Vol 1. Issue 7 Dec. 2015

YOUR GATEWAY TO THE WORLD OF PAYMENTS

PCMExciting stories about developments in the payments world 2016 | + Deep insight into omni-channel strategies

Blockchain

awakens

Welcome to Vol.2 - issue 1

You are reading the first issue of the Payments & Cards Magazine in 2016. In order to keep our clients, associates, subscribers and all payments professionals in the loop, we have decided to create a monthly magazine.

The first issue of 2016 features an expert interview on omni-channel payments, thought leader articles, top jobs and more! We’re also introducing a new section in this issue where we present and discuss insightful infographics provided by our partners. The magazine is also a good way for you to keep in touch with what is happening in the Payments world as well as like minded professionals. If you haven’t checked in with us lately, we think you will be surprised and excited about all the wonderful things happening in the industry.We hope to hear from you soon, and we welcome your feedback!

Throughout each issue, there will be descriptions and lists of events within the Payments industry happening this month, as well as announcements and the latest developments & partnerships. If you are a thought leader and would like to be featured or present your thoughts, please get in touch. What is more, as a business, the magazine offers you various advertising possibilities. Want to learn more? Just contact us!

For any questions, suggestions, or concerns, please address them to the editors:

Amir Abdin - amir@paymentsandcardsnetwork.com Duc Dang - duc@paymentsandcardsnetwork.com

The Payments & Cards Network team wishes you good reading!

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Letter from the CEO2015 was a year of change and the beginning of accelerated consolidation in the Payments & Cards Industry.

We saw some very large processors acquired and new initiatives from innovative merchants as they build in house payment teams as well as their own platforms.

The Payments & Cards Network was able to strengthen existing relationships with large, international players as well as gain new clients both on the Merchant, Consulting, Scheme & Processing sides of the industry.

From a talent perspective, it’s impossible to work with every single business involved in payments so we have strategically chosen to work with select companies who share their values with us and vice versa. With this strategy in mind, the Payments & Cards Network has grown 40% as a business in 2015 which has led to an increase of 62% in revenues.

We are very proud to announce our new locations as London and soon to be US offices which will bolster our offering across the world as we maintain our goal of being the number one global supplier of talent to the Payments & Cards Industry.

With the increased uncertainty of the political climate in South Africa, despite a very successful year for us, we have taken the decision to cease our operations in the region and will continue servicing South Africa & Sub Sahara remotely from our EMEA HQ in Amsterdam. This has not been an easy decision to make but in the interest of servicing our existing customers globally, we feel resources can be put to better use elsewhere.

PCN also launched Payment.jobs this year which is the only truly international job board dedicated to the industry. Early results are good but such as any board of this nature, it will take time to gain full traction. As every year, it is most important to reflect on goals unrealized and realized but most importantly the people involved in the success.

It has been our mission from day one to hire individuals who are capable of taking our business to the next level and work as a team that not only contributes ongoing value to the industry but are proud to work along side each other. Perhaps our greatest achievement this year has been the continuation of this success and hiring some very talented individuals who have been able to hit the ground running and already add to the sterling reputation of our company.

As CEO I could not be happier to be working alongside these individuals and look forward to welcoming additional members of the team in 2016.

In closing I would like to thank our customers who have supported us from day one as well as new clients who have just started working with us. We will be issuing our annual quality survey in Q2 of 2016 and I trust results will be even an improvement of 2015.

See you in 2016 and we look forward to seeing you in the network.

Jordan LawrenceCEOPayments & Cards Network

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thoughtleaders

STORIES

spotlight

Contents

Thought Leaders: Unlocking Wallet Payments in Sub-SaharaJide Akindele continues the series about the development of the mobile payments industry in a promising part of Africa.

Spotlight: ToastThis time we talk to the Asian P2P money transfer application maker of Toast.

Hot JobsLooking for a new role and exciting challenges in 2016? Check out our latest job opportunities!

EventsHere we showcase the most exciting upcoming events in the payment industry.

Infographic: The State of Fintech Investment in Africamondato looks at the opportunities in the African Fintech market.

Thought Leaders: Southeast Asia: 34.5 billion e-commerce future Aung Kyaw Moe discusses the e-commerce potential in Southeast Asia and the reasons why the ASEAN powerhouse looks promising.

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Thought Leaders: Forget Uber moments, Are we witnessing a napster moment?Mark Taylor gives us an insight into the perspectives and challenges of the ever more relevant cryptocurrencies.

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15Infographic: Trends in payments solutions PAYTOO shows us what impact the growth in mobile phone usage has on the payments world.

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Expoert Interview: A roadmap to omni-channel paymentsJuspal Manic dives into the world of omni-channel payments and discusses critical factors when designing this new type of strategy.

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Thought Leaders CornerBy Jide AkindeleJanuary 8, 2016

globalbusinessThis is the fourth edition of Jide Akindele’s series focusing on the developments in the payment market in Sub-Sahara Africa

New wave of coming

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2015 was as good year for mobile payments across the globe. Africa still leads the way in terms of subscriber adoption globally, however we have seen various schemes of mobile payments across the world in different forms, (such as) card linked, closed loop which currently dominates the various ecosystems in the battle for dominance.

In 2016 we are of the opinion that the next wave of mobile payment developments would be in the infusion of content loyalty schemes side by side with consumer’s payments. This means that there would be closer collaboration with merchants and mobile wallet providers and PSP’s on the technology side. This, however, will raise various questions on how and which part of the consumer’s data is shared, and by what party, within the value chain taking into account

compliance, regulation and data protection.

Having said that, once the modalities have been sorted, the advantages would become clearer if consumer data is profiled in a meaningful way. This would avoid the wasteful scattered approach of blasting advertising messages that are not well targeted. With the linked incentives, purchase patterns can be established, and bring together value merchants and processors equally, benefiting the consumer. This is particularly important for the Sub-Sahara African markets where there is a need for cohesion in consumer data gathering for analytics.

