7 Big milestones that Payments Industry crossed this year

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7 Big milestones that Payments Industry crossed
this year
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Pay with Wearables and Internet of Things

• Smart-Watch
• Numerous international exhibitions like the
  Consumer Electronics Show in Las Vegas, the
  Mobile World Congress in Barcelona saw the launch
  of Smart Watches by big companies like LG,
  Samsung, Sony, Qualcomm and many other players
  creating a wide scope for e-commerce and payment
  technology firms to target the smartwatch market
  space.
• In February 2014, a company named LevelUp
  successfully deployed its payment platform on the
  Pebble smartwatch enabling the watch to generate
  QR codes which can be scanned at POS to make
  relevant payments.
• Samsungs Galaxy Gear 2 comes with an integrated
  camera which can find other applications in
  payment methods requiring visual imagery
  techniques. The LG GD910 smartwatch comes with
  voice commands capabilities which can find use in
  soundwave related payment technologies.
• The Sony SmartWatch 2 is integrated with NFC
  hardware which itself finds wide use in payment
  domains. Casios G-shock smartwatch is BLE
  (Bluetooth low energy) enabled  and can find use
  in Beacon related payment modes.

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• Google Glass
• Google Glasses hosts a wide range of features
  which can be applied to payment methodologies.
  Customized apps can be installed on this device
  to enable intuitive interaction with banking
  e-commerce firms.
• In June 2013, a Ukrainian bank named PrivatBank
  installed such an application which gave the
  glass user the power to perform a variety of
  payment options.
• Using the app, the user can directly pay bills by
  simply clicking pictures of them, pay by voice at
  places like fueling stations and scan QR (Quick
  Response) codes by simply looking at them and
  order the payment process by simply saying Pay.
• Other functionalities can be embedded involving
  authentication by QR codes at POS terminals as
  done by the company Intuit.
• Practical scenarios are possible where users
  could simply find the nearby ATM using Google
  Glass, walk up to the machine, scan the relevant
  QR code and make withdrawals without the need of
  remembering PINs.
• Banco Sabadell, a Spanish bank actually got an
  app developed in October 2013 to make such
  scenarios possible.

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• Internet of Things
• The internet of things talks about the virtual
  presentation of identifiable objects in the
  internet-like structure. One such prominent
  object is the smartband.
• Those available in the market are also referred
  as activity trackers or fitness trackers. But the
  embedded technologies in these bands can find its
  usage in the payment technology forum.
• In the past, companies like Disney have shown
  capability of NFC enabled bands through MyMagic
  kind of solutions.
• The band Disney offers to the people coming to
  its theme parks to be used for payments at rides,
  stores, hotels, etc.
• The recent times have shown big companies like
  Samsung and Huawei coming with advanced form of
  bands which can truly be called as smartBands.
• The Samsung S Band is a known activity tracker
  which has unique RFID capabilities to even track
  your smartphone. Such RFID capabilities can find
  a use in RFID enabled payment applications.
• Samsung Galaxy Gear Fit and Huaweis TalkBand can
  find significant use in the NFC tagging based
  payment system and Beacon related applications.

