The Digital Payment Boom in India

From The IMFBlog.

What does a shoe shiner in India have in common with central bankers and finance ministers? They both can appreciate the digital-payment boom. It’s sweeping the world but has accelerated in India, where last November the government demonetized—declaring that 86 percent of the country’s currency in circulation would cease to be legal tender.

Mobile payment platforms like Paytm, stepped in to fill the void left by demonetization, and in the process­- are bringing more people into the banking fold. In this podcast, Paytm Chief Financial Officer Madhur Deora says he was not all that surprised when the invitation came to speak at the IMF-World Bank Annual Meetings.

“All bodies around the world—whether they’re central banks, the IMF, World Bank or the World Economic Forum—are seeing this as perhaps one of the top two or three changes or developments around the world that can have the biggest impact,” Deora said.

And the scale of that impact is significant, he said.

“Some of the problems that have existed for decades, 50 years, maybe 100 years in some places—we really have the opportunity to solve a lot of those problems over the next, literally, five years,” Deora said.

He gives the expanding use of smart phones a lot of the credit. Until four years ago, mobile payments didn’t exist in India. But smart-phone penetration has grown, and in the next few years, he sees 60-70% of the population having smart phones.

Beyond payments, the digital platform also allows those who previously couldn’t open a bank account or get a loan access to an array of financial services and products.

“We can solve for borrowing, access to credit. We can also solve for access to savings products, because our distribution is very, very cheap,” he said.

For finance chiefs and central bankers, digital payments allow them to more accurately assess the economy, as well as tax more efficiently.

While some may be leery of regulation, Deora sees it as a help, not a hindrance, to problems related to a country’s development.

“Lack of financial inclusion, which is present in most emerging markets is a problem that bothers well-meaning central bankers. I think regulators around the world have woken up to the fact that technologies can solve those problems,” he said.

This all may sound as if the entrepreneur has become a budding expert in development.

“I think that might be pushing it a bit, but we certainly see the potential for social impact. We see that this has some behavior-changing outcomes, and perhaps, very soon, some life-changing outcomes,” Deora said.

Listen to the podcast here:

The Future of Payments Is About Trust and Convenience

Payments is fast evolving from cash or plastic to digital. But as the universe of potential digitally enabled payment options proliferates, winners and losers will be determined not by simply fulfilling a payment instruction (now taken as given) but by the customer experience, and degree of trust.

New players, new platforms, and new devices. This transformation is discussed in a recent Inc. article, which I recommend. It nicely portrays the quantum of change and the dilemmas faced by incumbents. I reckon the payments revolution is less than 10% done!

It is safe to say that for every invention, innovation, or evolution that drives the modern world, we face a tradeoff of sorts. When we shift from a relationship-based economy to a transactional one, we gain efficiency and convenience while relinquishing privacy and some level of human interaction.

For the average consumer living in an age of convenience, missing parts of conversations during dinner with friends is worth the hassle-free experience of ordering a rideshare via our mobile app or pulling up a photo on Instagram as a reference point. Intrinsically, these things aren’t bad, but what it certainly means is that we (as both businesses and consumers) are placing our trust far beyond the locus of personal control, and into the hands of the the brands delivering products and services to us vis-à-vis technology .

Want to stay at a palatial estate off the coast of Italy? You don’t need to know a prince; you just need a profile on Airbnb, a credit card, and a mobile phone.

We need to look no further than the financial technology (FinTech) industry to understand how our collective move toward convenience will translate to a heightened trust for brands that can deliver us products and services in a secure, connected, meaningful way. As consumers require less cash and more credit across devices, payments innovation will evolve to accommodate this convenience-led consumer behavior.

In a recent conversation I had with author, BBC radio/podcast host, and Financial Times writer Tim Harford, he summed it up nicely: “Credit equals trust.” More pointedly: “Over the last one-hundred years, we’ve seen a slow evolution from a particular type of trust that occurred locally, to a broadening out…whereby more and more people are trusted to do more and more things.”

