile device.
As contactless, Barclays PingIt and Apple Pay integrate themselves into the ever expanding range of payments methods, consumers have come to expect one tap, or one click simplicity when it comes to parting ways with their money. This expectation is the same whether they are purchasing an item in store, or online. With simplicity and ease at the forefront of the consumer payment agenda, it follows that shoppers are increasingly interested in how new technologies can fulfil this experience.
Learning from overseas
In many developing countries, such as those in Africa, there are a high proportion of ‘unbanked’ individuals who rely on cash or informal financial services. However, given the high level of financial exclusion in countries such as these, traditional banking infrastructures find it difficult to make business models work to serve low-income communities.
However, of the 2.5 billion unbanked people in African countries, one billion of these individuals have access to a mobile phone. This provides a strong channel to extend the ways that consumers are able to make payments for goods and services – including direct from their mobile wallet. This model improves the customer experience and allows the user then to complete a transaction without the need for a traditional banking provider, or debit or credit card.
Change on the horizon
Of course, the market in African countries differsgreatly from the UK payments landscape, but we are seeing the demand for mobile payments growing in more developed markets too. Although there is a sophisticated banking infrastructure in the UK, with a low level of financial exclusion, businesses are still striving to find new ways to deliver quick and efficient payment capabilities to improve mobile commerce, and deliver the seamless shopping experience that consumers demand.
The introduction of PSD2 in January 2018 will provide clarity on the use of the mobile phone account to make payments against your mobile phone – ‘Pay By Mobile’. It will legitimise and improve security around the phone as a payment mechanism, which will soon be regulated in the same way as credit cards. However, this legislation will also restrict the distribution of funds through the value chain. In order to ensure complete protection for both merchants and consumers, any third party providing a payment service to a consumer, or other entity, will have to be a licensed Payment Service Provider.
Within this, there are few exceptions and exclusions. One of the segments that falls into this exclusion is telecommunication providers, who provide a payment service to their customers alongside their core services. This model is gaining pace in the UK, as Mobile Network Operators (MNOs) begin to learn from the success of their competitors in Africa by monetising billing relationships outside of core offerings.
Whilst these operators don’t need to register as payment providers, they do need to notify the FCA that they are benefitting from this exclusion. They must also detail how a €300 consumer spending limit will be managed – it’s important to note that this limit has to encompass all services, including voice, SMS and digital content.
This is no small task, and in order to avoid a breach, networks will likely need to implement a hard stop when the €300 is reached. Although the type of content or service, and the price per service, are fairly easy to control through contractual arrangements between the Telecom Operator and their intermediaries, the overall consumer spend on “third party products” is not. If an individual customer were to spend more than the limit in a month, it could push the Telecom Operator into a technical breach if they are acting under the exclusion and not registered as a PSP.
The importance of a licence
Currently, digital services and content providers are able to operate under this same exemption, but PSD2 will change this. Service providers who use a Pay By Mobile offering will need to ensure that they are working with an intermediary that has an E-Money licence. The intermediary sits in between the MNO and the consumer, and is responsible for handling mobile based payments, ensuring that they are correctly regulated by theFCA, and under the current watching brief of the Phone-paid Service Authority (PSA).
We’ve seen the payments landscape evolve steadily over the past few years, from the introduction of contactless cards in 2007 to the launch of ApplePay in 2014. Now, PSD2 could trigger the next wave of change in payments. The regulation will revolutionise the space, and Pay By Mobile will thrive in this new environment, allowing consumers to pay directly from their phone, charging transactions to a mobile wallet or phone account. This model benefits all parties within the ecosystem – the merchant, the MNO and the consumer. The stage is set for PSD2, the next catalyst for major change.
Should you reward high performance and if so how?
By Matthew Emerson, Founder and Managing Director, Blackmore Four
In our last article – “what do high-performing teams mean?” we identified four enabling conditions – a compelling direction, high accountability, clear expectations and trusting relationships to be the basic platform for high performing teams. But work teams do not operate in an organisational vacuum. Organisational performance is the key interest for managers and executives; however, organizations only perform efficiently if individuals feel satisfied and committed as well as cooperate with colleagues.