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Bypassed the secure element and HCE On 20th
March 2014, NFC forum issued a statement that
essentially waved the green flag at Host Card
Emulation (HCE). As the industry consortium
dedicated to the global deployment and adoption
of NFC services, the NFC Forum sees HCE as a
promising addition to the portfolio of NFC
solutions that could potentially accelerate
market growth. HCE is supported by NFC Forum
specifications, including the NFC Controller
Interface (NCI) specification, which in
combination with other standards, such as ISO
14443 and JIS X 6319-4, enables HCE
implementations. Service providers need to
evaluate and determine the best place to store
credentials for their solutions, keeping in mind
the trade-off between security risks and
convenience. The key goal of HCE is to bypass
the need for an app to access a phones secure
element in order to make an NFC payment
transaction. HCE accomplishes this by storing
payment information in the cloud rather than on
the secure element. So where did it all start?
While some startups were working on it, the real
momentum came when, with the release of Android
4.4, Google introduced a new platform support for
secure NFC-based transactions through Host Card
Emulation (HCE), for payments, loyalty programs,
card access, transit passes, and other custom
services.
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Industry experts on HCE Nick Holland, senior
analyst of payments at Javelin Strategy
Research Host card emulation may also provide
some fraud mitigation. We will see a more
holistic response to effectively dealing with
card fraud and plugging the gap, when fraud
migrates to card-not-present transactions Thom
Janssen, Managing Consultant with UL Transaction
Security says HCE may accelerate the
introduction of NFC services, because it provides
an optional more simple but less secure way to
provide an NFC card emulation service. It has
great added value for service providers that can
accept a reduced level of security in exchange
for an improvement of other factors such as time
to market, development costs and the need to
cooperate with other parties. Tom Noyes says
HCE Apps will replace the SE based card
emulation apps. Replace is more from a business
context than from a technical one. SE based
applications (like a door key, or healthcare
card) could still survive.. but why would anyone
want to pay the MNOs RENT if you dont need to.
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Entry of Tech giants such as Amazon, Apple and
Facebook marks rapid innovation ahead
Amazon While e-commerce is on the rise and there
is no shortage of Tech Press coverage about it
being a 1.5 trillion industry in 2014, that
number remains but a fraction of the staggering
15 trillion global commerce figureand Amazon
knows it. If you know anything about the retail
giant, you know theyre not content to be a big
fish in a small pond. That is why they have been
making several steps to enter, and possibly
dominate brick and mortar as they have with
e-commerce. Last year, we learned that Amazon
acquired GoPago Inc., a mobile app, enabling
consumers to pay for goods before picking them up
at a store, with the retailer POS system to
processes those orders. This was possibly the
first major hint towards Amazons intentions to
enter the retail space, but intentions were still
unclear. Fast forward to 2014, where we have
recently learned that Amazon will be offering
brick and mortar retailers a Kindle checkout
system. If successful, the implications would be
tremendous. In addition to POS sales, and
potential profits off sale transaction
percentages, amazon would have access to a
currently untapped vault of data surrounding
in-store spending trends. It has been reported
that the checkout system would include Kindle
tablets and credit card readers.
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If a Kindle-based POS system doesnt go far
enough to convince you that Amazon cares about
retail, news of their own physical stores set to
open as early as the coming months should leave
no doubt. And what better place to set up shop
than in their hometown of Seattle. While details
are vague, it has been indicated that the stores
will be nothing but the opposite of what you will
find at amazon.com. The boutique locations will
be stocked with high-end, high-margin items. It
can be expected that Amazon will take this
opportunity to give consumers an exceptionally
hands-on experience, something they have never
been able to provide online. Rings a bell? Yes
Apple has mastered the art and science of
retailing. Other tech firms are also trying to do
it Google, Samsung, Microsoft and others.
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Facebook It looks like Facebook is following the
same path as Amazon the social networking giant
is currently waiting on an approval from the
Central Bank of Ireland in order to begin their
mobile payments service. This is
HUGE! Previously, Facebook has tried to enter the
world of payments via Facebook Credits in 2011
and Facebook Cards. These systems did not catch
on as the company would have liked. The company
also partnered with PayPal to enable users to
link their credit card information to Facebook
login, making online purchases much quicker. Last
year, the company acquired almost 900 Mn via
fees charged on transactions through the social
network. This usually applies for in-app
purchases on their video games. The company takes
a 30 cut of app payment revenue generated by any
game on Facebook. However, most of the companys
revenue is still obtained through advertising
which is why Facebook is so keen to enter the
payments industry.
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Mobile First Banking takes centerstage
In the last few years, a new genre of virtual
banks has come up, that is primarily targeting
the tech-savvy mobile users for selling banking
and financial products. Whether such companies
(Mobile-Only banking services) will have a
telling impact on the payments industry in months
to come, or not, but these Mobile banks are
certainly making lots of buzz in the industry as
of now. Let us take a look at some of the key
players present in this space and
prospects/potential of such banks Some of the
key players in this category are GoBank, Simple,
Moven and Fidor Bank. All such banks are trying
to target customer demographic that is used to
mobility products and services. They dont have a
bank license of their own, and are basically
working as front-end to an FDIC-chartered
bank. On the other hand, Fidor Bank, the lone
major player in Europe, has its own banking
license. Thus, it offers special services like
peer-to-peer lending, crowd-sourcing, and bonus
payments for interactions within the
community. Payment is one of the key industries
in which mobile first trend has made a profound
impact. These mobile banking services are cost
effective for the banks and the customers alike.
There is no requirement of min. balance, and most
of the transactions are charge-free!
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Over 879 trillion dollars of transactions passed
the financial switches