Most consumers are incentivised by special rewards, offers and discounts associated with their Mobile app. This is also the case for Mobile wallet users (Smart phone App users), but not

mobile payments plus loyalty incentives

© SES S.A

forgetting feature phone users (USSD driven) who equally participate in mobile commerce, except not via the internet and can also receive such incentives via SMS if they do not have access to the internet. For the USSD users incentives would be more off-line driven incentives typically driving them to brick and mortar stores.

According to some live case studies, particularly in Sub-Sahara Africa, where off-line incentive programmes associated with mobile wallets took place over a sixth month period, have shown that over the campaign period mobile wallet usage increased transaction payments exponentially. It was also observed that new adopters also joined the service due to the incentive offerings,

in addition the retention rates remained exceptionally good with a reduction of inactive accounts. We have seen similar case studies in the USA and it shows this new wave to be an effective way of maintaining consumer satisfaction as well as increasing loyalty, transaction growth and adoption.

Prediction for 2016, Sub-Sahara Africa will see more merchants accepting mobile payments due to transaction growth. We expect known international brands to start testing the waters in the African markets in various forms in the m-commerce space, and expect consumer micro payment thresholds to increase as they gain more confidence in the payment medium.

MMIT, Mobile Media Info Tech, is a mobile payment processor with a mission to

revolutionize the mobile payment process.

MMIT focuses on the Sub-Sahara Africa market and partners with financial institutions

and international merchants to provide value added services to mobile wallet providers

and users. Please visit MMIT at www.mmitonline.com.

Jide Akindele, Founder, MMIT

Jide is a visionary entrepreneur with a deep and wide

knowledge of technologies based in the mobile money and

payment transaction space. Mr. Akindele has held various

directorship positions for companies in West Africa and has

worked in USA, Nigeria and the UK since 2007.

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Advisory Panel

Sponsors,Exhib itors & Partners

Co-Founder, Jumia/CEO & Co-Founder, Supermart

An award winning and celebrated businessman in Africa, Raphael heads up the biggest online retail platform in Nigeria, Supermart and has taken the African business scene by storm. His previous work with one of the biggest online companies, Jumnia, launched him to success, and cultivated his passion for Africa and its development.

Co-Founder and CEO, Gyft

Most will instantly recognise Vinny straight from the small screen and his position on South Africa’s Dragons Den, and others will know him as the co-founder of some of the biggest initiatives in online tech in South Africa: Clicks2Customers, Gyft and Silicon Cape Initiative. He has since moved to the actual Silcon Valley and is rubbing shoulders with big names like Richard Branson among others.

Principle, Digital Growth Africa & Middle East

Emilian’s passion for eCommerce and online trends shines through when he speaks. He describes himself as an eCommerce and global entrepreneur and has headed up some of the biggest companies in South Africa, as well as the rest of the world including Rocket Internet, Groupon and Zando among others. He is currently living between South Africa and the Middle East with his investment initiatives.

Internet Strategist, Naspers

It has been said that anything that this man shares will be deep and thought provoking. Joe used to be Mary Meeker’s right hand man, and was part of the team that took LinkedIn and MailRu public. Described as the most experienced man in internet in Africa, his skills and expertise are in high demand and he was pounced on by Naspers to hold a position here in Cape Town.

RAPHAEL AFAEDOR VINNY LINGHAMEMILIAN POPA JOE OKLEBERRY

DiGAME

CEO, MIH/ Naspers

Former CEO of Kalahari.com, Caren was relocated to Cape Town from Berlin, with prior roles including a nine year stint at eBay as general manager for shopping.com Germany, and as a director and GM for eBay Express Germany. Caren has also worked as COO at brands4friends, an eBay subsidiary in Germany.

CAREN GENTHNER-KAPPESZ

Founder and CEO, Konga Online Shopping

Sim is the Founder and Executive Chairman of DealDey Limited. He has over 13 years experience in New Media & Investment Banking and worked with leaders such as MicroStrategy, Lucent Technologies and Real Networks. Sim also served as the Africa lead for Google. He graduated from George Washington University, Dartmouth College & holds an MBA from Harvard Business School.

SIMDUL SHAGAYA

eCommerceAfrica ConfexFollow @eCommerceConfex and @KineticEventsSA on Twitter for daily updates and news feeds.

17 & 18 FEBRUARY 2016 | THE CTICC, CAPE TOWN

WWW.ECOMMERCE-AFRICA.COM

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Connecting the regions’ leading merchants; major retailers; brands; developers; designers and eCommerce experts, the summit is focused on exchanging inspired and innovative ideas, discussing emerging trends and making lasting connections.

Organisers, Kinetic, have secured some of the best global solution providers who are ready to provide the African continent with great products and services at the most exclusive and by far the largest Commerce gathering on the African continent.

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About mondatoMondato is a boutique consultancy specializing in the provision of strategic, commercial and operational support across the mobile finance and commerce (MFC) ecosystem. Established in 2008 on a foundation of years of experience in the telecommunications, technology and financial sectors, Mondato possesses a unique

Global investment in financial technology continues to increase exponentially, confirming that “fintech” is on the rise. While the majority of funding has been dolled out to North America and Europe, the most unmet need for innovative digital financial services lies in emerging markets. The bottom of the pyramind (BoP) in regions like Sub-Saharan Africa lacks access to traditional financial services, making consumers more open to new technologies. Many fair-weather investors are reticent to engage entrepreneurs targeting the poorest members of the population, which in turn, creates more value for those who do invest. Beyond the BoP, Africa’s economic growth, increasing middle-class and Internet penetration makes her a worthy candidate for investment. Contrary to the prevailing opportunity, less than 1% of private equity and venture capital funding went to Africa in 2015.

To learn more about opportunities for investing in African fintech, please visit www.mondato.com

Infographic description

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Southeast Asia’s $34.5 billion e-commerce future

does it check out?

A rose by any other name, according to Shakespeare, would smell as sweet. And whether the ten-member

cluster of nations surrounded by economic powerhouses Australia, China and India goes by the Association of Southeast Asian Nations (ASEAN), or simply as Southeast Asia (SEA), the region’s star is set to shine.