Features of the organisational context, such as the reward system, specific incentives and career development opportunities as well as the coaching and feedback behaviours of team leaders, can have.
a seismic impact on the outcome of the team. In today’s team-centric workplace, how do you recognise employees’ contributions to team success in the most effective way?
Individual vs. team reward
The problem is that group tasks are usually a mix of group and individual interests, a mixture of cooperative and competitive incentives. Therefore, is team recognition better? Or is it best to reward individual contributors?
When you reward individuals for their hard work and for achieving results, you incentivise them to keep up the good work. This recognition can, in turn, influence others to improve their performance. However, rewarding individuals may create a more competitive environment, potentially undermining any efforts to establish or maintain a collaborative culture within the organisation.
Through a meta-analysis of 30 studies involving more than 7,000 teams, Garbers and Konradt (2014) found that team-based rewards yield moderate positive effects on team performance. Recognising an entire team encourages greater camaraderie and when people are motivated to work harder for the good of the team, it often results in higher performance. Moreover, it demonstrates to the team that others in their organisation (specifically, those who designed the reward system and administer it) care enough about a team’s performance that they are willing to expend organisational resources to recognise what it accomplishes. Effective team rewards should elicit and reinforce collaboration among members as they work together to achieve compelling team purposes. Recognition for good team performance encourages members to think of “us” rather than “me” and goes a long way in helping to sustain collective motivation.
Both individual and team-based recognition have their pros and cons. So, what would be a compromise solution? A third option is offering a hybrid recognition program.
By simultaneously rewarding group and individual achievement, you can motivate everyone to work hard toward achieving the team’s goals. At the same time, you also recognise individual team members who go the extra mile. These are the people who make outstanding contributions to the team’s overall performance. The work they do is worthy of special recognition and should be rewarded appropriately. When a team receives something that members collectively value, it becomes more likely that members will do again whatever it is that they did before.
The consequences of excellent team performance, therefore, must be something that team members themselves view as favourable. Even if leaders think that putting a team’s name on the company intranet is kudos for high performance, that listing will have no effect if team members view it as silly, embarrassing or meaningless.
One kind of recognition that almost everyone cares about is money. At least in Western societies, people have learned well to “follow the money” if they want to understand what is going on or what is most valued by those in charge. Although compliments and nonmonetary rewards can go a long way in reinforcing team excellence, they cannot go all the way. At some point, people want to see some cash—or at least feel they have a piece of the financial action. What factors do you need to consider when designing your rewards strategy?
Equitable v’s equal
The evidence suggests that equitably distributed rewards are more effective than equally distributed rewards in
affecting team performance. So, for example, the practice of distributing the same bonus to all team members at the end of the financial year, while it might be easier to do, may yield weaker effects on future performance. Because fairness violations are processed more emotionally than rationally, even nominal rewards for team performance have implications for fairness perception and must be managed.
Communicate how you will distribute rewards: if you want to value individual contributions, you will need to define and say what the indicators of performance are (e.g., the amount of responsibility, hours worked, individual outcomes). In other words, use equitable pay and be meritocratic. Giving employees “voice” is an important first step of rewards fairness. Objectives and performance should be measured among individuals, so that you can show what each team member has done and what they each receive as a reward.
Consistency is key
Finally, we encourage team leaders to make sure they use fair decision-making criteria when they are deciding on who should receive recognition. Team members need to trust that you are recognising team members who make valuable contributions. Distributing formal recognition based on arbitrary factors, or simply rewarding “teacher’s pets,” may compromise the positive (and exacerbate the negative) changes found in our research. Many employees report feeling undervalued at the end of a project. These less favoured members are usually separated from the favourable team members due to hierarchy or departmental lines.
