Mobile Payments: From Emerging Markets To Emoji Madness

Shape Security Secures Funding And Mobile APIs

Security is a major concern for the mobile payments industry and a barrier to consumer adoption. That’s why plenty of money is being thrown at companies that can deliver secure payments.

Derek Smith, CEO of Shape Security, showed no modesty when he announced that the company had raised $40 million in funding, bringing total funding to date to $106 million. Smith told eWeek: “We could have raised a lot more funding, but the guidance from our board was to take only the amount we needed to achieve profitability.”

Shape Security’s ShapeShifter technology includes a hosted model and a virtual appliance, and the back end analyzes system transactions. Shuman Ghosemajumder, CTO of Shape Security, said: “We’re also now active in native mobile applications, and we’re also able to protect mobile APIs … Shape Security is now protecting 20 percent of the world’s in-store mobile payments.”

Ghosemajumder also noted that most hackers now target the API and not data on the devices. “In many cases, attackers using desktop systems and cloud servers are impersonating mobile devices, sending requests to a mobile API at high volume. What we’re able to do is distinguish between automated attacks coming from cybercriminals from requests coming from a native mobile app that has been secured with our SDK.”

Part of ShapeShifter’s strategy is to prevent attacks, using deception technologies that change the response to an attacker. “If the attacker is fooled by the response, that can offer a certain amount of protection.”

“Overall, what we’re doing is preventing attackers from reaching any type of scale from automated attacks,” Ghosemajumder said. “There are various mechanisms by which you can do that, and deception is just one of them.”

India’s Intelligent ATMs

In which country are there one-stop payment centers that help with everything from buying an airline or movie ticket to applying for an instant loan? ATMs in Mumbai, India, do all that and more, according to The Times of India. New intelligent ATMs use registered mobile (OTP) for payments and the Aadhaar platform for deposits and remittances.

Also, the AGS innovation center in Mumbai has designed ATMs that dispense gold coins with a certificate of authenticity, and ATM managers and manufacturers are considering introducing machines that offer foreign exchange and cash recycling. So, head to the corner ATM kiosk for all things payments.

Abundant Africa

The IMF told the AFP at a recent conference on promoting access to financial services in Dakar, Senegal, that Africans are “leading in the world” in their uptake of mobile banking services.

And according to Pakistan’s Daily Times, more Africans are using the banking services offered through mobile phone companies, and many experts believe that this trend will reduce poverty. Those using mobile services are not just those in urban areas; people in remote villages are also using mobile services.

In many areas, the roads are in such poor condition that contacts who carry cash to villages are unable to reach many of the rural inhabitants. Cash deposits are therefore made at kiosks, and money is sent via text in many areas by those who have no access to traditional bank accounts.

Mitsuhiro Furusawa, deputy managing director of the IMF, told AFP that the potential for financial development in Africa is “substantial” and that wider access to banking services could stimulate an additional 1.5 percent in annual growth. Rural communities and women, in particular, are targets for improvements in financial services.

Orange Money, M-Pesa and Tigo Cash are already widely used in sub-Saharan Africa. The IMF reported that 11 percent of Africans and 60 percent of Kenyans have a mobile banking account. The global average figure is 2 percent.

According to Jean Marius Yao, president and director general of Orange Money in Ivory Coast, Africa’s enthusiastic adoption of mobile banking has evolved from a simple way to transfer cash into an entire parallel system of micropayments of everything from saving accounts to business loans.

Roger Nord, deputy director of the IMF’s African Department, explained the link between financial development, economic growth and poverty reduction. For example, Kenya’s M-Pesa supports livelihoods by providing access to medical insurance, bill payments and small business loans to those who would be excluded otherwise.

Mastercard In Africa

The enthusiasm for digital innovation that is evident in the Africa and Middle East regions has not gone unnoticed by Mastercard, which has joined forces with the Bank of Kigali and RwandaOnline to launch a new online payment solution to bring Rwanda to the digital age. More on that later.

In contrast, Western Europeans are relatively resistant to digital change. The Mastercard Impact of Innovation study surveyed 23,000 consumers in 23 different countries across Europe, Africa and the Middle East to determine their attitudes to digital technology. The findings showed that consumers in technologically advanced countries are less enthusiastic about digital innovation than their peers in less advanced countries, but almost all people in all regions consider digital innovation to be a good thing.

Not only that, but consumers worldwide want more from digital technology and in all aspects of life and, particularly, speed. Ninety percent of consumers use their smartphone more than any other device, and users would prefer biometrics or fingerprint recognition rather than PIN codes for authentication because they are quicker and don’t take up memory space.

The study also found that consumers are assessing how digital technology can be applied and differentiating between areas where there is sufficient innovation in mobile. For example, 80 percent of those surveyed consider innovation sufficient for social networking, global travel, hospitality and finance, but there is more work to be done in health care, public education and public transport.

Ninety-two percent of consumers across regions have a positive outlook on digital technology and the future of technology, and a paltry 8 percent of those polled think digital innovations are having a negative impact.

Interestingly, those who live in less technologically developed countries are not only more enthusiastic about digital innovation than consumers in more developed markets, but they are also less resistant to change. Seventeen percent of Western European consumers claim to be resistant to digital change, which is the highest ratio of any region. The Swedes are an exception with over 70 percent of respondents ready for digital change.

The survey found that Central and Eastern European countries and those in the Middle East and Africa have the highest number of users who actively embrace new technology. Almost 30 percent of consumers are “eager promoters” of technology in Russia, Turkey and Ukraine, and those in the Middle East and Africa region just want more innovation in all areas.