Comprising ten member nations (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam), ASEAN looks to become an economic powerhouse in its own right. It is home to around 625 million people, 744 million mobile devices, nearly 200 million Internet users and a GDP of over US$2.6 trillion.

It will also boast a 400 million-strong middle class by 2020 (Nielsen).Amid the backdrop of political rhetoric transforming into economic reality, McKinsey attributes ASEAN’s rise to three powerful socio-economic trends

– rapid economic growth, urbanization and technology adoption (notably Internet penetration and mobile technologies). Moreover, with the wheels in motion for a unified ASEAN Economic Community (AEC) - set to come into force as early as end-2015 – the region has embarked on perhaps its most exciting phase of integration and cross border trade in the association’s 48 year history. Together these factors are transforming the region, its people and its economies, with e-commerce and m-commerce leading the way.

Building momentum in a fragmented regionWith rising online connectivity, with improvements in financial, logistical, security and alternative payment infrastructures, with more and more e-commerce M&As and with the AEC kicking in, ASEAN is ripe with potential. Frost & Sullivan estimates the B2C e-commerce compound annual growth rate (CAGR) of Indonesia, Malaysia, Philippines, Singapore, Thailand and

Vietnam at 37.6 percent from 2013 to 2018, growing from US$7 billion to US$34.5 billion – a number that would be even higher if we were to include the remaining five member states.

ASEAN holds such promise for governments , businesses and investors for a number of reasons:

Online connectivitySoutheast Asia comprises 744 million internet connections, with 119 mobile subscriptions per 100 people (WeAreSocial, 2015). It already accounts for 7% of global internet users, catching up to Western Europe (12%) and the US (11%). Internet penetration has risen 414% in Cambodia, 346% in Myanmar, 47% in Thailand – year-on-year – in FY2014. The average person in the Philippines spends 6.3 hours a day online, in Thailand 5.5 hours, in Vietnam 5.2 hours, in Indonesia 5.1 hours and in Singapore 4.7 hours. These are ahead of China’s 3.9 hours, South Korea’s 3.4 hours and Japan’s 3.1 hours. The proliferation

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By Aung Kyaw MoeDezember 29, 2015

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of tablets, phablets, smartphones and 3G – even 4G – services will play a role in further driving internet penetration rates, as technological advances continue to make devices affordable even to the less-affluent, key to enabling the region’s e-commerce future.

Financial infrastructureWhat’s remarkable about the 2014 US$7 billion estimate of ASEAN’s B2C e-commerce is that it has achieved this despite a financial infrastructure that has a lot more potential – and need – to grow. An estimated 70 percent of SEA residents lack access to traditional banking services (McKinsey). Moreover, with credit card penetration in some markets below 5 percent, e-commerce in A SE AN is unders tandably underdeveloped. Consequentially, SEA online retail accounts for around 1 percent to 2 percent of total retail sales, compared to China, at 11 percent (FT Confidential Research). However this figure for China was, as recently as 2010, 2.5 percent – a growth trajectory many anticipate SEA will follow in the coming years, against this backdrop of rapidly evolving financial infrastructure.

Logistical infrastructureLogistics and ecommerce have so far proven to sometimes be a mismatch for Southeast Asian shoppers, as only a small proportion receive free delivery. This means shoppers are incurring logistical costs that retailers would usually, in a competitive market, help to absorb. Southeast Asia’s landscape poses a unique set of challenges that is slowing the momentum e-commerce should be seeing. These include late delivery, damaged or lost packages, the prevailing practise of cash-on delivery, lengthy return procedures, and a lack of special services such as trial or installation – particularly when given the geographical barrier between buyer and seller.

In response, firms can either build their logistics systems, or partner with logistics companies. China’s Alibaba has, for example, acquired a 14.51% stake in Singapore Post, which will spend US$145 million on building a regional ecommerce hub. Alibaba’s ecommerce site AliExpress is seeing tremendous growth across the region. Meanwhile Uber has partnered LBC Express in

the Philippines to deliver Christmas presents on-demand. And that’s the role private and public sector actors with deeper pockets play – the ‘uberfication’ of the region’s under-developed logistical sector, in turn building intra and cross-border commerce.

Transaction SecurityRapid progress has been made in the domain of payment infrastructure and online security. Consumers are, however, put off from buying online – the Financial Times recently estimated that 90 per cent of visits to ecommerce sites do not result in sales. Part of the reason is because e-retailers are bound by Caveat Venditor, where governments impose strict regulations to hamper illegal money laundering operations across borders, indirectly turning off shoppers, who are required to provide credit card information to transact. Consequentially, AT Kearney estimates that 67% of digital buyers in the Philippines, 62% in Thailand, 60% in Indonesia, 55% in Vietnam, 52% in Malaysia do not trust giving their card information online – compared to the global average of 49%.

While this can be overcome as governments promote non-cash transac t ions and coordinated e-payment regulations, security laws needs to catch up with what’s commonplace in developed markets. ASEAN countries are responding, developing and enforcing security laws and regulations for ecommerce data protection and electronic transactions. Singapore’s Monetary Authority of Singapore (MAS) has, for example, made the 2-factor authentication (2Fa) process mandatory for any transaction, local or overseas. The movement towards intra-regional coordination of shared cybersecurity, best practices, and legislative frameworks will allay these fears, boosting ecommerce.

Alternative PaymentsE-commerce requires a healthy and robust payments infrastructure, together with integrated innovations, to overcome deficiencies in a region underserved by traditional banking. In SEA, where well over 400 million people are unbanked, compounded by existing security concerns among digital buyers, alternative payment solutions are rising

in importance, building the robustness of the payments infrastructure. They are a necessary option for businesses to reach out to un-banked customers, through new ways to complete transactions via ATMs, online banking and over the counter payments. Alternative payment solutions will also play a facilitating role in converting unbanked to banked users.

