In light of new figures recently released by the British retail consortium which reveal that the popularity of contactless has soared ahead of cash, Ross Macmillan, head of research and intelligence at allpay Limited (the UK’s leading payment specialist) argues that cash is far from dead – especially when it comes to bill payments, which contactless can’t accommodate.

Ross told Finance Monthly: “With experts predicting the end of cash for the last five decades, it’s no surprise that with the increasing use of mobile payments and digital wallets, they’re at it again.

“However, for all the talk about cryptocurrencies and virtual accounts – the value of banknotes in circulation in the UK has actually increased threefold over the past 20 years, according to the Bank of England. As at end of July 2015, the total value of Bank of England notes in circulation stood at £62.6 billion. And with more than 18 billion cash payments made in 2014, according to Payments UK, which accounted for 48% of all payments made in the UK, you could argue cash is alive and far from dead.

“Consider some of the major household bills like rent, council tax, water, TV Licence, gas and electricity. Every year hundreds of millions of payments for household bills are made with coins or paper providing flexibility and convenience for the likes of the rurally isolated, unemployed, un/under-banked, digitally excluded, elderly or vulnerable. If they were unable to use cash, they’d incur arrears on their bills and fall into debt. In fact, according to industry data, in some of these sectors between 10% and 39% of payments are still made in cash and cheque. In energy and housing for example, there has been an increase in volume, albeit small, between 2014 and 15.”

Worldpay, the UK’s largest electronic payment processing group, has announced that it is to merge with US-based firm Vantiv, following takeover approaches from two American companies.

A preliminary agreement has been reached for Worldpay to combine with its US rival Vantiv valuing the British group at £9.1 billion. The deal also sees two executives take the run for the group, between themselves based in London and Cincinnati.

This comes after news that Worldpay’s takeover request was approached by both Vantiv and JPMorgan Chase, the world’s largest bank by market value. According to the FT, shares in Worldpay have soared in the days following the announcement of the deal.

Below Hayley Bevis, Partner and Head of Corporate at law firm Coffin Mew, gives Finance Monthly her response to this story:

“It is no surprise that Worldpay has received takeover approaches from two US companies and is now to merge with Vantiv. In our experience, the size of cross-border transactions over the last year has increased dramatically, as has the appetite of overseas acquirers and investors since the result of the Brexit vote. From our discussions with overseas acquirers and investors, the interest in the UK’s fast-growth companies has been triggered by a number of factors including the favourable exchange rate, but also as a way of quickly expanding an overseas acquirer’s capabilities, experience, customer base and technological advances. 

“We have seen a particular interest in the technology sector from overseas parties, with a UK based acquisition/investment often forming part of a larger “buy and build” strategy.

“In the case of Worldpay, tax and local law considerations will need to be taken into account by potential acquirers, as well as the often harder to define practicalities of how things are done locally in the acquirer/investor’s jurisdiction. 

“We don’t foresee this trend abating any time soon, so UK companies should brace themselves for a flurry of unsolicited interest – and not be surprised when approaches come predominantly from overseas.”

Steve Biggar, Director of Financial Institutions Research, Argus Research, discusses what's driving the recent pullback in US bank stocks and which names Argus has "buy" opinions on.

Artificial intelligence is shaping the future of retail. Smart algorithms and data analyses are creating sustainable performance benefits across all levels of the retail supply chain.

With its Omnichannel ePOS Suite, Wirecard AG is the first payment provider to offer a fully integrated solution for self-learning analyses based on payment data in combination with other data sources. The evaluations substantially support e-commerce and high-street retail in implementing the following central growth concepts: increasing customer conversion, reducing customer attrition rates, predicting future consumer behaviour and linking points of sale with e-commerce.

Jörn Leogrande, Executive Vice President Mobile Services at Wirecard: "Using our data evaluations and analyses, merchants can increase their metrics in important performance areas. Our previous experience has shown that sales increases in the double-digit percent range are realistic."

Wirecard's turnkey solution generates insights into customer segmentation and cohort analyses, for instance, to optimise marketing efficiency. This revolves around the concept of a data-supported, real-time view of a retailer's customer behaviour in its entirety and increasing the customer lifetime value - optimal customer retention.

Insights into customer attrition (otherwise known as customer churn) behaviour are another unique selling point of the Omnichannel ePOS Suite. Complex evaluations enable merchants to identify customers who may potentially shop elsewhere. By introducing appropriate marketing measures, the churn rate can be significantly reduced.