While credit cards were the first trend toward expanding trust beyond your local store or banker, the next several years will reach an entirely new level of trust as mobile-enabled, contactless payment methods reach wide adoption.

Drivers of payments innovation

According to Visa’s recently released “Innovations for a Cashless World” report, four main trends will drive both consumer behavior and brand payment technology decisions over the next several years: Continuation of cashless transformation driven by card to cloud, everything as Point-of-Sale, paying in messaging platforms, transactions without borders, and the rise of the API economy.

“The ideas and findings in the report shine a light on the macro trends that will define commerce in 2018,” said Shiv Singh, senior vice president of innovation and strategic partnerships at Visa. “As innovation continues to outpace itself year after year, the rise of a cashless economy accelerates as more people around the world adopt technology.”

Several findings from the report give keen insight into our future, while simultaneously reminding us that how we pay for things holds far-reaching implications for both consumers and businesses, both of which are being somewhat forced to change old, institutionalized behaviors:

  • By 2020, 70% of the world (more than 5 billion people) will be connected by mobile devices, facilitating the transition to a cash-free future.

  • By 2020, more than 20 billion devices will be connected to the Internet; and where there is Internet there is an opportunity to channel it to a point of sale.

  • With more users than the population of China, messaging platforms like Facebook Messenger will drive peer-to-peer payments forward as significant growth in this area is expected in 2018.

  • APIs expand the opportunity for innovation by enabling companies to focus on one link in the chain rather than owning an entire value chain.

Customer experience: the ultimate trust test

While technology is one aspect of payments innovation, managing customer expectations and the human aspects of traction and adoption is also a key component. Companies must get this right in order to deliver the right products and services over the right channels at the right price point.

A recently published report by Accenture Consulting, “Driving the future of payments: 10 megatrends,” reinforces several of the salient findings from Visa’s report, while emphasizing customer experience (CX) as one of the main drivers of how payments will either succeed or fail as we move into the next several years:

“As the payments universe expands, customer experience is becoming the prime competitive differentiator. The irony–and the danger–for traditional players is that customer experience is in the spotlight just as they are losing control of customers. Less touchpoints mean less opportunities to shine. So when companies have customers’ attention, they better get it right.”

Luke Williams, Head of CX at Qualtrics, adds: “Companies are being infused with technologies, creating simultaneous potential for internal risk and disruption of their competitors. The trend now is ‘programmable technology layers’ – where the technology is open and customizable.”

According to Williams, this allows a nimble firm to compete how it wants to without being limited by narrow, rigid technologies. The rise of API economy (as cited in “Innovations for a Cashless World”) is a direct result of this trend, where the mindset shifted to interoperability of products and features.

How brands integrate technology with core aspects of the customers’ experience becomes even more relevant, as machine learning and AI replace humans in many cases. This is not necessarily a negative thing, as long as the technology is being utilized to enhance the relationship with a customer: “AI represents the future of frontline customer service.” remarked Todd Clark, President and CEO of CO-OP Financial Services. “AI-driven chatbots (computer programs simulating human conversation) can handle a significant number of basic customer service questions, freeing up resources to focus on issues requiring more significant attention. This type of support also allows for shorter wait times on the phone and with in-person chat, and as the AI system earns more about the nuances of situations, it will gradually increase the accuracy and scope of its support capabilities.”

Williams adds: “Companies that are viewed as trustworthy, while creating delightful, differentiated customer experiences (often driven by technology), will enjoy significant gains.”

As we head toward 2020, what we will lose in personal connection and first-hand decision making we will gain in broader experiences, accessibility, and opportunity. In essence, we will break down borders and (for those fortunate enough to have access) create a self-actualized world whereby simple transactions, coupled with trusting relationships, can enable the most mundane tasks to luxury experiences.