According to Dr. Carsten Sørensen, associate professor in digital innovation at the London School of Economics and Political Science (LSE), developing countries and regions may have a more positive perspective on digital technologies because they see potential for them to improve their lives.

In contrast, in highly developed countries, advanced technology is a reality, and the negative effects, such as security problems, might taint their perspectives. The survey confirms that a primary concern of consumers is the security of bank accounts followed by the security of their personal data.

Overall, the willingness in most regions to accept new technology shows a shift in consumer opinion and behavior. According to Ann Cairns, president of international markets at Mastercard: “This study shows a major global shift in consumer behavior. People across many diverse countries want a digital lifestyle and think it brings benefits to their lives … It’s extremely exciting to see the pace and appetite for change.”

And to satiate the hearty appetite for digital payments in the Africa region, Mastercard, the Bank of Kigali and RwandaOnline have partnered to launch a new online payment solution in Rwanda. Called Irembo, the payments solution is powered by Mastercard Payment Gateway Services. Africa is of strategic importance for Mastercard and its competitors; partnerships are being established in anticipation of a regional economic transformation.

The payment gateway was initiated in June by Mastercard and the Bank of Kigali. The new payment gateway marks the first milestone of a Memorandum of Understanding between Mastercard and the Rwanda Development Board (RDB), which specifies the digitization of Rwanda as a goal for the nation’s Vision 2020.

RwandaOnline, which has partnered with RDB for 25 years, developed the online portal. Using the portal, individuals can make online payments to any of six government entities for items such as driver’s licenses, birth certificates and travel visas. It is hoped that the solution might stimulate entrepreneurship as merchants can use the technology to create their own online portals and break into the eCommerce market.

Digital financing is another area where the unbanked and small businesses can benefit. McKinsey & Company estimated that the adoption of digital finance could add $3.7 trillion to the GDP of emerging markets and improve financial inclusion within those regions. According to a recent McKinsey report, 200 million micro, small and medium-sized enterprises (MSMEs) have limited or no access to credit, and digital financing provides a solution.

Daniel Monehin, division president of sub-Saharan Africa at Mastercard, said: “The launch of the Mastercard payment gateway service is an important milestone for us. By introducing this new technology to the country, we are helping merchants and consumers leapfrog into the digital age.”

In Asian developing countries, there is also movement in mobile payments. In Afghanistan, police salaries are paid by mobile, while India has just launched an ambitious national payments system for smartphones.

UK Rail Commuters Might Soon See Mobile Payments

Turning to developing countries, in the north of the U.K., commuters may soon be able to use host card emulation-based mobile payments on a trial service in the autumn. The mobile app is by ITSO, a nonprofit organization, which supplies the nation’s technical standards for smart ticketing.

Rail staff will be conducting a trial and will be issued NFC-enabled smartphones with the ITSO HCE app. The trial will be on a line in the north of the U.K. Depending on the outcome of the trial, the system might be considered for broader adoption.

EMV Slow But Steady

Back at home, EMV is taking hold in the U.S., but according to payments technology company Cayan, it is causing delays in checkout flow of about 12–16 seconds because cards must be inserted and cannot be swiped. These seconds add up to 116 million hours a year and do not include the time it takes for a customer to determine if a terminal is EMV-ready and if they should insert their card or swipe.

Although large retailers have adopted EMV and the technology is preventing fraud, it still has a long way to go with smaller retailers who consider their fraud risks to be low. According to Mastercard, fraud decreased by almost 40 percent from Jan. 2015 to Jan. 2016.

Card companies are trying to eliminate the delays. Amex Quick Chip enables cardholders to dip their chip cards during the checkout process and remove them before the transaction is completed.

Mobile payments would speed up checkout, and this might incite some. A report by Javelin noted that the adoption of mobile wallets by merchants and card issuers has risen from 11 percent to 21 percent in three years, but the transactions per person dropped from 3.7 per month to just three from 2013 to 2015.

Samsung Pay’s Birthday Gift

No, it’s not an exploding phone. Samsung Pay is celebrating one year as a leading mobile wallet in the U.S., and users of the app are also receiving the gift of coupon service from Quotient Technology. This feature will allow Samsung Pay users to redeem gift cards from major retailers and offer the ability to earn rewards from merchant membership programs. By continuing to add features and services, Samsung Pay is responding to consumers’ penchant for loyalty cards — 60 percent of users have used loyalty cards and over 65 percent want to, according to Business Intelligence.

And what gift is Samsung getting for its one-year anniversary? A significant number of new users if all goes well.

Although the rate of adoption of mobile payments is still slow — 55 percent of consumers want to pay by credit card through their mobile wallets, but only 23 percent actually have — Business Intelligence forecasts that mobile payments volume will reach $503 billion by 2020. Contrast that to $75 billion in 2016.

The main barrier to adoption is consumer tendency to retain existing habits and payment methods. Motivation for mobile payment adoption is likely to come from loyalty programs and P2P payments, which makes Samsung’s move a timely one. Samsung is the only mobile wallet offering coupon service to existing and potential mobile payment adoptees.

Venmo Goes Veggie

Let’s conclude with some fun facts. So, what’s at the top of the Maslow hierarchy for millennials and Gen Xers? Food, booze and …eggplant?

LendEdu looked at the emojis attached to Venmo app transactions for 500,000 payments. The themes, unsurprisingly, revolved predominantly around food, point-to-point payments … oh … and did we mention food? The most frequently occurring emojis were “pizza slice” and “flying stack of cash.”

Emojis related to beer, wine and champagne accounted for one-third of all activity. While alcohol-related emojis are to be expected, “eggplant” was a theme, particularly in the early morning hours, and only millennials are likely to figure that one out.