What comes first – using the mobile device to engage consumers, or enabling them to pay in their favorite physical merchant locations? Proxama’s Payments Division CEO Mike Woods tells MPD CEO Karen Webster that the answer is actually both – and explains why.
KW: Proxama has been around since 2005 and got its start using mobile devices to engage consumers – which has since evolved into enabling payments. Many players today who’ve come into the mobile payments market are starting with payments and then backing into consumer engagement – so the reverse. Why did you first decide to start with engaging consumers before introducing them to the notion that they could also use those devices to pay for things?
MW: It was really through the coming together of two companies late last year. Proxama is focused on two things: mobile proximity commerce and payments. On the proximity marketing side Proxama brought to market a mobile proximity platform called TapPoint, which delivers mobile marketing campaigns. In the digital payments part of the business, we merged Proxama with a company called Aconite Technology, a global payments company with EMV solutions and expertise in payments and mobile technology. Prior to coming together, Proxama worked primarily in the U.K. market whereas Aconite was very much an international company with customers across the world which now included a focus on the U.S. as it begins moving to EMV.
By combining forces, it enabled us to broaden our collective portfolio of payments solutions and also accelerate our cloud-based mobile solutions strategy. Together we now have a consumer and merchant proposition both from a proximity marketing prospective and from a payments prospective. We believe we are the first in the market to offer that, and for our customer base it really differentiates both them and what they can offer their customers as a proposition.
In the digital payments business we offer EMV and mobile payment solutions (both secure element and cloud-based). Our customers are card issuers, card processors, banks and credit unions. We offer a suite of EMV migration solutions and enable those customers to migrate from magnetic stripe to chip. We take a very low risk approach, we don’t ask the customer to throw out all their existing technology, we actually sit alongside them so they are able to protect their return on investment. It’s very rapid and it’s very cost effective.
We then have our mobile payment solutions, which enable customers to transition their card portfolios onto mobile for contactless payments. This all comes together under our enablement platform, or digital enablement platform (DEP) as we tend to refer to it.
KW: As you think about expanding to new markets like the U.S., are you talking to merchants? Or are you talking to issuers? Who do you really think you need to get on board first and why?
MW: Our focus and strategic priority at the moment is very much around the U.S. because the issuers are moving to EMV. We know that migration could take longer than perhaps the deadlines and we think that there is a good opportunity for us and for our solutions. We are using this opportunity to start to build market share across the U.S., with a focus very much around the issuers and card processors.
That’s reflected in the Proxama model for customers in the U.S. like Fiserv, which uses our software solutions to power over 40 million of their consumers. We also recently announced a deal with Navy Federal Credit Union, it’s an EMV migration opportunity and which will be followed by a move to mobile payments.
We are already working with a number of banks looking at deploying Proxama for marketing, which they see as a way of differentiating in the market. On the acquiring side, larger merchant acquiring businesses utilize our solutions to stand out in what is a relatively commoditized market being payments.
KW: You point out the commoditization of payments, where there is a concern on the issuing side of being lost in the branding shuffle. Is this an effort to make the brand of the issuer more visible to the consumer when they move to mobile?
MW: It is important we reinforce the future of mobile payments, because it is not really a question of if but when it will happen. Most important is the technology being endorsed and issuers having a range of viable options so they can give their customers a choice in the payments experience they want. The challenge is how to navigate their way through the complexity. We work with a range of issuers who are working through that complexity, but that is where Proxama’s (digital enablement platform) DEP comes in. It takes away a lot of the complexity of integration and risks of deployment. It enables them to be able to offer their customers the choice.
KW: What exactly do you offer the issuer? From the issuer’s perspective and then as a customer of that issuer, what will they be able to do once the issuer has deployed the solutions that are part of your digital enablement platform?