Analyses on anomalies, trends and sentiment, peak detection and time series based on country-specific data as well as cohort analyses to assess the efficacy of marketing measures are additional beneficial tools. The Omnichannel ePOS Suite can be used in pre-existing systems without incurring large expenses.

Markus Braun, CEO of Wirecard: "The Omnichannel ePOS Suite is the first step towards large-scale digital transformation in the retail sector. Over the next few years, data analyses using artificial intelligence and machine learning will play an increasingly important role in their business area. Based on our analyses, we are able to reduce risks and increase the chances of success for our partners. This means that all parties involved can gain a significant competitive advantage, which is why the omnichannel ePOS suite marks a decisive step for the future of payments."

(Source: Wirecard)

The number of purchases using debit and credit cards has more than doubled in the past 10 years, as contactless payments and online retail have driven a change in the way consumers pay, a new report from The UK Cards Association shows.

Debit and credit cards were used to make 16.4 billion purchases in 2016, up 146% from 6.7 billion in 2006. It means that 518 card payments were made every second last year by cardholders both in the UK and travelling overseas.

Over the past decade the growth in the number of card transactions has outstripped the rise in the amount spent, showing consumers’ increasing preference for using cards instead of cash for lower value payments. Last year the average value of a card transaction fell to £43.47, its lowest level in 15 years.

The new report, UK Card Payments 2017, highlights the impact of the growth in online spending and contactless payments. By the end of 2016, four in 10 (39%) card transactions were either online or made using a contactless card, compared to a quarter (24%) the previous year.

Graham Peacop, Chief Executive of The UK Cards Association, said: “Card payments play a central role in our economy, with spending equivalent to a third of the UK’s GDP. As consumers continue to make the switch from cash to contactless and with the rise of the app-economy, we forecast that the number of card payments will grow substantially over the next decade too.”

With card payments providing significant benefits to businesses, the number of retailers accepting cards increased to just over 1 million last year. The number of individual outlets accepting cards has jumped by 63% in the last 10 years to 1.3 million in 2016.

A total of £709 billion was spent by UK debit and credit card holders both domestically and overseas last year. Debit cards represented 75% of this total, amounting to £530 billion. This month is the 30th anniversary of the introduction of the debit card to the UK.

Payment cards were used for three-quarters (77%) of all retail spending in the UK last year. Cardholders spent the most on food and drink (£114 billion), followed by other services (£100 billion), financial services (£80 billion) and entertainment (£57 billion). A third of all card purchases in 2016 were made at supermarkets, while every fifth payment was on entertainment.

In 2016, there have been significant developments in the delivery of digital services to consumers, such as in-app purchasing and a new trend of fusing social media formats with payment capabilities.

In the next decade, the increasing use of contactless and mobile payments, particularly by younger people, will be a major source of growth for debit card payments, the report says.

The volume of debit card purchases is forecast to grow by 57% to 18.2 billion in 2026, four times the number made in 2006. In a decade’s time, half of all debit card transactions (51%) will be contactless. Credit card transactions are expected to increase to 3.7 billion by 2026.

(Source: The UK Cards Association)

People unlock their phone and, increasingly, shop and pay with the touch of their finger. They don’t get locked out when they forget a password because it has been replaced with a simpler, more secure option – mobile biometrics.  Whether using a fingerprint, an iris scan or a “selfie” to confirm identity, banks see biometric technology as a way to provide greater convenience and security to customers as they use their accounts. But, it’s still early days in mobile biometrics, and a new report from Mastercard and the Department of Computer Science at the University of Oxford highlights a big barrier. Only 36% of relevant banking executives feel they have adequate experience to deliver.

To overcome this knowledge gap, ‘Mobile Biometrics in Financial Services: A Five Factor Framework’ explores this fast-evolving technology landscape and provides bank executives with guidelines to successfully bring mobile biometrics to life. Simply put, they need to focus on Performance, Usability, Interoperability, Security and Privacy.

Some of these factors are more visible to the consumer, having a real impact on user experience, while others operate behind the scenes. But, long-term success for a bank requires that they address all factors equally to protect against threats. The framework can help financial service companies avoid the trap of focusing only on the ones their customers see.