Payments startup Sniip announces national Australia Post partnership

Mobile payment technology company Sniip, a disruptive force in the payment space, is today announcing a new nation-wide partnership with Australia Post to explore the use of Sniip to enable consumers to pay bills using the Post BillPay barcode anytime, anywhere.

Founded in 2013, Sniip ( ) is Australia’s first completely integrated and agnostic payments and billing solution. Its app-based functionality allows users to pay their bills in seconds using just their smartphone, while companies can seamlessly transition to paperless billing. It is the first payments solution in Australia designed around the needs of the customer, instead of a bank or payments brand. It is also the only payments solution in Australia to contain a real-time, peer-to-peer functionality for consumer and business use.

Co-founder and Chief Executive Officer of Sniip, Damien Vasta, said the company was excited to be working with Australia Post to provide greater choice to consumers in how they pay their bills.

“Working with Australia Post presents an exciting opportunity to bring the benefits of speedy and secure bill-payment to the vast network of Post Billpay users Australia-wide,’’ Mr Vasta said.

“This partnership is truly a breakthrough in customer service delivery, meeting the needs of the modern customer by catering for today’s mobile-centric society.”

As a stand-alone offer, Sniip offers substantial benefits to billers including cost savings over incumbent payment methods, quicker payments and conversion to paperless bills via an in-app notification to users now.

By using Sniip Post Billpay customers will be able to use the app as an additional way to scan and pay their bills within seconds using barcode technology, eliminating the need to enter a long account or payment reference number or bank details or waste time paying over the phone.

“Mobile payments have become a hugely popular method of making both discretionary and non-discretionary payments.”

“The Sniip integration makes payments easier and safer on a mobile, allowing customers to manage their bills more efficiently in-app and simply reducing instances of misplaced bills, forgotten emails and late payment fees,’’ Mr Vasta said.

Mr Vasta said that with an estimated 80% of Australians owning a smartphone, and people using them for almost everything they once did on a desktop, mobile bill paying and receiving was the way of the future.

“There is a consumer expectation that everything can be accessed on a mobile, and everything should be easy to use,’’ Mr Vasta said.

Sniip is already a payment option for some of the largest billers in Queensland, including Brisbane City Council and Queensland Urban Utilities.

“We are delighted to be working with Australia Post to extend our service to Australians on the go through this exciting partnership.

ANZ launches Garmin Pay

ANZ today announced its customers could now use Garmin Pay to make purchases on the go after the bank signed a partnership with the global wearables brand.

From today, ANZ’s Australian customers can load their eligible Visa debit or credit cards through the Garmin app and start using their wearable device to make smooth and secure purchases anywhere contactless payments are accepted.

Commenting on the new partnership, ANZ Managing Director Products Bob Belan said: “At ANZ we are determined to bring our customers new payment experiences so they can pay the way they want to.

“We’re pleased to be partnering with Garmin to bring our customers a payment option with one of the world’s leading wearable device companies that has a proven track record in innovation.

“The wearables market continues to grow with more than 26 million devices shipped worldwide in the third quarter of 2017 alone, so we know our customers will appreciate the ability to pay on their Garmin device.”

Customers will need a Garmin account and one of its vívoactive 3 devices to pair with their Apple or Android smartphone so they can use the payment service. Once they have set up the device with their card, customers can simply tap their device at a contactless payment terminal to make a purchase.

Bendigo Launches Apply Pay

Bendigo Bank appears to have quietly broken ranks and launched Apple Pay despite the fact the bank was on the list of banks who were  part of the failed attempt via ACCC to get Apple to allow NAB, CBA and WBC to have access to Apple’s NFC chip with their own apps. ANZ already offers Apple Pay.