MW: As part of the DEP, our customers are able to deploy EMV cards, process the transactions and perform the actual issuing as well. Our solution sits within the customer’s infrastructure and provides the ability to move to mobile by deploying other solutions within the platform to move their cardholder base across to mobile. Customers can deploy the first part of the platform and then continue to build out based on the end consumer’s proposition, allowing them to take on more of the platform and deploy additional services around that. Conversely, our clients don’t necessarily need to have deployed our EMV solution if they wish to move to mobile. Any client who already has an established EMV program in place can simply leverage those parts of DEP that enable a new channel for mobile payments.
This setup enables our customers to address the kind of expenses around migration to EMV in a quicker, low-cost, and low risk way, while also future proofing a move to mobile later on.
KW: What difference are you finding in the U.S. market? How are Proxama’s solutions adapted to those differences?
MW: The first thing we found is that everything is much bigger, especially in terms of payments volumes. Customers in the U.S. market want things very quickly. But we’ve been able to take what we’ve learned in our deployments around the world and bring those lessons into the U.S.
One of the things we realize is critical to success in the U.S. is expertise, and with such a large market moving to chip there are many complexities. To bring our experience from deployments across the world to the U.S. market has helped us to stand out.
We have had to adapt to a lot of networking type changes that are required, but in terms of significant differences there really is not that much.
KW: Back across the pond to the U.K., the big news is Apple Pay making the move outside of the U.S. to the U.K. later this month. What is the significance of Proxama’s DEP and Apple Pay’s move into the market? What can your platform do on behalf of merchants who have an interest in both Apple Pay and mobile wallet acceptance?
MW: The announcement of Apple Pay coming to the U.K. is important and underlines the fact that there is a global market and demand for these services. We’re excited by that, however, Apple Pay only provides a solution for those iPhone users, and we believe any issuer would like to deliver services to all their customer base, not just iPhone users.
Proxama’s DEP provides those issuers with a one-stop shop account enablement solution across EMV and mobile payments, across all those operating systems and across all those technologies. So the beauty of that is we can then integrate all those different Apple Pay-like systems with issuers and make that deployment much quicker. Our solution can provide a choice and flexibility to issuers, but most importantly can safeguard the issuers from investing in technologies that may in time become defunct, which we’ve seen happen before with fast moving mobile dynamics.
In the future as APIs are opened up, we believe this will enable Proxama to support larger payment solutions as they come to market, such as Apple Pay, and that’s why we very much support it coming to the U.K.
KW: Are you technology agnostic?
MW: Yes, the way our solutions are designed, built and taken to market enables them to remain very open. What we’ve seen time and time again in terms of the feedback from our customers is how easy the solutions are to integrate because of the way they are designed. They are agnostic and we have many principles in terms of our software and how it’s built to give the customers the choice of how they want to deploy and how deeply they want to integrate, while also allowing a connection to multiple mobile payment schemes within the DEP for the issuer.
KW: What are some of the other things Proxama is working on that reflect the strategy for tackling the U.S. market?
MW: We have a large number of projects going on in the U.S. These projects include EMV and other payments solutions, as well as a growing number of contactless mobile payments opportunities.
We are continuing to make significant investment in innovation and expanding our software solutions portfolio as market dynamics evolves. I think a good example of that is perhaps tokenization, which actually underpins our cloud-based payments platform and it also lends itself beautifully to some broader applications such as safeguarding against fraud and opening up other non-proximity solutions for Proxama as well.
We also now offer a managed PIN solution, which allows banks to issue and manage PINs digitally through a smartphone and move away from the costly paper-based systems in place today. We have many consumers using our electronic PIN distribution solution, helping to remove the fraud issues that come with paper-based PIN distribution as well.
With our proximity marketing capabilities and mobile payment solutions we are continuing to extend into what I call true intra-mobile commerce solutions, where the real value is not just to service providers and banks but also to the end consumers. Imagine being pushed an offer to your smartphone, entering a retail store, redeeming the offer, while receiving points and facilitating the payment all with a simple tap of your smartphone. Proxama’s DEP will deliver all of this, making it a very exciting and compelling proposition for both service providers and end consumers.