US Payments Industry Executives Gather at the Smart Card Alliance’s 2016 Payments Summit and the ICMA EXPO
Princeton Junction, N.J., April 13, 2016 – More than 800 executives and 100 exhibitors gathered in Orlando, Fla. for last week’s 9th Annual Smart Card Alliance Payments Summit, co-located for the first time with the International Card Manufacturers Association’s 26th annual EXPO.
The $26.5 billion card manufacturing and personalization services market is forecasted to grow 8.8 percent CAGR per year for the next five years according to ICMA’s latest research report by Al Vrancart, ICMA founder emeritus and industry advisor. The global card industry produced 13 billion smart cards last year, but this only represented 37 percent of the total units, showing there is still a huge opportunity to convert more applications to smart card technology. In financial markets, 10.3 billion smart cards were produced representing 79 percent of the total in those sectors.
In his opening keynote address, futurist Mike Walsh challenged the audience to make the payments world work like magic, with all technology being contextual, transparent, personal and fast. The conference presenters answered the challenge with discussions about many ideas on how to deliver magical realism to the payments industry:
- Rings, fitness bands and sunglasses you can use as “wearable” payment devices
- Defeating hackers with EMV and tokenization by eliminating sensitive payment information from payment networks
- Presence-sensing “be in, be out” transportation fare payment systems that eliminate the need to tap to pay
- Faster and more secure payments, led by the Federal Reserve Bank, partnering with the industry to foster innovation in the payments marketplace
In the new format for the co-located Payments Summit and ICMA EXPO, attendees built their own experience by choosing from the many card manufacturing and personalization topics, in addition to the advanced payments technology and business applications including EMV and mobile payments, transit fare collection systems, contactless, tokenization, biometrics, blockchain technology, powered cards, beacons and many others. Below are some highlights from the presentations.
U.S. Transit Agencies
According to an Accenture survey of 30 U.S. transit agencies, 50 percent of them have either implemented or are planning to buy a new fare payment system.
Many of these participate in the Transit Roundtable, organized by senior transit agency leaders to help speak with one voice to payments industry stakeholders on the unique needs of transit. New York MTA’s Josh Martiesian summarized the joint position of the group, which was also supported by a number of agencies presenting in the transit session.
With open payments, transit operators could be frontier merchants that help make habitual the use of contactless payment among consumers, increase spending with contactless cards and convert more cash transactions to digital. However, to succeed in transit, open payment needs to be fast, efficient and consistent, even in situations where no data communications are available. He called for leadership by the payments industry to help meet these challenges by issuing dual interface EMV contactless cards and including support for Offline Data Authentication (ODA) on those cards. ODA can help speed up transactions and reduce risk if an online authentication cannot be achieved, and many transit agencies would only accept contactless cards that have the ODA capability enabled, he said. Another consideration is that mobile wallet designs should consider transit’s fast throughput needs in order to keep the on-boarding time quick. Designers should strive for a more card-like and fast transaction experience than is available with today’s wallets.
While mobile is still a small part of the payments market, Leon Majors of Phoenix Marketing reported the market is in a building stage. Based on their March 2016 quarterly survey, 84 percent of credit cardholders know that payment applications are available on their smartphones, and 43 percent of smartphone households have loaded at least one payment card to an app on their phone. Among those, 74 percent loaded two or more cards.
Host card emulation (HCE) has helped issuers deploy their own wallets, according to Dave Tushie of Magellan Consulting. As of January 2016, there were 55 bank-issued wallets on the market versus seven at the end of 2014. He also said 70 percent of mobile transactions are either on Samsung Pay or Apple Pay, citing a Juniper Research survey, which underscores the importance of those brands.
There was a broad consensus among presenters that consumer preference will be the key factor for merchants as to if or when they support contactless and mobile acceptance. As Matt Barr, MasterCard’s group head of North American Digital Transactions, put it, “Consumers will vote with their fingers on what they use.” To provide maximum choice, MasterCard has created a new digital acceptance network called MasterPass that is designed to support contactless payment, smart tokenization and secure digital MasterCard payment across all channels and all devices including wearables.
The consensus among a panel of experts was that blockchain technology—the technology underlying bitcoin—provides capabilities that can help to streamline a diverse set of financial processes. In the view of Rick Swenson of RSS Consulting, the underlying security is strong, and its ability to provide attestation of ownership throughout a complex transaction, such as a mortgage application, is an attractive capability that will find many uses.
Cybersecurity Data Sharing
FS-ISAC’s Chip Wickenden reported that the cybercrime market remains a crucial problem with 78 different underground forums in Russia alone that offer 38 different types of goods, from malware infection platforms to rentable DDOS attack servers. And while the absence of sensational headlines might lead one to think the problem is abating, the 117,000 incoming attacks they see every day shows that is not true.
The financial cybersecurity information sharing organization added more than 2,000 members in 2015 alone, and now totals 6,800 organizations in 40 countries. Their collaboration has helped to reduce the lag between awareness and action from as much as 12 hours to as little as one minute for its members.
Other conference sessions at the Payments Summit covered the future of payments beyond EMV, evolving mobile payments technologies including HCE, tokenization, biometrics authentication, mPOS and loyalty, and discussions around the migration of the retail petroleum industry, which represents 12 percent of all U.S. credit card transactions, to EMV.
Internet of Things and Wearables
A new topic at this year’s Summit was how payment is being implemented in wearables and the Internet of Things (IoT). According to Ursula Schilling from Infineon Technologies, the smart wearable market is expected to have an over 30 percent compound annual growth rate through 2020, with EMV payment capabilities being implemented into these smart wearable devices. Dave Schwab of Accenture reviewed the use cases for secure payment in connected cars including car sharing, fuel payment and on-the-go valet services.
Audio archive recordings of the presentations from the Summit are available for purchase from the Smart Card Alliance at http://www.cvent.com/d/ldqgmg/4W.
About the Smart Card Alliance
The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use and widespread application of smart card technology.
Through specific projects such as education programs, market research, advocacy, industry relations and open forums, the Alliance keeps its members connected to industry leaders and innovative thought. The Alliance is the single industry voice for smart cards, leading industry discussion on the impact and value of smart cards in the U.S. and Latin America. For more information please visit http://www.securetechalliance.org.
Montner Tech PR