Now you can enjoy all the benefits of your Bendigo Bank Mastercard with Apple Pay on iPhone, Apple Watch, iPad, and Mac. Using Apple Pay is simple, and it works with the devices you use every day. Your card information is secure because it isn’t stored on your device or shared when you pay. Paying in stores, apps, and on the web has never been easier, safer, or more private.*

To pay in stores, there is no need to wake your iPhone or open an app. Just hold iPhone near the reader with your finger on Touch ID. You’ll see “Done” on the display, along with a subtle vibration and beep, letting you know your payment information was sent. On Apple Watch, double-click the side button and hold the display of your Apple Watch up to the reader. A gentle tap and beep confirm that your payment information was sent.*

Available anywhere contactless is accepted. You can pay with your iPhone or Apple Watch anywhere you can make contactless payments

ANZ adds eftpos cards to Android Pay

ANZ today announced the launch of Android Pay for eftpos cardholders, which means all its Australian customers can now easily make secure payments on their smartphone.

From today ANZ’s eftpos cardholders can access Android Pay to easily make secure purchases on their compatible device wherever contactless payments are accepted.

ANZ continues to lead the banking sector with its mobile payments services by delivering more options for customers than any other major Australian bank.

Commenting on the new mobile payment option, ANZ Managing Director Products Bob Belan said: “ANZ customers now have access to a complete suite of digital payment options regardless of which card or device they use.

“We’re committed to maintaining our leadership position in offering customers new, simple and convenient payment experiences so we’re pleased to provide our eftpos cardholders the option to now make purchases with their Android mobile device.”

To use their eftpos card on an Android device, cardholders simply need to download Android Pay from the Google Play Store and follow the prompts.

eftpos launches Android Pay for almost 2m ANZ and Cuscal customers

From ITWire.

eftpos payments are now available on Android Pay, with ANZ and Cuscal being “the first Australian financial institutions to make the service available to eftpos-only cardholders”.

eftpos acting chief executive Paul Jennings said eftpos on Android Pay would “provide eftpos mobile payments to cardholders, with secure access to their own money in real time and less likelihood of being surcharged”.

The service will use “Australia’s first domestic Token Service Provider (TSP) for increased security, by removing confidential consumer card data from the eftpos payment network and replacing it with a unique payment token”.

The eftpos TSP, which was built in partnership with Rambus, “enables eftpos to generate and manage its own payment tokens, facilitating secure digital payment experiences for eftpos cardholders”.

We’re told that the technology provides “additional benefits to consumers when faced with a lost or stolen mobile phone or card. The user is able to disable mobile payments quickly, without needing to cancel the physical card itself”.

ANZ and eight Cuscal-sponsored credit unions and banks are offering customers the choice of using eftpos on Android Pay, including People’s Choice Credit Union, Sydney Credit Union, Woolworths Employee’s Credit Union, CUA, Nexus Mutual, and FCCS.

Jennings said: “Almost two million cardholders will now have the capability to make eftpos payments on their Android mobile devices. This will bring the convenience of secure, in store mobile payments to many Australians for the first time.

“We are thrilled to team up with Google, ANZ and Cuscal to provide customers with access to their own money via their Android mobiles at the shops, with added benefits such as the ability to track their bank balances in real time.”

So, how do you use the service?

Cardholders simply need to download Android Pay at the Google Play Store and follow the prompts.

Pali Bhat, vice-president of Product Management, Payments, Google, said: “We’re excited to bring the security and simplicity of mobile payments via eftpos for Android device owners in Australia.

“Using Android Pay is more secure — and much faster — than rummaging through your wallet for a plastic card. That’s why we’ve worked with eftpos to enable Android Pay at almost 800,000 contactless payment terminals in Australia where people can seamlessly Tap & Pay with eftpos using their Android devices.”

Adding his comments on the new mobile payment option is ANZ managing director of Products, Bob Belan, who said: “This is great news for our eftpos cards customers who can now also use Android Pay to easily make secure payments at contactless terminals.

“Our customers are using mobile payments in growing numbers, and we are pleased be working with eftpos in offering this capability to even more ANZ cardholders before the end of the year.”

Cuscal’s general manager Product and Service, Robert Bell, said: “We’ve partnered with eftpos and Google to ensure that our clients’ eftpos cardholders now have the convenience of paying via their Android phones.