• Number of transactions processed by Fedwire,
  which handles large-scale wholesale transfers
  processed 132 million transactions for a total of
  599 trillion.
• Amount of wire transfers processed by just Bank
  of America 244.4 trillion.
• Number of transactions processed by the Automated
  Clearing House (ACH)  Network 21 billion
  transactions with a total dollar value of 36.9
  trillion. Whats ACH? ACH is an electronic
  network for financial transactions in the U.S. It
  processes large volumes of credit and debit
  transactions in batches.

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75 Mobile Wallets appear but struggle to gain
acceptance. What started next is amazing
linking with physical cards
In November 2013, Google launched the Google
Wallet Debit Card. A question was being asked in
some forums that whether Google in its response
to the launch of Isis program across US, shot
electronic payments innovation in its head. Some
details about the prepaid card To load it, users
can pull funds from a bank account, another debit
card or credit card, or from friends who can
either email money via Gmail or send it via the
Wallet app. Users can utilize their Wallet
Balance to shop and pay in stores by swiping
their card at any of the MasterCard
locations. Their Wallet Balance can be used at
ATMs to withdraw cash. Some ATM providers may
charge a fee for cash withdrawals. Users get
instant notifications on their smartphone to help
them  keep tabs on all of their
transactions. Apart from spending it with Google
Card, Users can utilize their Wallet Balance to
buy on Google Play, send money to friends,
YouTube and other products. It can also be used
to transfer money to the users bank account or
tap pay in stores.
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The Google Debit Card can be ordered for free via
a Google Wallet account page or the Android
Google Wallet app. It is currently operational
only in the U.S. On 22nd January 2014, T-Mobile
announced that the company is extending its
Un-carrier consumer movement to personal finance
transforming smartphones into personal money
managers that can free people from excessive fees
they often pay to use their own money. The
company calls this next phase of its consumer
revolution Mobile Money by T-Mobile. Mobile
Money is very similar to the approach Google took
with both Google wallet app on smartphones and a
debit card. But T-Mobiles Mobile Money packs
much more a smartphone app that works at
merchants, for bills, for money management,
T-Mobile Visa Prepaid Card, and surcharge free
nationwide ATM network that brings many of the
features of a checking account. Add to that, get
your tax refund directly into your T-Mobile Visa
Prepaid Card and much more. ATM, overdraft and
monthly maintenance fees all hit record highs
last year, according to Bankrates 2013 Checking
Survey. Mobile Money helps counter that trend
with the combination of a simple, smartphone
money management application designed for use
with a re-loadable T-Mobile Visa Prepaid Card
that offers many reduced fee or 0 cost  services
for registered T-Mobile wireless
customers. Whats amazing about T-Mobiles Mobile
Money offering is that they have tapped into the
benefits of mobility and focused on the biggest
issues faced by customers cost, complexity, so
many steps to do transactionary work and the
fragmented experience. The setup and transaction
charges are zero. 0 Purchase fee 0 Reload fee
in T-Mobile stores 0 Monthly maintenance fee
and 0 Withdrawal fees at in-network ATMs. And if
you want to deposit your checks? Just take a
picture with your smartphone.
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Bitcoin and other Cryptocurrencies have Taken
Giant Leaps In terms of Acceptance, Understanding
and Innovation
Cryptex In November 2013, I had discussed
the Coin Card  a new hardware that enables users
to store all their cards on a single card and
manage it with the smartphone through BLE. A
pre-order campaign had been planned by Coin for
November 15th. The plan was to top out at
50,000. That limit was crossed within barely 40
minutes. The card basically went viral, and
opinions from various parts of the industry
seemed to point out that maybe consumers are not
ready for a mobile wallet yet. In a similar move
and what could be a tremendous boost for the
virtual currency on 8th April 2014, Hong Kong
based startup Cryptex launched the Cryptex Card.
Cryptex is the first debit card in the world that
will enable users to convert cryptocurrency into
cash at millions of ATMs and merchants POS
terminals across the globe. This is regardless of
whether the merchants or banks in question accept
cryptocurrency or not.
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Stripe and Square Stripe recently began to test
payments for Bitcoins among certain users. Stripe
currently supports over 130 currencies globally,