“Biometric authentication has a lot of potential, but it is important to address the objectives of each of the Five Factors when designing solutions. Working together with Mastercard enables us to solve for realistic threats to the industry with the best technical and scientific ideas. Users will need consistency, quality and assured security for this technology to thrive,” said Professor Ivan Martinovic, Department of Computer Science at the University of Oxford.

Ajay Bhalla, president, Global Enterprise Risk & Security, Mastercard, commented on the research initiative in a blog, saying: “Effective mobile biometrics melt into the broader experience of consumer-centric financial services, giving people the power to instantly access their financial information or make a payment. They’re driving the trend toward a password-free future where digital identity is all about who we are, not what we remember.”

Considering that global sales of smartphones are expected to reach $400 billion by next year, people everywhere will increasingly have access to the tool that makes mobile biometrics possible. Banks see that as an opportunity, and with initiatives like the collaboration with the University of Oxford and pioneering biometrics solutions like Mastercard Identity Check Mobile, Mastercard is a partner to deliver widespread and responsible adoption of mobile biometric solutions in financial services.

As Bhalla continued, “This framework is fundamental to accelerating the deployment of mobile biometrics for consumers and industry alike, but collaboration is key. We can only achieve this if industry, academia, governments and technology vendors understand and contribute to the evolution of the Five Factor Framework for mobile biometrics.”

“Mastercard and Oxford have done important work in exposing some of the root causes for the inconsistent adoption of mobile biometrics in financial services,” said Ravin Sanjith, Program Director: Intelligent Authentication, Opus Research. “We expect the Five Factor Framework to become an indispensable aide for industry professionals and decision makers to have better informed, strategic discussions that drive towards more efficient and successful high-scale implementations.”

Anthony Duffy, Director of Retail Banking, UK and Ireland at Fujitsu told Finance Monthly:

“The news that biometric authentication is now consumers” preferred choice for their financial services security is further evidence that biometric technologies are coming of age. Biometric solutions have been used overseas for many years, with Brazilian, Japanese and Turkish banks all using Fujitsu biometric solutions to support day-to-day banking transactions. However, it is only recently that British banks have started to deploy the technology on a significant scale. We are seeing a growing confidence in the security and effectiveness of biometric technologies, perhaps in part brought about by both Android and Apple mobile devices using finger/thumb print scanner technology as an unlocking option. After all, as the technology goes from new to familiar, there’s a natural acceptance and understanding, which breaks down previous barriers to entry.

“Financial institutions are keen to enhance their security measures further and to improve customer service. Biometric technologies, by being unique to the individual, help achieve both goals. Their use often reduces the use of passwords, or even eliminates them altogether, while often also providing an audit trail. When deployed to help identify customers, their use can speed up the identification and log-on process, by removing the need for security questions.

“The reliability, security and accuracy of biometrics make them ideal for banking. Add to that the widespread adoption of biometrics on mobile devices, and it’s clear the technology is set to flourish. Consequently, at Fujitsu, we believe that the use of biometrics in banking is something we will see much more of in coming years.”

(Source: University of Oxford)

A new UN study reveals that Alipay and WeChat Pay enabled US$2.9 trillion in Chinese digital payments in 2016, representing a 20-fold increase in the past four years. The data shows that digital payments, using existing platforms and networks, provide access to a wider range of digital financial services, expanding financial inclusion and economic opportunity throughout China and neighboring countries.

The new report by the UN-based Better Than Cash Alliance, Social Networks, E-Commerce Platforms and the Growth of Digital Payment Ecosystems in China – What It Means for Other Countries, contains key lessons to help other countries include more people in the economy by transitioning from cash to digital payments. This shift could increase GDP across developing economies by 6 percent by 2025, adding US$3.7 trillion and 95 million jobs, according to a McKinsey Global Institute report.

"Social networks and e-commerce platforms are growing in every economy, whether large or small," says Ruth Goodwin-Groen, Managing Director at the Better Than Cash Alliance. "In China digital payments are thriving from these channels, bringing millions of people into the economy. This matters because we know that when people – especially women – gain access to financial services, they are able to save, build assets, weather financial shocks, and have a better chance to improve their lives."

"Widening access to financial services has always been at the heart of Ant Financial's mission and we are proud to have empowered more people to save, invest and gain access to capital. There is a quiet revolution underway and we know, firsthand, that our services are making a real difference to hundreds of millions of consumers. But, as this ground-breaking UN report highlights, this revolution is only just beginning. We see tremendous potential to bring many more people into the financial system, in China and markets around the world," says Eric Jing, CEO of Ant Financial Services Group, which operates Alipay.