“This adds to our large portfolio of leading digital payment solutions. Cuscal enables multiple financial institutions to compete and lead in payments solutions. We provide our clients’ customers choice in the way they want to pay.”

CBA and Westpac launch facial recognition on the iPhone X

Commonwealth Bank says it is the first Australian bank to offer customers secure access to their accounts using Face ID, the facial recognition technology built into Apple’s new iPhone X.

iPhone X users will be able to use Face ID to securely log-in to the CommBank App.

“Our customers use secure fingerprint logins on the CommBank App about 30 million times a month,” said Pete Steel, Commonwealth Bank Executive General Manager of Digital.

“Extending that functionality to Face ID is part of our ongoing work to provide a better banking experience to our customers through simple, easy and secure features.”

Face ID is one of the most secure ways to log into an account because it performs in-depth mapping of an individual’s face using more than 30,000 points of reference. These include the spacing between, and shape of, facial features.

“While we strive towards convenience and ease of use, we don’t implement new technology without being able to guarantee security for customers,” he says.

Westpac has subsequently also announced a similar facility.

This despite neither banks offering Apple Pay.

The Next Round In The Payments Wars

The Commonwealth Bank, Westpac, and National Australia Bank are working together to build the next generation of mobile payments and wallets in Australia.  These banks are not offering the Apple Pay solution, unlike ANZ. They sought unsuccessfully  to negotiate collectively with Apple in order to gain access to the iPhone’s near-field communications (NFC) chip which would allow their own apps to make contactless payments.

The first initiative of the new joint venture will be the development of a payment app that will enable instant payments for all Australians, including small businesses, regardless of who they bank with.

Beem will be a simple and convenient free app enabling anyone to make an instant payment using their smartphone, and request payment from someone who owes them money or to split a bill. The hope is that it will become an industry-wide payment solution, and is open to interest from other banks, industry, and retail players.

Beem will work on both iOS and Android smartphones, and will be compatible across devices and different banks – users won’t need to be customers of CBA or Westpac or NAB.

Commonwealth Bank Group Executive of Retail Banking Services, Matt Comyn, said Beem will give Australians a simpler way to pay and request payments, a pain point for both consumers and small businesses.

“Two thirds of small businesses say they are owed money for completed work, with around $7,300 owed to small traders. Beem will give small businesses a cost effective and easy way to collect payments instantly and on the go for their goods and services, without having to take the larger leap into using merchant credit facilities, or issuing invoices to be paid later,” Mr Comyn said.

Beem will benefit from bank level security and encrypted user account information. Every transaction will be authenticated and subject to real-time fraud monitoring.

Westpac Chief Executive, Consumer Bank, George Frazis, said Beem expands payment choices for customers, and is the latest offering in Australia’s long history of innovative payment solutions, including EFTPOS, Pin@POS, chip, tap and pay, and wearable payment devices.

“We are committed to giving our customers more choice by supporting a range of convenient ways for them to pay and transfer their money. Customers will soon be able to ‘Beem’ free payments instantly using any smartphone, regardless of who they bank with and without the need to add account details.

Innovations such as Beem and wearables are leading the way in payment solutions because they’re convenient, easy to use, and fit in with people’s lifestyles – we firmly believe in going to where our customers are and providing them with greater choice,” Mr Frazis said.

NAB Chief Operating Officer, Antony Cahill, said the bank is continually looking for opportunities to make banking easier, simpler, and more convenient for its customers, both consumers and businesses.

“Think about all the times you’ve gone out for dinner and split the bill – this app will make it easy for Australians to pay their family and friends instantly. Or, when you go to the local market and need to pay the butcher – this means instant payment through your phone. This is the industry working together to deliver an innovative payments solution, no matter who you bank with,” Mr Cahill said.

Commonwealth Bank is currently conducting user testing of a Beem prototype, with the app to be available for download on iOS and Android smartphones later this year.

