The Wave of Change in Payments Explored at 10th Annual Secure Technology Alliance Payments Summit in Orlando
Princeton Junction, N.J., April 6, 2017 – The 10th Annual Payments Summit, a Secure Technology Alliance event, took place last week with sessions featuring payments solutions, payments technology and transportation payments, and explored hot topics impacting the payments market today and in the future.
The Payments Summit, until recently, has been associated with the Smart Card Alliance. The organization recently announced it has expanded its mission to move beyond smart cards, and re-branded the organization as the Secure Technology Alliance. The event was co-located for the second year with the International Card Manufacturers Association’s 27th annual EXPO in Orlando, Florida.
The overarching theme of the 2017 conference was around embracing the wave of change rushing throughout payments. The main takeaway: all of the different sectors of the payments industry are crafting new visions for the future of payments and diving in to make those visions a reality.
Marc Keller, head of FI strategy and partnerships for Samsung Pay, drove this point home in his first-day keynote, sharing his perspective on how innovative new technologies can become mainstream in payments. The key drivers, according to Keller, are convenience, value and usability.
“You need to provide clear value to the merchant and the consumer, or [innovations] won’t be adopted,” Keller said.
Senior Vice President of Innovation and Strategic Partnerships for Visa, Shiv Singh, shared a similar vision, citing the need for invisible transactions, frictionless consumer experience and equal support for brand awareness, product development and innovation as keys to success.
In addition to this common theme of mobile and digital commerce, sessions across all three tracks touched on some of the hottest topics in the industry, including EMV chip technology, card-not-present (CNP) fraud, contactless and mobile payments, the importance of the consumer payments experience, and emerging transit payments innovations. Below are some of the highlights from the sessions.
EMV Chip Migration Is Progressing, with Work to Do
The migration to EMV chip technology in the U.S. is making continued progress. Jared Drieling, business intelligence manager at The Strawhecker Group, reported new data at the event that 52 percent of merchants today are enabled to accept chip payments.
George Peabody, partner at Glenbrook Partners, also shared an update, stating that 81 percent of credit cards, 46 percent of debit cards, and 63 percent of all cards in the market are chip cards. Peabody predicted that by 2020, 90 percent of transactions would be chip-on-chip (transactions using a chip card at a chip-enabled terminal).
In a discussion on the chip migration journey in the U.S., an all-star panel of U.S. Payments Forum members representing the issuer, acquirer, merchant acquiring, card services and terminal vendor groups reflected on technical, business and regulatory challenges they overcame since the rollout began, and the support they are providing to the remaining financial institutions, merchants, and software providers with their chip adoption. A few of the Forum’s ongoing priorities around the chip migration include enablement at the ATM and fuel pumps, small merchant implementations, and pay-at-the-table acceptance experiences.
Understanding and Mitigating Online Fraud
With online fraud a global concern, many sessions focused on causes and ways to mitigate this type of fraud in the U.S.
To better understand the rise of CNP fraud in the U.S., Susan Pandy, director of payment strategies at the Federal Reserve Bank of Boston, said that, while many do, it isn’t accurate to place all of the blame on the chip migration. She also pointed to a number of other factors, such as the rapid growth in e- and m-commerce transaction volume and dollar amount as significant contributing factors.
Christopher Justice, CEO of CenPOS, looked to learn from experiences in other countries such as Canada, where he said CNP fraud rose 233 percent within five years of the country’s chip migration.
Some of the tools and methods to mitigate CNP fraud discussed by speakers throughout the event included tokenization, biometrics, risk-based authentication and multi-factor authentication.
Frictionless Transaction Experience in Mobile and Contactless Payments
Melissa Fox, senior manager of payments strategy and innovation at First Annapolis, shared research based on a study of 1,514 U.S. consumers that shows mobile payments are on an upward trajectory, with adoption up to 75 percent in January 2017 from 40 percent in May 2015. She also noted that frequency of use was increasing, with one in three Apple Pay users using it weekly or daily.
Additionally, 36 percent of merchants are equipped with a contactless-capable terminal, and of those, 28 percent have activated them, according to Strawhecker’s Drieling.
Transparent transactions and a frictionless consumer experience are two key factors identified by Deborah Baxley, partner at PayGility Advisors, that are needed to move payments innovations like contactless payments forward.
In the case of mobile payments, Marianne Johnson, senior vice president of Network and Security Solutions Products and Innovation for First Data, said there has to be a strongly apparent value for both the merchant to be willing to accept the mobile payment, and for the consumer to be willing to use it.
Most experts agreed that merchant acceptance is critical for adoption success, with First Annapolis’s Fox noting that mobile and contactless technologies create a customer experience advantage for transaction speed. Philip Andreae, vice president of field marketing of Oberthur Technologies, came to a similar conclusion through reviewing how the rest of the world moved to contactless payments after migrating to chip technology. Andreae predicted that the U.S. would follow suit with transit as the driver.
Speakers concluded that there’s still work to be done within the industry to overcome the barriers of adoption, but Fox believes “changes in the payments industry take time to take hold,” and says, “the mobile payment industry is poised for growth.”
Payments: The Key to Seamless Transit
In a keynote roundtable session, speakers outlined a vision for a seamless, easy and convenient experience for riders, and said making this a reality requires an unobtrusive payments experience.
“Transportation providers are trying to offer an easy, convenient experience for their customers,” said Mike Dinning, director of multimodal programs and partnerships for the U.S. Department of Transportation Volpe National Transportation Systems Center. “But they’re challenged with linking together all of these services, and ideally the payments for these services, to really make the experience easy.”
While the speakers acknowledged there is work ahead, they see multimodal payments convergence, or the integration of payment services for any type of transportation, as the solution to common problems like traffic congestion, limited parking and unsafe walking or biking environments.
As a start, Dinning pointed to a recent Secure Technology Alliance white paper that explores real-world implementations of this model in practice today that can provide a foundation for transit agencies considering support for these new models.
With so much change and innovation impacting the payments industry, the Payments Summit has become the event payments stakeholders look forward to every year because it brings together like-minded individuals looking to find new ways to overcome challenges impacting the adoption, security and usability of emerging and developing payments technologies.
For continuing updates on the Secure Technology Alliance, visit www.securetechalliance.org, follow @SecureTechOrg on Twitter.
About the Secure Technology Alliance
The Secure Technology Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption and widespread application of secure solutions, including smart cards, embedded chip technology, and related hardware and software across a variety of markets including authentication, commerce and Internet of Things (IoT).
The Secure Technology Alliance, formerly known as the Smart Card Alliance, invests heavily in education on the appropriate uses of secure technologies to enable privacy and data protection. The Secure Technology Alliance delivers on its mission through training, research, publications, industry outreach and open forums for end users and industry stakeholders in payments, mobile, healthcare, identity and access, transportation, and the IoT in the U.S. and Latin America.
For more information, please visit www.securetechalliance.org.
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