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News and Views January 2015

20th of January 2015

Mobile Payments: Predictions – For This Year and For 10 Years from Now

 Mobey Comment: These are realistic estimates on how the payments landscape will change, and David Worthington’s prediction on upcoming challenges in compatibility has hit the nail on the head.

The 10-year predictions on Mobile Payments Today are realistic, but miss completely the European perspective including pending regulation changes.

Mobey Forum feels the expected changes in European regulation are almost ignored by the industry, and are not talked about in professional circles with the depth those would deserve. In our latest member meeting in Vienna we heard Moritz Widekind’s presentation on the topic (the presentation can be found at Mobey Forum’s knowledge center).

HCE in the News

Nine Polish Banks Adopt Visa’s HCE and RBC launches first HCE App

Nine banks in Poland will launch mobile payment services with Visa’s HCE cloud based solution early this year. Banks, including  ING Bank Slaski, mBank, Bank Millennium, Raiffeisen Polbank, eurobank, Getin Bank, Bank Polskiej Spoldzielczosci and Bank Smart are rolling out Visa’s cloud based payment specification. Customers of these banks will be able to pay for goods and services with an Android mobile application that uses HCE functionality.

Meanwhile, Royal Bank of Canada has become the first bank in the country to launch a mobile payment application using host card emulation. The bank’s customers can use most Android mobile phones to use any near field communication enabled Android phone to pay at the POS with the RBC Mobile app anywhere in the world.

Read more on Telecom Paper

Read the Royal Bank of Canada press release

Mobey Comment: The launch initiative of the Polish banks is extremely interesting and shows how Visa is taking a lead in the HCE roll-outs in Europe. According to our sources, Visa does not do any tokenization services themselves, but relies on the 3rd party support from former TSM providers, who have their platforms ready to hop on HCE wagon. Maybe it’s because of this that Visa has been able to move fairly fast. Poland was a natural starting point, since it has the widest acceptance and issuance of contactless cards and terminals.

One of the biggest benefits compared to SIM based NFC models, which was also rolled out in Poland earlier, is that the users do not have to visit their mobile network operator to change the SIM card. Any convenience is good convenience!

Canada’s RBC is moving forward with their hybrid model, which has been a surprise for some in the industry. It seems they have very carefully considered the pros and cons of both hybrid / cloud-only versions, and decided to take the secure route.

ApplePay Has 90% of Market with Promising Adoption Rates

ApplePay is now supported by credit cards that represent 90% of the purchasing volume of the US market, according to Market Insights, after Barclaycard, Sun Trust and USAA among others announcing the adoption of ApplePay. Whole Foods reported that they handled 150 000 Apple Pay transactions in October and McDonald’s claimed that Apple Pay accounted for half of the tap-to-pay transactions  in November.

Meanwhile, ITG Research reports that ApplePay was responsible for 1% of all digital payment dollars in November, and points out that this is an impressive result as the service is currently available only to those with the news hardware and the payment method is supported by a limited number of merchants. The report finds that 60% of new ApplePay customers used the service on multiple days in November, while only 20% of new Pay Pal customers used the service on multiple days. ApplePay customers used the service roughly 1.4 times per week. Upon adopting the service, the average user uses the service for 5.3% of credit card transactions and 2.3% of all dollars spent.

Read more on Market Insights

Read more on ITG

Mobey Comment: PC Pro predicts that ApplePay will launch in the UK very soon after the release in Canada in March. This would mean Apple has to have their puzzle in place: the business model for European market, and the biggest of all, the set-up for tokenization services in Europe. In the US tokenization services are provided by the card schemes, Visa Inc, MasterCard and Amex. This is especially challenging for Visa Europe, which is a separate company from Visa Inc. and has to set up its tokenization process from scratch.


Biometrics and Banking

Below you will find essential links from the biometrics industry gathered by our biometrics workgroup to support the work they are doing in evaluating the use of biometrics in banking.

General Market Information on Biometrics in Banking

Mobile device related information and rumors

  • Apple has received a patent that saves finger prints in iCloud, removing the need to save fingerprints in different Apple devices. However, this opens a way for hackers, according to Daily Mail and Huffington Post. For some reason, this patent was frequently noted in mass market newspapers such as Daily Mail and Huffington Post, which will probably lead to an increased distrust in biometrics amongst consumers. Maybe the best industry comments can be found here by Biometric Update.
  • Long term rumour: Samsung adding iris recognition to its smart phones by MobileID World . MacHash predicts the same.

Roll-outs in banking

  • USAA is rolling out biometrics for logging in to online banking during Q1. This will be the first service in the US to use biometrics for online banking.
  • Barclays is introducing finger vein recognition for its corporate customers in 2015.
  • ING Netherlands is the first bank in Europe to use voice commands and voice authentication for its banking app. See Max Mouwen’s excellent presentation of the service at the Vienna member meeting on Mobey’s members’ area


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