Rise in M&AsSoutheast Asia is already drawing global e-commerce players, including Germany ’s Rocket Internet, with investments in online marketplace Lazada along with online fashion retailer Zalora, Japan’s Rakuten, Softbank, and China’s Alibaba, JD.com and Tencent. The pace of e-commerce and payment innovation in Southeast Asia is certain to accelerate. Rising investments are expected over the next few months, developing the region’s e-commerce through investment, acquisition and subsequent consolidation.

Advent of AECThe word “fragmented” is used cons is tent l y by economis t s , politicians and business visionaries alike to characterize ASEAN – not without reason. With ten countries, ten languages, ten currencies and economies with varying (often too high) levels of economic nationalism, ASEAN is indeed made up of ten very unique parts.

Some are highly developed – Singapore, for example, has a 2014 per capita GDP of $60,410 (IMF), while Myanmar’s was $1,405. Singapore presents one of the most friendly business environments in the world, whereas Myanmar was, as recently as 2013, twinned with Sudan in an article by The Economist.

For AEC to hold any meaning, even in less erudite circles, it would need to address the notion of piecing some of these fragments together, by opening up cross-border trade. And then, there’s the bigger context – where ASEAN fits in the broader Asia-Pacific narrative.

About 2C2P2C2P (Cash and Card Payment Processor) is a leading Southeast Asian comprehensive payment services provider, transforming millions of everyday payments across Asia. The company offers a number of services tailored for the needs of ecommerce and mcommerce merchants, banks and financial institutions of any size.

Founder and Group CEO , 2C2PAung is the founder and Group CEO of 2C2P, a Southeast Asian

payment services company revolutionizing payments for financial institutions, ecommerce and mcommerce merchants and consumers across Southeast Asia. He hails from Myanmar, but has been based

in Singapore and Thailand for the past fifteen years.

by Aung Kyaw Moe

Love thy neighbourASEAN’s awakening lies not only in more efficient and transparent intra-regional trade, but also in doing business with its neighbours, particularly China.

That’s the biggest challenge, and even greater opportunity, one which is particularly attributable to e-commerce. China’s trade with ASEAN is estimated at US$224.38 billion in H1 2015, up 1.6% year-on-year. More crucially, since 2010, over sixty percent of its outbound investment has been into ASEAN, with internet and e-commerce cited as key areas of interest.

With better infrastructure, and with trade efficiencies, e-commerce has the potential to drive the 21st century’s rendition of the Maritime Silk Road.

ASEAN’s future is bright!

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by Aung Kyaw Moe

Forget Uber Moments, Are We Witnessing A Napster Moment?

A popular analogy bouncing around financial services is how the emergence of blockchain technology is similar to the invention of the internet and how that disrupted, well, everything.

Off the top of my head; executives at Barclays; the founder of Ripple, Chris Larsen; the managing director of R3, Charley Cooper, who currently has 43 banks working together; and Goldman Sachs have all made the comparison.

This fantastic new-fangled system will not only improve efficiency and settlement times it will revolutionise cross-border payments and save banks $20bn a year (or so Banco Santander claims). We are led to believe this is the dawn of a golden age for financial services and the possibilities are so great that our minds cannot yet fathom how transformative it will be. Of course, the beauty of the internet was that no-one saw it coming, no-one could control it, and it has grown into something almost beyond definition.

And so the news that R3’s unquestionably bold mission to create a standard in blockchain that all, banks, insurance, trading houses, stock exchanges, can share, while admirable, should be viewed with some caution. With 42 banks now on board, it will be interesting to see how the group delivers whether too big to succeed or indeed too big to fail, either way it is too big to ignore. There have already been cries of “cartel”, from the likes of the ex-Visa forex figurehead Jon Matonis, a Bitcoin Foundation founding member now busying himself in the private sector.

After all, what could possibly go wrong with banks colluding and sending soothing messages to regulators that “everything is fine, and the great thing is blockchain can actually HELP enforcement agencies do their jobs better”?

By Mark TaylorDezember 24, 2015

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Cynicism aside, the sweeping Death Staresque nature of R3’s unprecedented and justifiably attention-grabbing partnership has overshadowed some interesting, smaller use cases. Bank ledger protocol developer Ripple is not throwing all its eggs in one “blockchain can save the world” basket, and neither is PayPal nor rapidly expanding cross-border payment group Earthport. All have acknowledged the potential but are positioning themselves to be interoperable, knowing that being connected to the ledger, having it as an option for them or their clients, is better than being entirely reliant on the ledger. It is likely to be the smaller, more nimble companies who can affect real change while we all wait agog for the big moment when the banks cut the ribbon on their sparkling new back ends (which should be sometime around 2026 according to the World Economic Forum).

It is likely that the payments industry will adapt slowly, incrementally. We are evolving at a rate of knots, and the last 24 months have been a rollercoaster, but this was already a sector already at the forefront of innovation, not some slumbering giant about to get a rude shock. Look for the suppliers to insurance, capital markets and stock trading for the initial use cases.

Financial auditors, heavily reliant on their model of scrutinising the inner workings of financial institutions, would quickly be out of a job should blockchain come to fruition and usurp the need for this trusted service. It is no surprise that PricewaterhouseCooper and Deloitte for two have built their own blockchain labs and are testing a series of use cases.

And what of poor old Bitcoin? The forgotten element in all of this is the crypto-currency which has its own ledger, the Bitcoin blockchain, was cast aside in 2015. Advocates (like Coinbase) believe the world will

© pixabay

Mark Taylor Senior Journalist for PaymentsCompliance

Mark’s regulatory coverage of the payments industry touches on a wide variety of subjects from cryptocurrency, international sanctions and anti-money laundering laws to innovation

eventually gravitate back towards the Bitcoin blockchain once the banks finish testing and realise they cannot possibly match the computing power of an open, global network.

Given that Christmas has passed, let’s try a seasonal analogy.

You have picked out a wonderful gift (Bitcoin) for a small child (the banks), something new and sparkly that you are convinced they will enjoy as it enhances their life and that of their friends. However upon opening it the child throws ignores the gift completely and starts playing with the box it came inside (blockchain). The reality is more likely somewhere in between.

