Payment Methods

Payments Gets Contextual, A Push From Google And A Miss With EMV

It is no longer “beginning to a look a lot like Christmas” so much as it looks entirely like Christmas everywhere you turn — a fact as distracting as it is festive. Something about the combination of twinkling lights, extremely discounted consumer goods and egg nog renders human beings increasingly less capable of focusing on anything not directly holiday related. The closer Christmas gets, the stronger the effect.  

Such that today, five days out, most of us sitting at our desks are straining to keep a clear mind focused on facts. And while we cannot do much to cure the Christmas-cognition cloud, we can at least help keep all the most important information front and center.  

So where was the action last week that might influence the direction of payments in the months to come?

Well …


Uber – Now Via Facebook

Payments and commerce got what is probably its first “supergroup” last week with the announcement that PayPal (via its Braintree subsidiary), Uber and Facebook (via Messenger) will be working together to bring the American consumer the next big thing in contextual commerce.  

Going forward, Facebook users can now order and pay for an Uber ride via Messenger. Braintree is the backend power in the pair-up, meaning that its tokenization will be used to authenticate consumers and process payments between Messenger and Uber.

This will allow Facebook’s members to access Uber, whether or not they already have an Uber account.  

That part is pretty cool – and quite possibly the foundation for a whole host of interesting contextual commerce mashups enabled by Braintree on and off Facebook.  

“This feature, launching in collaboration with Uber, is just a natural extension of businesses being present and actionable on Facebook Messenger,” Juan Benitez, GM at Braintree, explained in a blog post. “This new functionality sits right at the intersection of increased mobile commerce adoption and the rapid growth of on-demand services, and ties the two together to streamline a truly mobile commerce experience.”

“It’s not just that we are using our two-sided network to really reduce friction on mobile, we’re also seeing checkout start to move to interesting new places. There’s a lot of experimentation in how and where that’s going to happen,” Braintree’s CEO Bill Ready told MPD CEO Karen Webster in an interview before the official announcement was made.

And that is a trend that he expects to continue in the commerce and payments ecosystem.

“I think you’re going to see the same thing with checkout moving outside of the traditional checkout page on a merchant site or even checkout pay in a merchant’s app. Or the in-store checkout aisle. The two-sided network as well as our tokenization platform that we’ve built up over many, many years lets us take friction down as we are doing with One Touch, but also lets us start to allow merchants and consumers to connect in these new contexts in more seamless ways,” Ready said.

The future of contextual commerce, Ready noted, is all about having “more portability of how [consumers] can use their payment credentials,” which PayPal via Braintree plans to be a key enabler of.

“We’re enabling a broader set of use cases for these kinds of experiences where you might have payment information [and] checkout capability right now confined to a very specific experience that we are going to broaden,” Ready said.

“Whichever side of that your payment instrument is on, we’ll conduct a transaction seamlessly via our tokenization services so that the user can have a great experience the whole way through, and not have to go re-enter the information or worry about how payment information is facilitated between two different apps. We just make it seamless, regardless of where [the consumer] had provided payment information,” he continued.

By Braintree powering the payments vehicle between Uber and Messenger, it allows the tokenized transaction to seamlessly move from one application to the other in a manner that’s authorized by the user, Ready explained. This is the value that PayPal and Braintree bring to the table in this partnership.  

Sort of like having a card on file with Braintree and PayPal and being able to use those credentials anywhere that commerce happens.

Can you spell game changer?


Android’s Active Week

There is always something to be said for a big finish, and it seems the team at Google’s payments arm has decided that what 2015 needed was a big pop of news to wrap up the year.  

Google led off the week with an announcement that going forward, users will be able to send money by using just a phone number.

With the latest version of the Wallet app, funds can be sent directly to a mobile device with a secure link via text message. The recipient can then use the link to enter their debit card information in order to claim the money, which will be available in their selected bank account in minutes, Google said via blog post.

And like all good payments apps, Google Wallet is going cross platform and will soon be available in Apple’s app store.  