Key findings from the report:

• More people have opportunities to save and invest. Platforms such as Alibaba's Yu'e bao make investing money into diverse sets of financial products more accessible for low-income populations. This product allows them to invest the money left on digital accounts, leading incrementally to long-term savings. From 2013 to 2016, Yu'e bao has grown to manage US$117 billion and is now serving over 152 million customers.
• Digital finance helps dramatically increase access to capital for small merchants. As of September 2016, a total of RMB 740 billion (US$107.3 billion) had been lent on the Alipay platform to over 4.11 million small and micro enterprises and entrepreneurs.
• Big data generated through these platforms helps to build credit-scoring history and boosted access to credit, particularly for low-income financially-excluded populations. For example, Sesame Credit offers an alternative creditworthiness assessment by examining the credit history, financial behavior, contractual capacity, identity, and social networks of users.

The study also found both Alipay and WeChat are expanding beyond China and investing in major fintech and payments providers. They are joined by other major communication platforms, utilizing existing social networks and e-commerce platforms to drive digital payments and financial inclusion. The report found opportunities especially strong in countries with a high smartphone uptake and collaboration between the private and public sectors:

• In South Africa, 78 percent of all internet traffic takes place over mobile channels – one of the highest rates in the world. However, despite the continued growth of adoption rates, only 15 percent of South Africans reported making a purchase on a mobile phone in the preceding month when surveyed in 2016.
• In India, both Ant Financial and Tencent have bought into the Indian mobile payments market, which is enjoying rapid growth under new regulation. Ant Financial and Alibaba invested up to $900 million in PayTM, as well as sharing staff and technical expertise. The result: PayTM has grown from 5 million to around 200 million users in just the last few years.
• Indonesia was the fastest-growing m-commerce market in the world in 2016, expanding 155 percent from January 2016 to January 2017. Some of this growth may be due to the release in 2015 of BBM Pay's Instant Mobile Payments. The popular BBM chat app has over 55 million users in Indonesia and continues to develop.
• In South America, markets have the infrastructure necessary to build payment ecosystems similar to those seen in China. Fifty-nine percent of the South American population uses social media, and 52 percent connect with social media over their mobile phone. Yet the digital payments space remains fractured, and no payments provider has linked their service to these platforms in a significant way, or vice versa.

(Source: Better Than Cash Alliance)

Written by Paresh Davdra, CEO and Co-Founder of Xendpay & RationalFX

2017 is an exciting time to be alive. Along with the various socio-political developments, it is also a period heralding monumental strides in the human way of living. The bug has bitten the financial industry as well, which is now converging with the tech space to co-create what we see as the future of handling the world’s wallet and forex. Across payment gateways to remittances, we are being pushed to bring in an element of the ‘instant’ and ‘now’ – a fast and easy world of immediate money transfer and delivery. Markets are no longer convened by pockets; the change is multi-lateral and multi-layered. For instance, in the developed markets we are engaging on a platform of routing forex transaction buoyed by political uncertainty, while simultaneously upgrading the business models in developing markets to suit economic experiments such as the recent demonetisation drive in India.

The tsunami of tech inspired disruption that the payments industry has seen over the past few years has given birth to multiple business concepts and ideas like digital remittance services, e-wallets, digital payments and ecommerce have burst to envelope the current narrative. While the developed markets across the west and east have embraced new forms of ICT enabled currency handling, the developing markets hold immense potential as they begin to experience revolutionary changes in their systems. For example, China and India are the world’s largest cash economies which spend millions of dollars printing and minting physical currencies. In such markets, there is scope for bountiful improvements and value additions using ICT enabled services.

In the case of India, the government had all of a sudden on 8^th November 2016, demonetised the 500 and 1000 rupee notes, taking them out of circulation and rendering them no longer valid legal tender within a window of 3 days. For a country with 86% of cash transactions, the ensuing confusion and panic nearly brought the country to a standstill for a week. However, necessity turned to opportunity, and during that period of cash crunch, e-wallets and payment gateways pushed themselves forward to recalibrate their business model to expand their offerings in a new cash deficit environment. About two months since the demonetisation exercise, a leading e-wallet company generated a huge market share and elevated its business operations to amass enough collateral to become a payment bank! While India is now onwards to digitalise its economy, countries such as Sweden and Norway operate their economies with less than 5% in cash; while Australia’s Citibank had very recently announced to stop accepting paper money altogether.