Perhaps the final analogy for us is less the Internet, and more Napster, and what that did to the music industry. The humble file-sharing site brought major record labels and conglomerates to their knees, completely altering how we the consumer accessed and bought (or didn’t buy) music.

The shockwaves reverberated far beyond the tired music world, and now a generation has matured, file-sharing and streaming are slowly being monetised, but not without casualties (HMV being one). There is perhaps is an element of “that could be us” from a nervous, insular banking community traditionally fearful of change and of new technology. Crashed cash machines in the UK often greet bemused customers with the sight of Windows XP re-booting, hardly a cutting edge process or a reassuring sight (Microsoft stopped updating XP some time ago). Are the banks looking at Bitcoin and deciding they don’t want a Napster moment, and are buying into blockchain without fully understanding it, or what it can do? Only time will tell.

About PaymentsCompliancePaymentsCompliance is part of ComplianceOnline. ComplianceOnline is the leading provider of business intelligence for the gambling, payments and blockchain industries. We specialise in providing high level and independent news, analysis, data, eLearning and research through our primary services GamblingCompliance, PaymentsCompliance and BlockchainBriefing. Request your free 14-day trial at www.

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A Roadmap to omnichannel paymentsJuspal Manic is the Director of Specialist Services function for the International Services segment of TSYS, a leading global payments provider, focused on enabling clients to optimise their payments technology. Juspal has more than 14 years’ experience in the payments space and has worked across multiple geographies in various technology roles across the payments value chain.

Juspal ManicDirector of Specialist Services at TSYS International

What is omni-channel?

Put simply, Omni-channel as a concept is a seamless experience for the customer through a sales process or a process in terms of making a transaction or engagement, which could involve mobile, web and or physical channels.

Omni-channel tries to force an organization into having a seamless approach. When you look at the origins of that concept it dates back to the 2000s. When mobile devices like smartphones occurred a lot of retailers were in a price war situation. At that point, certain retailers realized that they can’t compete for price, so what they wanted to do was change the shopping experience. That’s why it became more about changing the experience of the customer and thus, becoming customer centric. Therefore, the increasing usage of smartphones has driven the omni-channel approach.

Obviously you also have the rise of apps within the smartphone ecosystem and then you also have the fact that we’re more connected nowadays. Overall the customer is the focal point of omni-channel, with the customer driving the

journey forward in terms of engagement. It’s also about collaboration because it forces an organization to pay more attention to collaboration. In this context it’s no longer just about physical stores vs. the digitization, they have to work together now.

To sum up, the omni-channel concept is about the seamless integration of all customer touch points. Looking at the trends and where this development all came from, the retail industry gathered the most momentum for the omni-channel approach over the last five years. Since retailers had physical stores but also digital footprints, they wanted to merge those together.They were the forerunners and early proponents of this concept. After that, a lot of service providers / IT providers came into play, but if you think about the next evolution, there are other industries who have realized its potential.

For example, it ’s no surprise that in the automobile industry there is a lot of work going on espacially in the car’s dashboard landscape about who is going to be the focal point in your car (when you get in your car). You have Google, Microsoft and Apple doing a lot of investment in this area with the objective of providing a single ecosystem

with your connected devices. You can also take wearables as an example, and now you have the health factor kicking in. All these industries are getting bolder in the space because they see an opportunity to be more connected with the customer. What is more, you are going to see great integration of the omni-channel concept. No longer will you just have companies looking at themselves. They’ll look at partners and vendors that can contribute to make the customer experience richer. They’ll also seek strategic alliances with other vendors or other channels to see if they can integrate these even more into their offering. That’s why the trend in retail very likely kicked that off more than anybody else, positioning them ahead of the curve.

When looking at the whole value chain, there are startups coming in that are challenging the traditional value chain. So you have the payments value chain in which a lot of startup companies are emerging. These companies want a chunk of the pre-purchase to post-purchase market share. Thinking about all these value chains being disrupted and then factoring in the influence of social media, companies have to provide a seamless experience because it ’s

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not only about the product or service anymore.

If I had to summarize it in very simple terms, there are a couple of things I would focus on. There is a piece around social media, which is going to upsurge a challenge on the omni-channel piece. Another piece pertains to the payments piece. With mobile wallet and other means of payments, the acceptance piece is fundamental. It needs to be secure, it has to provide high acceptance level and you need to make sure it’s frictionless. No more of this two factor or three factor authentication, that landscape will change. So when you go to purchase, all that happens will be so seamless that perhaps you go back to your device, you do your biometric and it’s done. No additional passwords needed.

There is a non-profit organization called Fido. It ’s about fast identity online. Effectively you’ve got a lot of the big players involved, such as Microsoft, Visa, and Netflix. This organisation is trying to create a standard for online authentication. In fact, they are trying to establish a standard for the removal of passwords and authentification via additional means (devices). And then you think about the connecting piece. It’ll push the landscape to be a slicker and more frictionless process.

The loyalty piece also embodies a challenge for merchants and providers. For me the biggest part of all of this is with you being connected, and omni-channel being effective in the digital ecosystem, is about real time analytics. That is what the game changer is. The reason I’m saying this is if you look at payments, the analytics is normally on the fraud —post transactions on the use of pre transaction in terms of the piece of authenticating the card holder. However, now it’s about changing the cardholder’s behavior to make a purchase.

What kind of organizations are going to be challenged with this? Some have a better position to cope with this than others. A good example is Amazon; they are fantastic when it comes to analytics. They have the ability to not only do real time behavior analytics, but to push products which they think either you as a demographic would be interested in, or you as a customer buying that

product would be interested in.

Today the trends in omni-channel are around social media, agile supply chains and frictionless payments. There is going to be great integration of partners and alliances, it’s always about being connected and it’s about the analytics. That is the front end.

If you look at back end for organizations, they have to collaborate. The fundamental element is collaboration. Internal organizations are not about bricks and mortar against the digital side of the business. It’s one single system now. You have to remove the barriers. You have to work together. You can also over-collaborate, which can have the reverse effect so you need to get the balance.

