Six Spanish Banks Join SWIFT gpi For Cross-Border Payments

SWIFT announced Thursday (March 21) that six Spanish banks, representing 85 percent of the cross-border payments market in Spain, have adopted SWIFT global payments innovation or gpi.

In a press release, SWIFT said with SWIFT gpi the cross-border payment transaction experience is greatly improved, with speed and transparency increasing. SWIFT gpi enables banks to conduct end-to-end tracking of the cross-border payment.  According to SWIFT, the six banks to adopt SWIFT gpi are Banco Sabadell, Banco Santander, Bankinter, BBVA, Caixabank, and Grupo Cooperativo Cajamar. All are live on the service and are actively using SWIFT gpi for their cross-border payments.

“SWIFT gpi is the new norm for cross-border payments, delivering on the expectations of both the banks and their customers. We are very proud of the value that gpi delivers to the financial industry,” said Juan Carlos Botrán, head of SWIFT Iberia, in the press release. “We look forward to launching a series of new functionalities, including pre-validation and case resolution, and to announce the results of our proof-of-concept work linking SWIFT gpi to eCommerce and instant payments platforms. All of this will help us improve both the end client experience and processing efficiency even further. On behalf of SWIFT, I would like to thank all gpi banks, and especially the Spanish gpi banks, for leading the way in making gpi the new standard.”

According to SWIFT, hundreds of thousands of cross-border payments amounting to more than $300 billion are sent each day using the new gpi standard. Payments are made typically within minutes but can take seconds in some cases. Last year more than $40 trillion was transferred over SWIFT gpi, with cross-border messages using gpi reaching 56 percent, a year-over-year increase of 270 percent. More than 3,500 banks, accounting for 85 percent of SWIFT’s total payments traffic, have committed to adopting gpi.

“SWIFT gpi represents a major improvement in the international payments experience, which has traditionally been difficult to keep track of. The improvements to speed and traceability are significant, and, combined with the upcoming launch of the pre-validation service, deliver the required reliability and transparency to a process that was previously complex and lacking in transparency,” said Miguel Prado, head of treasury at Endesa, in the press release.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

FSS Launches Secure3D to Bolster Online Transaction Security

FSS (Financial Software and Systems), a digital payment and financial technology company, has launched FSS Secure3D, its new-generation adaptive authentication solution based on the EMVCo 3DS 2.0 protocol. The product is amongst the top 20 products globally, to be EMVCO 3DS 2.0 certified.

With the growth of digital commerce, card not present fraud attacks have become more sophisticated. According to The Nilson Report, globally, losses from remote fraud could amount to US $44 billion by 2025.  

FSS Secure3D extends a frictionless approach to authenticate cardholders and to safeguard customers against fraud. The solution deploys advanced machine learning algorithms to learn customer transaction behavior, to detect anomalous transactions and continually adjust risk controls in line with evolving fraud patterns. Issuers can use a combination of variables including merchant, cardholder, device, location and transaction related parameters to risk score each transaction and determine if it was initiated by a legitimate cardholder. Issuers and merchants benefit in terms of improved customer experience, reduced false positives and lowered incidence of fraud.

For suspect transactions, FSS Secure3D supports a range of stepped-up verification measures including out-of-band authentication such as one-time passcodes, as well as biometrics including facial and fingerprint recognition. This offers flexibility to issuers to extend the authentication process to emerging transaction touchpoints including wearables and IOT devices.

Speaking on the launch, Suresh Rajagopalan, President Retail Payments, FSS stated; “Secure and seamless transaction journeys are a strategic differentiator for new-age commerce. FSS Secure3D improves risk-based decisioning capabilities and enables issuers find the sweet spot between strengthening anti-fraud measures and delivering frictionless transaction experiences. The fact that FSS is among the first few service providers globally to achieve EMVCo certification reflects our product leadership position in the space.”  

SEC Probe Prompts Direct Lending CEO To Step Down

Direct Lending Investments’ founder and CEO Brendan Ross has resigned while his company is the focus of an investigation by the Securities and Exchange Commission (SEC).

Bloomberg reported that the company revealed in a letter to investors that Ross stepped down from the role of CEO on March 18 after the company found evidence that it may have overvalued its investment in small-business lending platform QuarterSpot. The company reported the issue to the SEC, which is investigating the matter.

In a separate letter, the company also shared that another borrower had defaulted on a loan that accounted for about a quarter of its capital. As a result, Direct Lending suspended withdrawals at that time.

Ross said in an email on Wednesday (March 20) that it wasn’t an easy decision to step down from the company he founded in 2012.

“I am committed to doing what is best for the investors and to preserve the value of the fund,” he wrote.

When it launched, Direct Lending initially focused on small business loans before expanding into making larger loans to companies also in the lending business. The company has reported gains every month through at least November 2016, with Ross stating that its assets had risen about 10-fold between 2014 and 2016. It had $758 million in assets as of November.