The past couple of years have been particularly interesting for the payments world, and if we look back at 2015 – around February is when the initial trend in payments start-ups became more pronounced. This period also saw a boom in other forms of payments than the conventional cash transactions, and with the development of a cashless economy, more protruding questions on the trust and security factors around e-payments started to solidify booming the frequency of use, creating a new market that gradually became its own bionetwork. One year later, we witnessed major progress in investments in the FinTech sector in the UK and Europe, which inundated the sector as insistent tech developments in the sector marched on and harvested gravity defying momentum. Trial, adoption and application entered the day-to-day routine in the industry and almost each passing day experienced a new breakthrough.

From then on, the focus shifted towards the consumer experience. Now, in 2017, we are bound to witness a thriving increment in the numbers of consumers whose lifestyle and purchasing parity will pave way for change, and witness more consumers gearing up to ride the technological wave their way. As digital payments have already become the norm in the developed world, the slow seepage of structure onto the eastern world will systematically affect how transfer of value is carried out – the incredibly fast pace at which new businesses and solutions are emerging has created a cat-mouse chase between innovators and regulatory sector. Consumers now have to keep pace with the movements in the tech sector. The sector is urging more technologies into the mainstream, especially protocols like the Blockchain technology.

More importantly, the FinTech developments are becoming more or less very disruptive and will continue to dent the establishments and empower the common man. For instance, the forex trade largely involves banks and corporates which act on market movements to operate on the remittance space.

When a customer wants to transfer money back home, they are bound for a three day wait as the bank or company explores for a favourable trade for themselves before completing the transfer. Companies such as ours are challenging this very lethargic and age old status-quo, to promote instant money transfer without implementing middlemen or brokers. We are truly empowering the end consumer with a fast and easy system on their fingertips. Why? Because it is 2017!

Besides these key points, transparency has been playing a pivotal role in consumer sentiment; as this generation of consumers have high expectations when it comes to flexibility and sharing of information and data. This factor encapsulates the trust element of an organization. Upcoming firms should take a note of this trend to focus on strategies that implement transparency and flexibility when it comes to communicating your value proposition to the customers.

This year will witness a world of instant digital payments with immediate validation, acknowledgement, and exchange of transaction data between the point of transaction and the seller’s ledger. This is against the 2016 idea of “near real time,” which pertains to accelerated sets that may range from minutes to hours or even more days, real time would be truly, absolutely instantaneous dispensation and processing of information. Lastly, it should be noted that payment systems are crucial to any economy considering their vital role to enable the intermediation process, a core requirement for financial stability. Upcoming technological applications and adoptions like the Blockchain protocol will most likely serve as a key factor in facilitating immediate intermediation, due to its seamless process automation capabilities to keep a ledger sound without human intervention.

Omnichannel shopping – where consumers can use multiple channels to research, buy and collect products, all while being recognised by the brand regardless of how they choose to interact – has long been a familiar concept to retailers. But as demand for an even more technology-focused shopping experience continues to increase, how can businesses take their offering a step further to better meet ever-changing customer expectations?

Finance Monthly hears from Sharon Manikon, Managing Director of Customer Solutions at Barclaycard, on what’s next for retail technology and the many ways we shop.

Staying up-to-date with the latest technology can be a challenge, but it can also hold the key to standing out from the competition, leading to increased footfall and more satisfied customers. Here, Barclaycard explores three common shopper frustrations and the technologies emerging to help businesses satisfy those needs.

Reduce fitting room frustrations with smart changing rooms

Barclaycard research reveals that three in ten shoppers (29%) become frustrated when they have to queue for a fitting room. One potential solution is to offer ‘virtual’ changing rooms, an interface in which customers upload a photo of themselves or create an avatar with their measurements, then ‘try on’ clothing items. This could prove a big hit, with three in 10 people (30%) saying they would be more likely to shop with a retailer using this technology.

Online shoppers are also interested, with 30% reporting that virtual changing rooms on a retailer’s website would help them when making a purchase. Offering ‘smarter’ fitting room options both in-store and online could therefore alleviate consumer frustrations and may even help retailers cut down on the number of items that are returned.