How is the new Internet of Things concept influencing the way people work with omni-channel and its strategy development?

When you think about it very simplistically there is a saying ‘always on and always mobile’. That to me summarizes the IoT. Research shows that there are about 13.4 billion connected devices around the world today. By 2020 it’s expected to grow to 38 billion. When thinking about the opportunity to be always on and always mobile it does open huge opportunities for engagement but also adds a huge amount of complexity. You’ll see people coming into the game who are not here today but you’ll also see the traditional players evolve and change as well.

One potential new industry, which can utilize the IoT, is healthcare. You look at a person walking around with a Fitbit or you have some type of health connected device but also the Apple Watch. All those kind of things are collecting data on you. The question is what the next evolution of wearables is. At the moment they’re still at an early stage. Via wearables, you can now make a transaction. With Apple Watch you can actually make a contactless transaction via a point-of –sale device. I think that’s only the first part of the journey. The next part is going to be more interesting because you are always connected. When you walk into a store and you have your device enabled, you go walk past a piece of clothing or a product, which has

a RFID or NFC connect tag on it, it will have the ability to push an offer to you in real time. If inventory is high and you have a surplus on these goods and they aren’t selling, you can put a real time offer to that customer and if they do a purchase, it supports the management of your inventory management, which can make organizations more efficient and lean. If you are a retailer and you can offer a price point there and then, which is competitive, which will make the customer react, it will likely to be beneficial to both parties. In this way your inventory management as well as your supply chain also become slicker, but the customer feels the value.

If you look at where intelligent devices are: what will happen is that the layers between the customers and organization will become much thinner.

Typically, when you launch a strategy, the marketing people of an organization have an idea of a concept and push it to the business guys. The business guys then verify on the marketing campaign or the proposed approach. It moves across the other departments like IT, Finance and Logistics. These guys then become enablers in making that strategy happen.

This has changed, and in reality, it’s no longer only initiated by product and marketing. It’s about product, marketing, IT and the enabling functions that support the business because it has to be a collective vision not just a singular vision. You could have the best product in the world but (from an architecture perspective) if you can’t support the distribution or the channels of selling it, it’s not going to be successful. Companies have to be much more agile in their approach. A lot of banks, IT providers, IT divisions within major corporations like retail, automobile; these guys are enablers. But they traditionally follow a waterfall development life cycle. Then you have a lot of startups which come into the industry who use agile development so they’re able to deliver quicker. That’s because they don’t have the same kind robust processes in their organization.

The traditional organizations when they go into omni-channel and IoT, they are going to have to be more agile. If you don’t have the agility, and strategy development you are going to suffer

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because other people are coming to the market much quicker than you.

The fundamental premise of the, always on and always mobile mentality, is that it gives organizations access to the customer but also provides a lot more data points. It ’s important since the strategy has to be built on understanding your customers. The challenge (where strategy development becomes very difficult), is how the data is central to your strategy development. With the collection of data and the huge pool you have and the investment in data scientist it’s about making the data relevant for you, your product and your value chain. If you mine the wrong data, then in fact you could move your product or the value chain in a way where you will be outcompeted in the market. It’s about the data collection, its analysis and the utilization within your strategy development. If you can do that and you can distribute your data to the certain area of the business where it’s relevant you can build a more cohesive strategy.

What are the key challenges in the omni-channel strategies?

You need to understand your customer before you start the journey to provide an omni-channel approach. So you need to look at your strategy when implementing an omni-channel approach to make sure it’s cross-functional, cross-channel and cross-platform. These three things are fundamental in an omni-channel strategy. However, you need to ensure that it’s also an agile strategy and it can be executed upon. Otherwise you’re going to be behind the market. It also goes down to the integration of not just your own services but third party services.

So the market is going to a state where companies are willing to work more with third parties and strategic partners or vendors. What they’re asking for is the ease of integration. APIs or headless APIs need to be integrated in a seamless way by making them very non- complex, because if they are not, the problem is that you become very hard to work with. Then in fact, you might loose your opportunities because the omni-channel concept as well as the IoT is about connectivity. It’s about ease of integration. Speed to market and ease

of integration are key factors as well as the enablement of third parties. With all these factors to take into account, you make your own environment more complex and that’s where collaboration comes in.

If internally you’re not aligned to collaborate, and externally you are a difficult partner to work with, then your chances of finding opportunities to collaborate will be limited. In simple terms, if your execution is slow and poor you will start finding pressure within your business, which you then have to outsource or diversify further.

The barriers of entry in payments at the moment is low because companies are entering the value chain and causing disruption easily because they only focus on a specific element . The question is when the regulators start to become much more aggressive on the end to end value chain. At the moment it focuses on the core piece, which is making the transaction securely and treating the customers fairly with their data protected.

An omni-channel strategy allows you to manage the customer journey. However, if you don’t manage the customer channel, somebody else will do that for you.

What makes omni-channel payments special and why?

I think even if you can have the best product or service in the world, but have the most cumbersome and disjointed way to make a payment, or the lack of a seamless experience on your payment, you won’t succeed. Customers will be turned off and go elsewhere. That’s the beauty; they have the choice to go elsewhere. The element that links the customer with all these things is payments. That’s one of the unique identifier. In the past customers were unwilling to give their details. However, if there is a benefit for them then they are happy to give you that information. Apple Pay has come into the market and changed the dynamic by authenticating using your biometric and NFC. PayPal can be mentioned as innovators in this context. Their strategy is to open themselves up from an API perspective so that they can easily integrate into what ever the payment vehicle is.

Amazon Payments is trying the same, moving into that space. Their advantage is that they have a large footprint, they possess diversity in terms of their stalls, and they could challenge the payments landscape when implementing payment authentication with their own Amazon authentication approach, i.e., just using your Amazon credentials.

An omni-channel strategy enables you to collect more data points than just on the card payment / transaction. Consequently, you will be able to control and manage the customer journey and experience more effectively. The reason that payments are so valued in omni-channel is that when considering micro services and APIs you can now easily integrate with partners. Hence, you can have a better loyalty and reward program, whereas in the past they were separate services.

