Payments and Commerce Newsletter – September

This is a portion of my biweekly newsletter that I started earlier in 2015 to a small group of people that I communicate with often – a mix of Founders, Bank and Retail Execs, VCs, and others who find their work intersect with mobile and commerce. The last one to go out is pasted below, so you could see what it’s normally about: my posts, thoughts about other posts I have read, my take on interesting industry bits, and other perspectives. If anyone wants to be included in the distribution – email me at cherian(.)abraham(at)experian(.)com.

What it is -> A quick read and meant to be useful.
What it is not -> Not meant to make you buy stuff, not meant to use your email for other things.


My Blog posts:

Continuing on Tokenization –

I wrote this earlier post about how Networks are approaching tokenization – as dumb pipes today in a desperate attempt to turn their assets in to smart rails. It must be both fascinating and terrifying for V and MA that in the last decade, growth in payments volume and account holders has paled against the 2 billion smartphones that are coming to represent entirely new end-points for commerce. And Networks view tokenization as the best step to rewire existing rails to leverage these new end-points of commerce – while preventing new rails from manifesting (e.g. Paypal tokenizing ACH).

This strategy isn’t entirely lost on issuers, who look at standing up their own tokenization service as the preferred approach to move up from the back of the payments stack to the front. Especially as networks continue to subsume parts or whole of the continuum of services offered today by Payment gateways (handling fraud, card on file etc) – banks fear being abstracted away as well. After all, the point-of-sale today is fast becoming the intersection of many things that has nothing to do with payment – loyalty, authentication, lending et al – that a bank cannot afford to be shoved in the back any longer.

Banks are well advised to not make the mistake of assuming that a network centric tokenization service shall remain always to be about payments. As payments, rewards and loyalty start to decouple from the point of sale inside a store to a number of connected devices – networks are freeing themselves of loyalty towards who owns those pieces – as long as those pieces converge on the rails that carry them.

Other Blog posts:

A dive in to the Lending Club data (data visualization and a good write up on investment strategies on the marketplace)

Methods and systems for verifying cardholder authenticity when provisioning a token (Patent Filing on Token Assurance)

Interesting Industry bits:

– Messaging is intersecting with Payments and now Lending. WeChat will allow its users to borrow up to 200,000 yuan without guarantee or collateral.

– Biometrics – Convenience without Security. OPM says 5.6 million fingerprints were stolen in the attack, five times as many as initially thought. It is very concerning that the fingerprints themselves were stored – not a representation that was encrypted/hashed (ideally salted) which would have prevented the data from being useful if compromised. This poor understanding of security isn’t limited to the public sector, as HTC, the Android device maker itself was outed earlier about storing fingerprints unencrypted as images in an easily accessible folder on the device. As Biometrics become mainstream, and new entities take on the role of identity arbitration – this space deserves transparency and open standards.

In other news:

– Verizon has been telling its ad-tech partners that they will no longer have access to its interest-and-location based data about Verizon customers – as it seeks to wall its data within its own Ad ecosystem. What would be interesting to banks and others is if this spills over in to On-network identity verification services like Payfone that rely today on access to carrier network and data.

– Research from Javelin show lost sales from false declines dwarf actual fraud losses, to the tune of $118B from when customers are turned away at the checkout due to unfounded suspicions of fraud, compared to $9B in actual fraud losses.

– The Chief merchant, the No. 2 exec in chain of command and seen as a potential successor to CEO in Retail, is now an algorithm.

Board of Advisors at SimplyTapp - creators of Host Card Emulation driving democratization and open access to NFC in Android. Mobile Commerce & Payments Lead at Experian Global Consulting, serving Experian's clients in Banking, Retail, Consumer Credit & Payments. A strategic adviser w/ over 17 years of international Tech & Business Strategy consulting, advising firms in banking, retail & asset mgmt that seek clarity & insight in to the myriad business models around payments, fraud & commerce. Founded DROP Labs, a mobile payments/commerce strategy & advisory practice. Tweets here. I'm on LinkedIn here.
Cherian Abraham
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