Keep queues short with the next generation of payments

The Barclaycard results also finds that four in ten shoppers (42%) get annoyed when they have to wait in a queue at the checkout. Payment technology can hold the key to lessening those long lines; indeed, new, faster payment methods are already helping to do this. Retailers should prepare for the increased popularity of checkout options like contactless, wearables and invisible payments.

Firstly, Barclaycard’s Contactless Spending Index reveals that half (50%) of Brits now pay contactlessly at least once a month – and this number is set to increase, with contactless spend jumping by 166% in 2016. Our data also shows that the trend to pay via ‘touch and go’ payments on a mobile or using wearables, clothing or accessories that has become more popular in the past two years is likely to continue to go from strength to strength this year.

In the longer term, invisible payments like those pioneered by Uber will gain traction, as they allow customers to complete a transaction within an app without ever hitting ‘checkout’ or walking to a till in-store. An extension of invisible payments that is currently under development is ‘scan and pay’ apps. These enable consumers to walk into a store, scan an item on their phone and pay ‘invisibly’ through payment details that they have previously input and stored on their device. Although the technology has only just been tested, one in five customers (19%) already say they would welcome apps to scan and automatically pay for items.

Retailers should expect consumers to embrace this technology in the next few years. Contactless, mobile and wearables are already starting to become mainstream, and the growth of invisible payment options will soon start to emerge as ways to pay in the retail space.

Improve the customer service with conversational commerce tools

Today’s demanding shoppers also expect more from customer service, and want quick and easy interactions at any time of day – through whatever channel they choose. According to a recent survey by ubisend, a chatbot development company, 51% of people say businesses should be available 24/7 and half (49%) would rather contact a business through messaging, such as texting, than on the phone. Companies are already using various forms of artificial intelligence (AI), such as computer systems that are able to perform basic tasks and answer simple queries, so to satisfy this demand brands should watch the AI space for applications that they can integrate into their high street stores.

As customers continue to seek out other payment options besides in-person transactions, corporations could see a rise in ‘conversational commerce,’ or the use of AI for making purchases. Already, chatbots, AI customer service tools in apps and online platforms, and digital assistants like Apple’s Siri and Amazon’s Alexa, are becoming popular stand-ins for personal shoppers and check-out counters. As this technology continues to develop, consumer demand for it across all aspects of commerce is also poised to increase.

Consumer expectations are driving exciting innovations in the retail space. Payment solutions providers are already looking forward to make sure payment systems continue to match customer demands – and businesses should ensure they are keeping up too. Not all of these solutions are ready to hit the high street, but retailers can stay abreast of new developments by speaking with their payment providers and exploring advances in technology. The brands that embrace these new tools will be most likely the ones driving repeat – and new – custom.

You’ll have noticed over the past year, that every time you go to pay for something, contactless methods are saving you time. Kevin McAdam, Head of prepaid at Allpay Limited, tells us more about this evolving theme in the payments sector.

Society has developed a thirst for speed and ease of payment, originating with online payments and direct debits, followed by the birth of contactless. The use of contactless payment is on the increase, with recent research highlighting the technology’s prevalence over cheque payments. Equally, at allpay Limited we’ve seen an increased demand for contactless, with upwards of 90% of new orders requiring contactless functionality. Moreover, while not a mandatory requirement, many local authorities are seeking contactless in their tenders, most notable in the last 4-6 months. This proves that the market is shifting towards faster payments which require minimal input.

For tenants living in social housing who are elderly or infirm, minimising the room for error is key - especially if they lack access to, or an understanding of, certain technologies. Contactless eliminates the need to remember a PIN number, resulting in small payments being processed with minimal intervention and stress. Transactions are processed quickly, easily and with peace of mind.

As a result, prepaid card payments are evolving to facilitate contactless. Both prepaid and contactless cards enable easy, swift and secure transactions, but are not in competition.  Rather, moving forwards, the two payment methods are integrating to optimise ease for the payee and the speed of transactions. Our future goal at allpay Limited is to issue debit free, re-loadable prepaid cards with all the security benefits, as well as contactless capabilities.

The next step towards further facilitating payments is providing access to universal credit via prepaid cards from the government. Universal credit is less restrictive as, instead of paying for one specific outlet, payees would have autonomy over how the money was spent. Of course the pre-set limit of £30 maximum would remain. Yet, this versatility is an appealing prospect for those reliant on prepaid cards, with contactless capability an additional bonus.