What is the future outlook for omni-channel?

It ’s about building micro services, which are available to integrate, very simple but at the same time secure and reliable. Being cross-channel is also a fundamental factor. Wearables will have a significant impact on omni-channel in the future too. They will get more intelligent, more sophisticated and add many more functions like GPS. On top of that, many other industries will come into the market, including automobile, utilities and healthcare.

On the marketing side, there are the real time analytics, which will help companies to obtain better insight into the customer and push more relevant products and services based on the gathered data. Another aspect that organizations have to pay attention to in the future is payments. Ease of integration will be required, high acceptance as well as security. The last factor I find most vital for the future is the agility of the logistics and the supply chain to cope with the demand.

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With this infographic, we wanted to highlight a significant growth in mobile phone usage, as it has become a conduit for payment solutions worldwide, and leading this trend are users from emerging countries.

The top five receiving countries, for money transfer and family remittance, are China, Philippines, Mexico, India, and Nigeria. These countries have contributed to the big impact in the market’s numbers. Because the remittance market in the developing countries is among the most expensive in the world, the mobile wallet industry has opted to become one of the most advanced, with mobile phones penetration at an all-time high.As a result of this trend, we have been able to observed a substantial growth in usage of mobile phones, due to the growth of the mobile payment service, the actual number of mobile phone owners, and the money spent in mobile apps and browsers.

Infographic description

About PaytooPAYTOO is a brand of PAYTOO Corp., a US Corporation founded in 1999. Since then, PAYTOO has expanded its line of products and launched in 2009 the first mobile solution to combine telecommunications and payments into one single account, the PAYTOO Mobile Wallet™. This unique mobile wallet offers not only an alternative to a bank account, but also a complete range of financial services such as direct deposit, money transfer, gift cards, bill payment, cell phone top ups, prepaid and virtual MasterCard, paying a merchant, and its two newer products, the cardless ATM and the multi-service profit center kiosk.

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Using Your

SpotlightThink you have what it takes to start a business in a super-hot market?

PCM takes a close look at some of the most innovative and promising startup companies in the payment industry.

Aaron Siwoku, founder & CEO, Toast

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“IT’S NOT JUST ABOUT SENDING MONEY, IT’S ABOUT BEING A TRUE FINANCE PLATFORM”

A recent study shows found that Southeast Asia has a large inbound remittance market that was worth US$56.8 billion

in 2014. However, there are many inefficiencies in the remittance market. One of those problems is the way money is sent by overseas workers.

We speak with Aaron Siwoku, founder and CEO of Toast, a startup using blockchain technology to provide a fast and cheap alternative to traditional money senders.

Where did your idea for Toast originate?

So, basically we started off developing a digital currency platform, CRYPTOSIGMA. We decided that the real problem we are trying to solve is not making it more easy to buy and sell but we wanted to actually create a more efficient finance platform. When we started thinking about that, simultaneously we also came across something that’s a big problem here in Singapore and it’s replicated in Hong Kong and numerous other cities across the world, especially in the United Arab Emirates. We saw domestic helpers and migrant workers, queueing up at Western Union to send money and the queues would be down the

street. One thing that struck me about this queue was that everybody had a smartphone, with 3G data connection and was chatting on Viber and checking Facebook. Then I thought, there must be an easier way to send money, rather than queueing up and handing physical cash over counter.

So, there is a couple of problems to solve there. The problem that a lot of people think is relevant is the moving of money from one place to another - but this is actually the easiest part of the equation. The most difficult part of the equation is; how do you get money from somebody who doesn’t have a bank account? How do you get that money into a digital application and represent it as a digital balance in an eWallet and do the KYC and AML checks?

What we decided to do is to change the name of the platform from CRYPTOSIGMA to TOAST, because we felt that sending money should be as easy as it is to make a piece of toast and we really wanted to simplify the remittance experience. We felt that was a great place for us to start and get our foot in the door, but as the money remittances’ business is not terribly profitable, we knew that this was only the initial problem we wanted to solve and eventually (the aim is) to look more

like a digital Bank.

There are lots of good examples of digital Banks in the UK and Europe but not in Asia. So, we really felt there was an opportunity to become a digital bank in Asia, starting with remittance because it is a very relevant problem that affects a wide demographic of people that starts with migrant workers but goes all the way up the chain to white collar workers and even businesses. So we thought that we can make it efficient to send money and make the user experience simpler.

What is your core product or service and what makes it different?

One of the things we are planning to launch in Q2 is Direct Bill Payment, because the second biggest problem after queueing up to send cash back is the fact that when you actually get to the front of the queue to send that cash wherever you want to send it, often you are sending it to a (now) estranged fiancé, partner, husband/wife who is looking after children. Perhaps you’ve been away for two or three years working as a maid in Singapore or Hong Kong and you are now seeing somebody else, the recipient person is also seeing somebody else and the money that you send actually doesn’t all make it to where it is supposed to go.

A snapshot of the Toast app.

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So, we are now in Q1, setting up Direct Bill Payment, which means that using TOAST in Singapore and Hong Kong a Filipino migrant worker will be able to do to bill payments over 390 different providers in the Philippines - that’s everything from government, utilities, to insurance, healthcare, loans, education, etc.

From there we feel going forward into the future we can hopefully then do advanced pay day loans, interest on fixed deposits and then we can start to look very much like a digital bank. So, we just see money transfer and being a mediator as a way to build a finance platform that people rely on, trust, and does the things that people want it to do. My bank, apart from keeping my money

and allowing me to spend it on a debit card, doesn’t really provide me with any interesting products that I need. For example, I want to buy iTunes credit, pay for gaming credits, buy stock, and that’s me and my needs and desires, but my bank doesn’t understand me, and it don’t make it easy to do those things that I want to do through my bank, and that’s a problem.