Team-based rewards have both potential benefits and drawbacks for an organization, especially in the context of team trust. While they can be successful in highly interdependent team environments when reward measurements are fair and clear, they can also result in motivational loss, competitive behaviour and feelings of discomfort by team members who are reluctant to determine each other’s pay when such preconditions are not in place. It is important for managers to take these dynamics into account when designing a team-based rewards program and remember that there is not a one size fits all approach.
Matthew Emerson is the Founder and Managing Director of Blackmore Four, an Essex based management consultancy working with leaders of ambitious businesses to achieve outstanding performance through periods of growth or significant change.
Starting his career at Ford Motor Company, Matthew has developed his expertise in Organisational Effectiveness in key senior HR, Organisational Development and Talent roles, predominantly in Financial Services (Credit Suisse, Barclays and DBS) and most recently as the Group Head of Talent and Performance at UBS AG.
Having worked in and across Asia for six years as well as having ‘global’ responsibility in a number of his roles, Matthew has an appreciation of international and multi-cultural working environments. He also has a multi-sector perspective, having worked with organisations in Manufacturing, Healthcare, Education and Technology.
Asian shares near record highs as U.S. stimulus plans offset virus woes
By Swati Pandey
SYDNEY (Reuters) – Asian shares climbed to near all-time highs on Monday as concerns over rising COVID-19 cases and delays in vaccine supplies were eclipsed by optimism of a $1.9 trillion fiscal stimulus plan to help revive the U.S. economy.
Sentiment in the region was also boosted by a report that China had surpassed the United States to be the largest recipient of foreign direct investment in 2020 with $163 billion in inflows.
Futures markets also pointed to firmer starts elsewhere. E-mini futures for the S&P 500 rose 0.37%, futures for eurostoxx 50 as well as London’s FTSE were up 0.3% each while those for Germany’s DAX added 0.4%.
“The FDI story has definitely lifted China and its near neighbours today, blowing an economic recovery tailwind into geographically adjacent markets,” said OANDA’s Singapore-based market analyst Jeffery Halley.
“Looking ahead, equities will find more meaningful reactions from the progress or not of the Biden stimulus package, and the level of dovishness displayed by the Federal Reserve at their FOMC meeting this week.”
Global equity markets have scaled record highs in recent days on bets COVID-19 vaccines will start to reduce the infection rates worldwide and on a stronger U.S. economic recovery under President Joe Biden.
Still, investors are also wary about towering valuations amid questions over the efficiency of the vaccines in curbing the pandemic and as U.S.lawmakers continue to debate a coronavirus aid package.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose to 726.46, within kissing distance of last week’s record high of 727.31.
The benchmark is up nearly 9% so far in January, on track for its fourth straight monthly rise.
Japan’s Nikkei rebounded from falls in early trading to be up 0.7%.
Australian shares added 0.4% after the country’s drug regulator approved the Pfizer/BioNTech COVID-19 vaccine with a phased rollout likely late next month.
Chinese shares rose, with the blue-chip CSI300 index up 1.1%. Hong Kong’s Hang Seng index leapt nearly 2% led by technology stocks.
All eyes are on Washington DC as U.S. lawmakers agreed that getting the COVID-19 vaccine to Americans should be a priority even as they lock horns over the size of the U.S. pandemic relief package.
Financial markets have been eyeing a massive package though disagreements have meant months of indecision in a country suffering more than 175,000 COVID-19 cases a day with millions out of work.
Global COVID-19 cases are inching towards 100 million with more than 2 million dead.
Hong Kong locked down an area of the Kowloon peninsula on Saturday, the first such measure the city has taken since the pandemic began.
Reports the new UK COVID variant was not only highly infectious but perhaps more deadly than the original strain also added to worries.
In the European Union, political leaders expressed widespread dismay over a hold-up by AstraZeneca and Pfizer Inc in delivering promised doses, with Italy’s prime minister lashing out at the vaccine suppliers, saying delays amounted to a serious breach of contractual obligations.
On Friday, the Dow fell 0.57%, the S&P 500 lost 0.30% and the Nasdaq added 0.09%. The three main U.S. indexes closed higher for the week, with the Nasdaq up over 4%.