Access to universal credit via prepaid has already been tested by the Kent Council, with a largely positive response. The trial demonstrated that prepaid cards have the potential to promote financial inclusion and independence, helping people manage their money and debts and widening options for financial management. On this basis, the evaluation concluded that it would be feasible for the Department of Work and Pensions to carry out a more extensive trial of using prepaid cards to support vulnerable claimants. We pride ourselves on the convenience we offer our customers by providing a wide range of payment solutions. With this in mind, we aim to be at the forefront of all new developments in the prepaid sp

With over 60% of global travellers identifying the smartphone as their "most indispensable" travel item, a new airline industry brief from CellPoint Mobile explains why carriers should embrace the ‘Three Ps’ - Passengers, Payments and Profitability - as key components of their strategy for revenue growth in 2017.

The airline industry is currently at a crossroads defined by high expectations for financial success, rising competition, and a mobile marketplace that is undergoing profound, rapid and global change.

Already accustomed to using smartphones to pay for everything from shared rides to in-app retail purchases, today's passengers also are demanding access to the most popular digital wallet solutions and alternative payment methods (APMs) to meet their travel needs. Airlines that enable fast and convenient ways to pay through Android Pay, Apple Pay, PayPal, MasterPass, Visa Checkout and Alipay and other solutions are well positioned to capture lucrative revenues from the mobile marketplace.

By acknowledging the impact and potential of the Three Ps, airlines will be better positioned to create more paths to purchase for passengers and to reach their revenue goals for continued growth and increased profitability beyond 2017.

The industry brief from CellPoint Mobile highlights key trends and growth from across the airline and travel sectors, including:

• Passengers: In a 2016 Expedia/Egencia survey, nearly 10,000 global travellers identified the smartphone as the "most indispensable item" to carry on their journeys, with rates as high as 90% among Asia-Pacific travellers confirming that passengers increasingly rely on mobile devices to research, plan, book and pay for their trips.

• Payments: Travelers have access to several hundred global and regional mobile wallet solutions and alternative payment methods (APMs) enabling them to make purchases from anywhere - if airlines deploy them.

• Profitability: eMarketer estimates that digital travel sales will reach $817 billion (USD) globally by 2020, led by Asia-Pacific, North America and Western Europe, while a new report by Allied Market Research estimates a $3.3 trillion global payments market by 2020.

Airlines that make mobile transactions easy and seamless for their passengers can capture new revenues that arise from a variety of opportunities, including the direct sale of tickets and services, ancillary products, day-of-travel purchases and upgrades, impulse purchases, loyalty program transactions, social media channels, chat bots and other emerging technologies.

(Source: CellPoint Mobile)

From chatbots to instant payment solutions, Finance Monthly has heard from Ralf Ohlhausen, Business Development Director at PPRO Group, who gives his top 10 on the ever-changing payments sphere, the fintech disruptions of 2017, and the latest regulatory updates for the coming year.

1. Usability of payment methods

Payment methods need to become more user-friendly to appeal to various platforms of commerce from the till point to online, taking differing devices into consideration in order to stay competitive. This is especially important for providers of e-commerce payment methods who need to come up with optimised user experience and facilitate the growing trend of mobile payments.

2. Strong Customer Authentication (SCA)

SCA becomes a mandatory part of the Payment Services Directive 2 (PSD2), which will be implemented in the member states of the EU over the next two years. Unfortunately, the SCA’s increase in security will likely affect usability, which is completely contrary to what merchants and consumers want. New innovations around authentication methods may reduce the problem, but may also lead to more advanced concepts overall, making SCA obsolete.

Going forward, we will see increasing discrepancies between fast moving technology and slow moving regulatory changes - a difficult dilemma, which can only be overcome by fundamental changes in the regulatory approach. If you are impacted by SCA watch out for exemptions that might be granted and new authentication methods mitigating the adverse effect on usability.

3. Mobile payments

There’s been some bad news for mobile-payment sceptics. According to the 2016 Visa Digital Payments Study, in just one year the number of European consumers using mobile payments has increased by 200%. Previous scepticism may have been prompted by the fact that it took mobile payments longer to take off than originally predicted.  Bashing mobile-payments also became a favourite sport for some journalists.  But that doesn’t change the fact that mobile has now reached its tipping point. And with companies such as Apple and Samsung now getting serious about mobile payments, it seems a fair bet that the pace of that change is about to accelerate.

