Wednesday, February 8, 2012
In a brief session hosted by Randy Vanderhoof, SCA Executive Director, executives from MasterCard Worldwide, Isis, PayPal Inc. and the New York Metropolitan Transportation Authority answered questions about the changing payments landscape.
First, Ed McLaughlin, MasterCard's Chief Emerging Payments Officer, was asked for details about MasterCard's decision to join the push for the adoption of EMV technology in the United States. McLaughlin said his company is working to provide "a great experience and real security" for consumers – a theme echoed by others on the panel. McLaughlin said MasterCard's goal is to introduce EMV technology in a manner that allows consumers to make payments whenever and wherever they like.
Vanderhoof asked how EMV would fulfill MasterCard's promise to "power innovation." McLaughlin said MasterCard is putting together a framework for payments with the intention of providing customers with a good experience in any environment and allows them secure interoperability around the world. He referred to the United States as an "an island" surrounded by interoperability.
Jim Stapleton, Chief Sales Officer for Isis, the mobile payment network being developed by Verizon Wireless, T-Mobile USA and AT&T Mobility, was asked to predict a timeline for mobile payments. Stapleton said the improved security offered by new technologies such as EMV are to the point where the ability to counterfeit or clone cards is "incredibly thwarted." He pointed out the security improvements are not new and are being used successfully around the world.
"This is not about new technology, it's about the U.S. embracing it," he said. He added that terminal manufacturers such as VeriFone Inc. are already preparing all of their card reading terminals to support the new NFC technology. "No merchant will buy a reader today without this technology embedded in the terminal," he said. He then noted that MasterCard's and Visa's "rigorous time schedule" for EMV introduction in the United States will shorten the transition to the new technology dramatically.
Vanderhoof said the rate of innovation in POS payment is moving at a snails pace compared to mobile payments. Stapleton countered that there is already an "amazing omnipresence" of electronic payment options in the United States that works well. "Now the issue is security and increased consumer convenience," he said. Innovation will come in areas Stapleton called "pockets of value" – the place where payments can still be smoothed and made more convenient for consumers. Stapleton called areas where payments are not optimally convenient "friction pockets" and said smoothing those represents an opportunity to develop pockets of value.
Stapleton said when value pockets are eventually leveraged, the brick-and-mortar merchant world should function in the same way as an online experience: when customers walk into the store, brick-and-mortar merchants will know who the customers are, what their buying habits are, what cards or payment methods they use, and the contents in their carts – and customers will be able to make purchases from anywhere in the store.
Vanderhoof asked Paul Gauthier, Head of Market Intelligence for PayPal to discuss how new payment methods like PayPal's phone number and PIN system at the POS are making inroads into merchant accounts.
"We have a strong customer base, but we don't have to carry the baggage of a legacy system that is a little outdated," Gauthier said. "This is a new world where buying doesn't just happen at a checkout stand. We have to design for a connected world. Our approach is to leverage the cloud. We see the cloud as an aggregation of services. We will evolve as the world evolves."
Gauthier said PayPal's fundamental approach is to not be associated with a single payment method. "We are not contrary or conflicting with NFC," he said. Gauthier said as long as there is choice at the POS for the consumer and merchant "we will have a very innovative service."
Amy Linden, Senior Director of New Fare Payment Systems for the MTA, was asked to explain how the MTA sees itself in the "evolving ecosystem of transactions." She said the MTA is moving its payment process to vehicles the customer is already familiar with. She noted that contactless open payments provide the opportunity to make payments faster and simpler while offering consumers the opportunity to pay anywhere, anytime and any way they choose. They also give MTA the chance to reduce the cost of fare collection, she added.
Linden made these additional points: the key is to allow customers to use payment methods that consumers believe offer a good, secure experience; the launch of an open payment standard all can adopt will make the MTA contactless payment program successful; and challenges and risks are part of adapting to new payment methods, but they are worth taking in the name of economic progress.
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