Beem will initially have a sending limit of $200 a day ($6,000 per month), with a monthly receiving limit of $10,000 as an initial risk control measure.

Beem will be available to all bank customers and small businesses that hold a global scheme debit card issued by an Australian Authorised Deposit-taking Institution (ADI).

The joint venture will be independently run, with a mandate to actively seek new participants to join the initial three participants. Future product initiatives beyond the payments facility are being planned, including digital wallet features and capabilities.

Westpac Reveals ‘PayWear’ Wearable Payment Technology

Given the stalemate with Apple Pay, it is interesting to see the recent announcement that Westpac customers will soon be able to tap-and-pay hands-free with the announcement of a new wearable payment option, ‘PayWear’.  “Westpac PayWear uses the same contactless payment technology as your Debit Mastercard®. You simply tap the accessory wherever contactless payments are accepted and the transaction will be debited from your everyday bank account”.

Westpac 'PayWear'

PayWear Essentials, available early December, includes a silicone band and a ‘keeper’, which can be easily attached to an existing watch or fitness band, containing a microchip (PayWear Card) linked to the customer’s everyday transaction account.

Customers can tap and pay in the same way they regularly do with their debit card, without having to reach for their wallet or smartphone, through the new range of waterproof and battery-free wearable accessories.

Westpac Group Chief Executive, Consumer Bank, George Frazis said customers across the country embrace greater convenience and expect to be able to simply tap-and-pay.

“Australia has the highest contactless penetration in the world, and cards continue to replace cash as consumers demand convenience. We’re always looking for new ways to help make our customers’ lives easier, and with our new PayWear products, customers will be able to pay on-the-go, in one hands-free step.

“With PayWear, there is no need to search through a bag, login to an app or worry about battery life. It will be on the go with our customers and ready for use when they are.

“When speaking with customers, personal style and choice were important. In fact, 70% agreed that they would only wear a wearable device if it suited their own personal style and lifestyle. This is why we will collaborate with iconic Australian designers to create a variety of wearable accessory designs to suit different tastes, preferences and styles,” Mr Frazis said.

The first Australian designer to be announced, who will design a range of unique products for Westpac PayWear, is award-winning surfboard shaper and entrepreneur, Hayden Cox of Haydenshapes. A range of leading Australian designers will be hand-picked to speak to a wide mix of everyday Australians – from surfers and fitness fanatics, to busy parents, professionals and festival-goers.

Hayden Cox says the opportunity to collaborate with Westpac has been a natural fit when it comes to designing products that are innovative, functional and stylish.

“Functional design is something I’ve always been passionate about – particularly technology and products that improve experiences for people. It was this passion which led me to creating and filing a patent on my parabolic carbon fibre surfboard construction, FutureFlex, and wanting to uniquely design my product to improve the surfing experience.

“Working with Westpac to create an exclusive range of wearable accessories which evolve the way people make contactless payments is exciting to me. This product signals an inevitable and innovative progression of our everyday routines. While some customers may opt for the simpler Essentials range, there is also a part of the market that will want something with a little more flavour. This is where the products I’m designing will sit.”

All Westpac customers with an everyday banking account eligible for a Debit Mastercard® will be able to order a PayWear Card online via Westpac Live, which can be inserted into the PayWear accessory of their choice. The PayWear Essentials range of wristband and keeper will be available from December. The Designer range is due to be available to customers in early 2018.

Westpac customers will be able to use PayWear to make purchases on all contactless-enabled terminals.

“Unlike many other wearable payment options, our customers don’t require an expensive device to access this technology. Customers will be able to get a PayWear Essentials accessory free of charge for a limited time, making it accessible to all our everyday banking customers,” Mr Frazis said.

The announcement of PayWear builds on the Westpac Group’s strong history of digital innovation, as the first to introduce internet banking to Australia, and the first in the world to deliver fingerprint sensor technology (Touch ID) to mobile banking logon in 2014.