Jefferies analysts said U.S. stock markets looked overvalued though they still remained bullish.
“For the stock market to have a real nasty unwind, rather than just a bull market correction, there needs to be a catalyst,” analyst Christopher Wood said.
“That means either an economic downturn or a material tightening in Fed policy,” Wood said, adding neither was likely to occur in a hurry.
In currencies, major pairs were trapped in a tight range as markets awaited the Fed’s Wednesday meeting.
The dollar index eased to 90.073, with the euro at $1.2181, while sterling was last a tad firmer at $1.3721.
The Japanese yen was a shade weaker at 103.69 per dollar.
In commodities, Brent gave up early losses to be last flat at $55.41 a barrel and U.S. crude rose 3 cents to $52.30.
Gold was flat at $1,852.9 an ounce.
(Editing by Shri Navaratnam and Jacqueline Wong)
Dollar pauses its decline on fresh virus worries
By Hideyuki Sano
TOKYO (Reuters) – The U.S. dollar stabilised on Monday after a recent decline as fresh worries about the coronavirus and the global economy prompted investors to hang on to the safe-haven currency.
But analysts said the dollar could resume its fall if the U.S. Federal Reserve reaffirms its commitment to a highly accommodative monetary policy at its rate meeting later this week — as widely expected.
“I don’t think the Fed has any incentives to curtail its stimulus at this point, even though some market players may try to read between the lines for any signs of tapering in stimulus,” said Kazushige Kaida, head of FX sales at State Street Bank’s Tokyo Branch.
“I think the dollar is staying in a downtrend even though it is marking time for now,” he said.
Federal Reserve Chair Jerome Powell is expected to signal he has no plan to wind back the Fed’s massive stimulus any time soon when the central bank concludes its policy review on Wednesday.
The dollar index stood at 90.172, flat on the day. It bounced back on Friday after hitting 90.043 on Thursday, last week’s lowest level.
Economic activity in the euro zone shrank markedly in January as stringent lockdowns to contain the COVID-19 pandemic hit the bloc’s dominant service industry hard while UK data showed British retailers struggled to recover in December.
British Prime Minister Boris Johnson also said on Friday there was evidence a new variant of COVID-19 discovered late last year could be associated with higher mortality, while problems in some vaccine roll-outs also weighed on sentiment.
Downbeat coronavirus news overshadowed some upbeat U.S. data, including a surge in manufacturing and an unexpected jump in existing home sales.
Bets against the dollar have become overcrowded, analysts also said, with U.S. data on Friday showing net dollar short positions swelling to the largest since May 2011.
The euro was little changed at $1.2174 , taking a pause after a 0.8% gain last week.
The common currency is capped in part by signs of political instability in Rome, which has also driven Italian bond yields higher. The yield spread between Italian and German bonds hit its highest since November on Friday.
Italy’s main ruling parties on Friday flagged snap elections as the only way out of its political impasse, if Prime Minister Giuseppe Conte fails to drum up a parliamentary majority after scraping through a confidence vote.
The situation in Italy demonstrates the widespread risks of political instability from popular discontent as communities grow weary of the pandemic, some analysts said.
“The stock markets’ rally during this pandemic is completely dependent on fiscal expansion and debt monetisation by central banks,” said Makoto Noji, chief currency strategist at SMBC Nikko Securities. “Political instability could delay fiscal measures. The year 2021 will not be the same as 2020.”
In Washington, the honeymoon after Joe Biden’s inauguration as President last week means investors are hopeful that at least a part of his $1.9 trillion coronavirus relief plan will come through fairly soon.
The second impeachment trial of former U.S. President Donald Trump expected early next month could complicate his efforts.
Elsewhere, the British pound held firm at $1.3684, not far off a 2-1/2-year high of $1.3745 touched on Thursday thanks in part to Britain’s lead in COVID-19 vaccinations.
Against the yen, the dollar was flat at 103.76 yen.
(Reporting by Hideyuki Sano; Editing by Sam Holmes and Ana Nicolaci da Costa)
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