In the meantime, the borrower that defaulted, VOIP Guardian Partners I, was focused on advancing money to smaller telecoms against their accounts receivables. It filed for bankruptcy March 11, still owing Direct Lending $191.3 million, according to last month’s letter to investors.

Rodney Omanoff, one of VOIP’s founders, claimed in a recent interview that some of the telecoms that were long-time clients stopped paying bills and that his company was not to blame.

The SEC declined to comment on the current investigation, while Direct Lending and Omanoff didn’t respond to requests for comment.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

Amazon Blocks Product Promotions That Lose Money

In an effort to boost its bottom line, Amazon will no longer allow products that don’t turn a profit to advertise on its site.

CNBC reported that Amazon has recently been telling more vendors, as well as brand owners who sell their products wholesale, that if the eCommerce giant can’t sell their items at a profit, the merchants can no longer pay to promote them.

“Amazon is trying to be much more profitable than they were in the past,” said Joe Hansen, CEO of Buy Box Experts. “But this policy shows there’s bias in Amazon’s ad service, even though it says it’s an open advertising platform.”

An Amazon spokesperson defended the move, saying it has been a common practice for retailers for decades.

“Like all retailers, Amazon decides which products to market and promote in our stores based on a variety of factors, such as relevancy, availability, profitability and other factors,” the spokesperson said.

Amazon employees refer to these products as “CRaP,” which stands for “Can’t Realize a Profit.” These items are usually sold for less than $25, but could be as high as $2,000 if large and expensive to store and ship, explained Hansen.

The move to get unprofitable products off the site is yet another issue vendors have with Amazon, who has been accused of using its eCommerce market power to change its policies suddenly.

In addition to angering merchants, Amazon’s practices could also lead to regulatory scrutiny — especially with lawmakers in both the United States and Europe taking a tougher stance on big tech companies. Just this week, Google was hit with its third antitrust penalty by European Union regulators. This time it was fined €1.49 billion ($1.7 billion) for limiting how some websites used display ads sold by competitors.

And Democratic presidential candidate Elizabeth Warren has even proposed a plan to break up large tech firms, saying they “have too much power.”

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

Bitcoin Daily: Aussies Can Purchase Crypto Via Cash; Bitcoin Struggles To Stay Above $4K

Leading crypto exchange Binance announced the launch of Binance Lite Australia, which allows Aussies to buy bitcoin with cash.

The offering is Binance’s first fiat gateway on the blockchain continent, providing a cash-to-bitcoin brokerage service via a network of more than 1,300 supported newsagents across Australia. There are plans to support more digital currencies and fiat purchasing options in the future.

“Binance Lite Australia further expands digital currency adoption by providing easier ways to buy bitcoin. We are excited to continue to roll out more fiat to crypto gateways around the world to support the growth of our industry,” Wei Zhou, Binance CFO, said in a press release. “We firmly believe that more adoption will lead to more innovation and more economic opportunities.”

In other news, CoinMarketCap announced it is launching two cryptocurrency benchmark indices on Nasdaq Global Index Data Service, Bloomberg Terminal, Thomson Reuters Eikon and Börse Stuttgart.

The two indices are calculated and administered by German index provider Solactive, and will cover the top 200 cryptocurrencies by market capitalization, one including bitcoin and one without it. The index that doesn’t include bitcoin will be called CMC Crypto 200 ex BTC Index, while the one including the crypto is called CMC Crypto 200 Index (CMC200).

“We are excited to launch and share these indices with the market,” Brandon Chez, CEO of CoinMarketCap, said in a press release. “These indices will promote greater accessibility to cryptocurrency data in an easier-to-digest format. In partnership with Solactive, our chosen index administrator, we hope these professionally-calculated indices will serve to expand the reach of cryptocurrencies into the larger financial markets.”

And bitcoin is struggling to stay above $4,000, with the crypto’s market value stuck in the price range of 3,920-$4,020 for the fourth consecutive day.

According to CoinDesk, bitcoin had created a bullish outside-reversal or “engulfing” candle in the three days to March 16, but a price break above $4,040 is needed to validate the indicator. At press time, bitcoin is at $3,986 on Bitstamp, a 0.3 percent gain on a 24-hour basis.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

Apple Pay and Google Pay Enabled on Worldline Payment Terminals in Germany

Worldline now supports the modern mobile payment solutions Apple Pay and Google Pay on its payment terminals which allows users to pay easily via smartphone or smartwatch.

Identity verification is carried out intuitively using the biometric information of fingerprints or face recognition at the NFC terminal (Near Field Communication). Tokenization technology provides an extra layer of security and serves as a barrier between the actual transaction and the buyer’s stored payment data.

Through the acceptance of Apple Pay and Google Pay, Worldline offers all consumers who want to use their devices for daily payments a secure and easy payment option. The solution is now available to all merchants who use a Worldline payment terminal. German consumers who wish to use the service only have to make sure that their bank supports Apple-Pay or Google Pay. Through their bank’s app they can store their Mastercard and Visa credit card details on their smartphone or smartwatch. This card data is then shielded from the actual transaction by tokenization.