So, the platform we are building really understands the demographic that we are targeting. We understand that they want to do money transfer, Direct Bank Depositing, Bill Payment, load the prepaid mobile phone number with credit for a family member, they want loans, interests on deposits, and so on. These are the very specific modules that

we are building within TOAST so that we end up with this model banking system, where people can say, well, I want to do money transfer and I want to load the prepaid mobile number of my grandma so we can talk together on Whatsapp. Someone else might say, I don’t want to do money transfer but I want to do Bill Payments to keep the electricity on and I want to buy gaming credits for my kids to play games after school. This is where we are going with it, it is not just about sending money, its about being a finance platform with multiple applications. Not just a transaction processor but about being a true finance platform. I think we just really care about getting it right, we care about understanding our user. To go back to what I was saying before, my bank does not understand me because they cannot process and interpret the data and say, why are you moving money to a competitor bank? What can we do better, to keep you as a customer?

Banks have got into quite a funny place where they actually spend more money on user acquisition and very little money on existing users and if you are going to keep existing users, you have to understand that it is a relationship. Your relationship with your users or customers is the same as a relationship with boyfriend, girlfriend, or a brother or sister. If you do not understand that person and you cannot communicate with them (it can quickly) result in a relationship breakdown. The reason I think TOAST is so special is because we put a great deal of emphasis on understanding our users, we speak to them, we ask them “what do you want?”. We try to look at the things that are happening, the way they are interacting with the platform, the way the money is moving toward what is popular, and (also what is not so) popular. If its not popular, lets remove that module. If there is something that people require, lets figure out how we can build that module into the platform to continue forward with this modular based banking system that I envision where people can pick and choose what products they want to use and what’s most very relevant. So, I think its just the fact that we are looking at the data, we care about what the date is telling us, and through this we are really listening to our customers.

Because of this, we care not so much about acquiring a ton of new users but we care about serving the existing ones

Aaron Siwoku (left) at the FinTech Innovation Forum 2015.

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we have very, very well and making the platform very relevant for those people.

What kind of year do you foresee for your company and the industry as a whole?

I think there are a lot of people coming into the payments space now - it’s a crowded space, FinTech is popular, Remittance is popular. There are lots of people out there pitching remittance ideas; remittance companies, and digital remittance companies. However, the majority of them aren’t licensed, they are just pitching an idea, and there is a big difference between pitching an idea and actually having licenses and then having more licenses in progress and application.

On top of that, there are some companies out there that have licenses but they do not have the right product or the right systems. It is a complicated business, once you have the license you have to actually be able to move the money, you have to in detail understand how to move the money, you have to have the systems in place to track that money, to do the transaction monitoring and reporting, you have to be able to do AML and CFT cross checks. I think what is going to happen is as a lot of these other startups that are in this space don’t get licensed and as we continue to acquire licenses (we just acquired our license in Hong Kong, we are in the process of acquiring our license in Singapore, we just started our application for our

license in the UK, for example), some of the larger companies, (e.g.) Transferwise, Azimo, maybe some of the banks are going to start to pay attention and they are going to look at us in more detail.

I would imagine over the next two years we will be an interesting acquisition target for some of these bigger players, but acquisition is not what we are looking for. We want to build this platform, and it doesn’t make sense for us to work so hard on this product simply to be acquired a year or two later. I think this is something that might make sense in 5 or 6 years but we have got a lot of work to do. So, I envisioned over the next 5 years a lot of very hard work, a lot of growth on the platform and I think you will see a lot of innovation in terms of these products that we develop and how relevant they are to our demographic. We are building a pre-eminent finance platform for Filipinos.

What are the key hurdles for growing your business in the coming years?

The big growth barriers for us of course are around regulation and licensing because we are dealing with money. I think for us, our growth and becoming popular as a platform will just be based around the fact that we are deploying a great product, its easy to use, its intuitive, the user interface is very slick and there is a demand for a product like this. It is very difficult to move money. Speaking to many people they expressed their frustration whether

doing it at WesternUnion or via an online banking system. I have a desk full of banking tokens and it’s a nightmare. I think for somebody like us to come in and to remove a lot of friction from that process, to have the licensing and to have the systems in place to move the money efficiently and safely gives us a lot of room to grow in this space.

All in all, I think that growth comes through solving (popular problems). Growth is then a natural result of solving a problem that is long overdue to be solved and that’s what we have to focus on. We do not need to get carried away with ourselves, thinking about how much we are going to spend on user acquisition or what kind of TV campaigns we are going to have. No, I think we just have to continue to build a product that people want in their hand and solves the problem which is sending money from A to B – which currently is a nightmare!

Any recent exciting news you would like to share with the payments community?

Pretty much just the fact that we are going to be launching some new products in Q2, to expand on this modular based banking system that we are building. That will enable Bill Payments and to load prepaid mobile phone in the Philippines, directly from your TOAST app or directly from the web interface.

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Events

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This event will examine why the importance of a good strategy has never been more significant, especially with the large increase in new market players competing with the traditional banks. The conference will also discuss the future of real-time payments and possible risks banks need to consider.

Nordic MCP 2016 will feature 8 keynote presentations, 2 interesting tracks, 600 minutes of networking. After years of doubt whether mobile payments will take off, now we believe this argument is finished. Nordic MCP will focus its attention on what this means for retailers, what are the true benefits and what are the changes in consumer behaviour as a result.

Date: Jan 27-28, 2016 | Stockholm

Date: Jan. 25-26, 2016 | Copenhagen

The conference will cover numerous topics such as ‘Innovation and Emerging Technology in Retail Banking’, ‘Understanding your Customer: Why it’s not an option’ and ‘Challenges in moving from a product-centric to a customer-centric organisation’. Delegates will have the opportunity to network with professionals from industry leading organisations.

Date: Jan. 27-29, 2015 | Kuala Lumpur

The event brings together over 700 global public transport executives, government officials and service providers - all looking to kick-start their year with the latest technologies, research and knowledge, while networking with clients and valuable new contacts. Use promotional code “PCN20” to claim 20% discount on ticket price.

Date: Jan. 26-28, 2016 | London

You have any suggestions or ideas for the next issue of our PCM eMagazine? Get in touch today and maybe you will be featured in the next edition:

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