The Week in Payments Picks, Predictions, Pans and Pushes

Payments players around the globe gathered last week to chat about all things payments and commerce.  As you might expect, there were lots of new products, big ideas and big predictionsshared. We thought you’d like to see the things that we thought were worth sharing.

“I could care less if plastic goes away.  What we’ve seen is that our brand has been enhanced by our digital transformation because people value the service we provide.”

-Ken Chenault, CEO American Express

Ken Chenault told a standing-room only crowd that he tells his people that he wants to be the company that puts American Express out of business.  He’s not scared of the digital future – the thinks the his company’s successful partnerships with players like Uber, Facebook and Twtitter demonstrate he has no reason to be. He’s also not scared of partner Apple Pay – noting that in response to the concern that Apple could make an end run around all of the networks by buying a player like Discover.

“The reality is you can take a defensive mentality and say, ‘I’m going to hunker in the bunker because I am not sure what will happen,'” he said.”

He also noted he thinks it is unlikely Apple really wants to go into the full credit card business.

“Look, I’m an entrepreneur, I’ve run businesses, startup businesses for 20 years. As CEO of this venture, I’ve never in my career found that you get much mileage when you tell your customers what they can or cannot do. And so we’re not operating that way.

– Dekkers Davidson, CEO MCX

After a tough week of defending themselves, MCX head Dekkers Davidson shot back in defense of the CurrentC mobile wallet.  He noted that CurrentC was offering cash-pricing for mobile payments (as opposed to a series of complex interchange fees) and a customer experience that more seamlessly integrates rewards.  And he also defended MCX against the repeated claims that they are anti-competitive, noting the exclusivity deal is a temporary feature.

“So this exclusivity that they’ve acknowledged is very short-lived, I can tell you it’s measured in months, not years.”

Davidson did also note, however, there would be consequences for merchants who ignore the deal when it comes time to set-up launch.

“MasterCard has transitioned from a payments company to a technology company focused on building the operating system of digital commerce. Part of that transformation is reflected in the partnerships with multiple new digital players and the close collaboration we seek with developers and startups. Our goal is to give seamless, real-time access to MasterCard’s products and services and our powerful network, so developers can use our APIs to build the next set of success stories around the world.”

– Mario Shiliashki, Senior Vice President of Open API at MasterCard

MC was one of the primary sponsors of the  2014 Money 20/20 Hackathon and they brought to the table a special prize for the team that won the MasterCard (a “priceless” Las Vegas Experience package).  The MasterCard Challenge focused on the best use of one of two featured MasterCard APIs: MasterPass and Simplify Commerce – in a consumer experience using hardware or software tools (e.g. wearables) in any shopping context such as point-of-sale, kiosks, vending machines, parking lots, cars and toll booths.

“Banking is broken. It is ripe for disruption.  Why would a customer walk into a branch to look at a screen? That’s not innovation, it’s stupid.”

– Jay Sidhu, CEO of Customers Bank

Sidhu is the CEO of a $3.5 billion institution in Wyomissing, Pa. and as a discussion member on a panel called, “Reinventing Banks for the New Payments Ecosystem,” he threw down the gauntlet for a new, better day in banking.  He further went after banking’s sacred cash cow- fees- and noted that they are crippling an industry that is already being hobbled by customers that are deserting them.

“Banks are addicted to fees.  Banks have gotten big, fat and happy on big margins.”

“Organizations are looking for a way to stop pouring resources into costly certifications, stop worrying about large-scale data breaches, and focus on delivering incredible consumer commerce experiences.”

– Robert McMillon, Vice President of Product Security for Verifone.

Verifone was all over the globe this week promoting  global availability of its secure commerce architecture, with particular emphasis on how they can help merchants stave off large-scale data breaches, and reduce the certification burden – particularly for U.S. merchants, acquirers and other payment providers looking to enable EMV acceptance.

The secure commerce architecture decouples payment data from the merchant’s point of sale (POS) system and enables encrypted delivery of this data from the payment terminal directly to the merchant’s processor.  Previously this service had only been online for U.S. Payment as a Service offering, going forward it will be  available to all of Verifone’s direct merchant customers and all merchant acquirers in the U.S. Merchants can use the architecture through integration with their merchant acquirer. Global availability will begin in 2015.

“But the natural consequence of that is that criminals – if they hear more and more about these systems – incidentally more of them will be interested in experimenting with them,”

-Catherine “Alden” Pelker, FBI’s Money Laundering Intelligence Unit analyst

The future of digital currency was a topic of hot conversation worldwide this week, as regulators and entrepreneurs discussed what the future of bitcoin and its digital brothers will be going forward.  Panels focused on on consumer and security challenges as well as some of the promise offered by bitcoin and the technology underpinning it.

An ongoing concern, however, was bitcoins essential appeal to criminal elements.  Though regulators expressed openness to making space for bitcoin, concerns that traffickers in drugs, child pornography and stolen credit cards take their payments nearly exclusively in digital currency.

“B2B and B2C will converge in the internet of things.”

– Edward Simonet, M2M director, Oberthur Technologies

The Internet of Things (IoT) will deliver a new form of commerce in the next few years as the B2B and B2C business models will converge and become B2B2C, Oberthur believes. Someone buying a fitness monitor, for example, is actually buying access to a service that will store and analyse data, says Simonet: “The device is just the tip of the iceberg.” However, with new abilities come new risks, however, and there are concerns new devices connected to open networks presented a new host of security challenges. For this reason, several security measures are likely to be installed, such as a digital signature device to ensure the device’s integrity.

“Our true competition is getting consumers the best experience so they can change their habit away from plastic to mobile.  Our competition is the plastic cards and the cash they already use.”

– Will Graylin, CEO LoopPay

There were no shortage of people talking about Apple Pay and what it all means this week, and Will Graylin thinks that’s all to the good.  Loop announced the release of two new products – a Card Case that allows smartphones to emulate a mag stripe for payments, and an electronic card that can hold pay card data and work like a phone in a mobile transaction (in a situation where one might not want to give up their phone).

Loop says it doesn’t worry about Apple Pay, because it has to worry about getting consumer on board with making a change from a payment type that already works for them.