Earlier this year, Google took the necessary steps to make its mobile payments service FDIC-insured — giving its users a safer way to store their money.

Google kept the action coming with the further announcement mid-week  that Google’s contactless payment solution, Android Pay, will now be available through the mobile checkouts of several Android apps in the U.S.

“Since our launch this fall, we’ve seen millions of people set up Android Pay, and the vast majority of them are using tap-and-pay with their Android devices for the first time,” Pali Bhat, Android Pay’s director of product management, said in a blog post on Tuesday (Dec. 15).

“Now, we’re ready for the next step: We’re working to bring Android Pay’s simplicity and security to purchases within apps and to people in more countries around the world,” the post continued.

Android Pay is compatible with all NFC (or HCE) enabled devices using any OS released since KitKat. Google officials confirmed for PYMNTS that Android Pay is compatible with roughly 70 percent of the Android phones currently in the U.S.

According to Google, Android Pay is already accepted at more than 1 million locations throughout the U.S., and the company has big plans to continue the global expansion of the payment method.

That includes a new loyalty program offer in conjunction with Coca-Cola. The promo? Tap your phone on an NFC-enabled Coke vending machine, get a Coke and get points added into your Android Pay account for future purchases.

Google also managed to get the edge on Apple last week with an announcement that they will be expanding into Australia with the support of several of the nation’s big banks. Though Apple Pay has technically already launched in Australia, it is only an option for American Express customers. The nation’s issuing banks — the force behind over 70 percent of the credit and debit cards in Australia — have thus far been unable to come to an agreement on the cut of interchange fees Apple charges banks to be signed on with Apple Pay.  

Bhat confirmed that Android Pay will launch in Australia during the first half of 2016, with an expectation that more countries will be added throughout the coming year.


EMV’s Slow Crawl

It is safe to say that thus far, things have not gone quite as expected for EMV’s deployment in the U.S. In fact, from the word “go” on Oct. 1 when the liability shift went into effect, EMV has been playing catch up in the U.S. market.

Of 12 million merchant terminals in the U.S., only 314,000 were EMV-enabled by Oct. 1 — and not all of them were activated and in use. Yikes.

The card side was a bit more prepared, with roughly 250 million cards upgraded to include chips. But that’s still a small drop in the proverbial cards bucket. There are 2.1 billion cards in circulation across all networks and platforms.

“There were expectations that we would be 100 percent deployed across issuers, acquirers, processors and merchants,” Verifone’s Lori Breitzke noted in a recent PYMNTS digital discussion. “It’s now obvious it’s going to take a good deal longer than that.”

And the picture gets even less rosy when one takes a closer look at the retailers that have made the switch.  

A recent survey conducted by Consumer World revealed that less than 46 percent of major retailers are currently using their EMV-enabled terminals. That means that most, while they have the new hardware, have not yet turned it on at all (or, in some cases, any) of their retail locations.

Edgar Dworsky, founder of Consumer World, told NBC News that he noticed during holiday shopping that though he saw a lot of chip terminals, almost none of them were in use. Further study revealed that only 10 chains had enabled the chip card function chainwide: Best Buy, Home Depot, Lowe’s, Macy’s, Old Navy, Rite Aid, Sam’s Club, Target, Walgreens and Walmart.

Bed Bath & Beyond, CVS, Costco, Foot Locker, Kmart, Kohl’s, PetSmart, T.J.Maxx, Toys”R”Us and Whole Foods all noted they plan to roll out the changes gradually throughout 2016.

“It seems crazy that all of this money is being spent to send out replacement cards and to install all the new payment terminals at these big name stores, but nothing has really changed — the security is no better,” Dworsky commented. “Plus, it’s really frustrating and confusing for shoppers who see the new terminals and don’t know whether to swipe or dip their credit card.”

Not a glowing review.  

So what is the moral of the story this week?

Payments has a Traveling Wilbury to call its own, Google is getting very serious about payments and EMV has a lot of room for improvement in 2016.  

Merry Christmas!


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