ApplePay is now rolling out to most major markets. And it’s doing so, as it turns out, exactly as consumers are starting to accept mobile payments. Given how often Apple has got it right before, particularly in terms of user experience, there’s every reason to be optimistic this time too. That can only be a good thing both for mobile payments and for the alternative-payment market as a whole. On a more wide-ranging note, this is a lesson for all of us in the industry. New developments invariably go through the whole of the hype cycle — including what Gartner refers to as the “trough of disillusionment”, when everyone is pointing to early failures and disappointments and saying “it will never work.”

As an industry, we’ve got to get better at recognising this cycle for what it is. We need to stick with good ideas, even when they don’t seem to be fulfilling their early hype. Because good ideas don’t go away. And no one wants to be the late adopter when, suddenly, everything starts coming together at last.

4. Instant Payments

The Euro Retail Payments Board (ERPB), a successor of the SEPA Council, is currently pushing very hard to make sure that SEPA is not falling behind the many national initiatives for implementing faster and even instant payments. The European Payments Council (EPC) just published their first rulebook for instant SEPA credit transfers (SCT Inst), which will bring down the crediting of the beneficiary’s account from one business day to a mere ten seconds. Similar instantaneous funds availability shall also come to SEPA Direct Debits, Cards and other payment methods. Implementation of SCT Inst will be optional for all the banks (at least for now) and may take some time, but the future of payments will be instant – just as it happened to messaging, the purchase of books or music and many other things of our daily lives already.

5. Access to Account

January marks one year until the Second Payment Services Directive compliance deadline, which will bring the new concept of “Access to Account” (XS2A) into the EU. Licensed Third Party Providers (TPPs) will be granted access any bank account in the EU to provide payment or account information services to their customers. 2017 will see increasing competition to the additional layers of value-added services (VAS) presented to banking customers.

6. Chatbots

At the beginning of 2016, internet giants rushed to incorporate an Application Programming Interface (API) into chat programs – also known as chatbots – for automated communication with customers. After a year of creating a firm presence in the UK, chatbots will become one of the biggest innovations in 2017 since the introduction of smartphones and it won’t take long until “chatbot payments” are the norm.

7. Blockchain Technology

The underlying blockchain technology behind bitcoins will certainly make further headlines in 2017. Blockchain is a database where all bitcoin transactions are saved. It consists of a long chain of data blocks in which one or more transactions are being compiled, encrypted and securely stored. Transactions are very fast with blockchain, and although they are not made in real-time, they are very cheap. Ideas, where the blockchain technology might be used in the future, are only just being developed. Basically, however, it is already clear it could be beneficial for all transactions that are currently in need of a “trusted third party”. One example is smart contracts. Instead of solicitors, computers take over the contractual management, meaning that they are proofing all preconditions in live mode and are able to realise individual agreements automatically.

8. Anti-Money Laundering

It has been much speculated whether the fifth Anti-money laundry directive (AML5) will actually come into play in 2017. If it does come in the form currently proposed by EU legislators, it will have a massive impact on e-money institutions. The already low limits for e-money usage without Know Your Customer (KYC) processes will be further decreased in a way e-money will lose its appeal over standard banking. That would through the baby out with the bathwater and could collapse the whole EMI industry.

9. Peer-to-Peer (P2P) payment

Person-to-Person or Peer-to-Peer (P2P) payment solutions have been popping up across Europe and the rest of the World for quite some time, but we can expect 2017 to see the method to gain traction here in the UK. The European Retail Payments Board (ERPB) is working to facilitate the co-operation of existing and future P2P mobile payment solutions to ensure interoperability on a pan-European level. The vision is to provide any person with the ability to initiate a pan-European P2P mobile payment safely and securely. 2017 could finally see a standard brought into place which reaches a critical mass of people and enables P2P payments without the need for knowing lengthy bank account numbers.

10. Cashier-free stores

Amazon recently unveiled plans to bring a chain of cashier-free stores to the UK next year. By using technology to track which items have been selected, the store will remove the need for products to be scanned or for customers to queue at a checkout as customers will be able to pay via smartphone as they exit the store. The introduction of such stores will accelerate the UK’s move towards a cashless and even encourage a card-less society in 2017.