and Bitcoin will now be added to that list. The
company will begin supporting payments via
Bitcoin, through a private beta program that its
users can sign up for. Merchants that utilize
Stripe to accept bitcoin payments will
automatically be paid out in the local currency
of their choice. In another major development,
payments giant Square announced on 1st April,
2014 (it was no Aprils fool mind you) that
Bitcoins could now be utilized to purchase goods
and services via Square Market. Were building
tools so sellers can accept any form of payment
their customers want to use. Making commerce easy
means creating easy ways to exchange value for
everything from a massage to a DODO case for your
iPad. In that spirit, starting today, buyers can
purchase goods and services on Square Market with
Bitcoin, stated Squares blog post.
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Huntercoin and Dragons Tale With the creation
of Bitcoin, Satoshi Nakomoto essentially opened
up a new stream of innovation. We have seen a
number of alternate crypto-currencies
or Alt-Coins emerge over the last year
Litecoin, Namecoin, Peercoin, Dodgecoin,
Mastercoin and many more. Frankly it was getting
suffocating to hear of all those Bitcoin clones.
In February 2014 however, a very interesting and
innovative new P2P crypto currency was introduced
Huntercoin. Huntercoin is the Worlds first peer
to peer (P2P) decentralized Massively Multiplayer
Online Game(MMOG). It definitely has appeal to
both gamers as well as crypto-currency
enthusiasts. Here, players control Hunters which
harvest coins in a 2D virtual environment. The
Hunters return to a spawn area after harvesting,
where the coins are effectively
banked. Participants collect Huntercoins (HUCs)
inside a virtual environment through the
application of strategy, teamwork and human
effort. HUCs have a real world financial value
and unlike other crypto-currencies. Huntercoin is
affordably accessible to the majority because
dedicated and expensive mining hardware isnt a
necessity according to them. These coins can then
be converted into Bitcoins and real world
currency. Basically, you get Paid to Play! And
not the other way round as it usually is.
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SuperRewards and Vungle I have discussed many a
time how Bitcoins could change the face of
gambling and gaming Industries completely.
Another colossal move that supports this
statement comes in the form of SuperRewards On
31st March 2014, the social and mobile game
monetization giant announced that would begin
enabling users to buy in-game items and virtual
currencies via Bitcoin.
You can see big names such as gPotato, Aeria
Games, Gaia Online and not in the very least
Sonly Entertainment online count among
establishments that utilize Playerize i.e
SuperRewards. The addition of Bitcoin to this
network or system could offer a huge boost to the
cryptocurrency and impact the gaming industry
itself in a huge way. Vungle, the premier app
monetization technology company and in-app mobile
video advertising platform, has added bitcoin as
a payment option to app developers. Vungle allows
creators of mobile apps (iPhone and Android), to
monetize their business to show 15-second videos
in high definition that is integrated into the
user experience.
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The addition of bitcoin option to Vungle platform
enables publishers and developers to expand their
reach on the the companys mobile ad network that
covers over 4000 apps.It will also provide
flexibility to keep more of what they earn
because of the virtual currencys lower
transaction costs. In addition, bitcoin exchanges
are faster as compared to other transaction as
developers dont have to go through a financial
institution. The target group of Vungle are
specifically individual developers or small
groups of developers. Vungle believes the
long-term prospects of bitcoin is important
enough to offer it as a payment option. Bitcoin
has more potential as a payments system than as a
widely used alternative currency.Developers in
Vungles network include Wooga, Fruit Ninja
creator Halfbrick Studios, ZeptoLab, maker of
Cut the Rope, and Sega.
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Authors
Lets T_at_lk Payment Lets Talk Payments is a
global initiative which is focused on US, Europe
and Asia for covering innovations in payments. It
is being build to become a complete resource
(online digital news, analysis, events, payment
product/feature reviews, surveys, interviews and
videos) for the payments industry. The company is
based out of Charlotte (USA) with teams and
contributors across the globe.
Knowledgefaber Knowledgefaber is a fact based
research and consulting firm focusing on emerging
opportunities in emerging economies
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