Panagiotis Karasavvoglou, Head of Merchant Services Germany at Worldline: “With the acceptance of Apple Pay and Google Pay, Worldline is helping merchants address a broad and emerging customer base that seeks flexibility and security for their payments. With the increasing popularity of Apple and Android-capable devices, Worldline is making a valuable contribution to promote mobile payment usage in Germany and help make contactless payment even better.”

Security is key

The wallets used by Apple Pay and Google Pay on smartphones and smartwatches are considered particularly secure thanks to Touch ID and the token technology used. For payment transactions, the credit card data provided through the wallet is neither stored directly on the device nor transmitted. Instead, a specially generated unique token acts as a security hurdle and is passed on to the payment terminal instead of the card information. As an additional identification measure, the user only has to authenticate their identity using fingerprint or face recognition – similar to unlocking a smartphone. PIN entry at the terminal and similar delays are eliminated with this method of payment. This makes the payment process with Apple Pay and Google Pay just as fast and efficient as with a contactless card.

Jamie Dimon: Big Tech Should Prep For Big Reg

JPMorgan Chase CEO Jamie Dimon said tech giants need to brace themselves for a similar slew of tough regulations to what big banks faced after the financial crisis.

“They haven’t had the benefit of the full monty yet,” said Dimon to CNBC, adding that “if I were them, I’d be getting prepared for it.”

Big tech companies like Facebook, Google and Amazon have been feeling the wrath of lawmakers in recent years. Democratic presidential candidate Elizabeth Warren has even proposed a plan to break up large tech firms, saying they “have too much power.”

In addition, Google was just hit with its third antitrust fine by European Union (EU) regulators. This time, the company was fined €1.49 billion ($1.7 billion USD) for limiting how some websites used display ads sold by competitors. This fine is smaller than the combined $7.67 billion that the EU fined Google in the past two instances.

It was also recently reported that France is looking to levy a 3 percent digital tax on revenues derived from business done in that country by global tech firms with certain revenue levels. Facebook, Google and Amazon would be subject to the tax, as would a few dozen companies operating in France.

“When you get attacked by someone, you get one group, it could be every country, every AG, every regulator, all at the same time,” Dimon noted. He added that, “they should really gear up and look at it as a very broad-based, extensive type of thing they have to deal with, and listen carefully to the complaints from the other side. There are sometimes legitimate complaints you should be very reactive to.”

It is surprising that Dimon would be so candid about the matter, especially since tech giants often turn to investment banks, including JPMorgan, for advice on acquisitions, as well as raising capital in debt and equity markets.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

FDA eCig Crackdown Boosts Appeal Of Online Authentication

It might not have been inevitable, perhaps, but it was certainly expected: a regulatory backlash concerning the booming trade (both online and in brick-and-mortar stores) of eCigarettes, with their different flavors attractive to younger consumers — including underaged ones. However, that backlash also promises to drive the eCigarette business online, and provide even more opportunities for ID verification and authentication providers.

To dig deeper into the ongoing changes, PYMNTS caught up with Reinhard Hochrieser, director of product management at Jumio, an authentication services provider. With more age-restrictive products and services moving online (more sports gambling options are going digital and mobile as the result of a 2018 U.S. Supreme Court decision), verification and authentication are becoming increasingly vital parts of the global digital economy.

Earlier in March, the U.S. Food and Drug Administration (FDA) issued what essentially amounts to a prohibition against the sale of flavored eCigarettes in brick-and-mortar stores, including gas stations and convenience stores. That stands as one the biggest regulatory responses so far to the growing eCigarette market, which will reach $47.1 billion by 2025, experiencing a compound annual growth rate (CAGR) of nearly 24 percent, according to one report.

“This will have a huge impact,” Hochrieser told PYMNTS. “It will force brick-and-mortar stores to not sell eCigarettes, or have a separate section in their stores” where those flavors are sold, but which are inaccessible to minors. “It will mean huge hassles” for those physical stores, he said, and that will drive “movement to the web” for more eCigarette sales. That will also work in favor of companies such as Jumio: The FDA said retail sites selling those flavored products must use third-party authentication services to prevent sales to underaged consumers.

Regulatory Trend

As one can imagine, the FDA’s recent decision is hardly popular in all parts of the retail world. Jeff Lenard, a spokesman for the National Association of Convenience Stores, told The Wall Street Journal that the “government should not be picking winners and losers,” and that the “FDA’s own data shows that 86 percent of students who used eCigarettes did not get them from stores — they came from online retailers or a social source.”

The trend is pretty clear, Hochrieser said, and it favors more use of online ID authentication methods. While the FDA decision shows that the U.S., for the moment, is stricter about eCigarette sales than most other countries (at least when it comes to one big aspect of that trade), Europe is not terribly far behind.

There, countries have gotten on board the ban bandwagon, prohibiting smoking in public places (even in Paris cafes, which might be nice to some seasoned travelers, but still odd). In addition, age restrictions on the purchase of tobacco products — and fines for violations — are not as enforced or heavily imposed as they are in the U.S. In contrast, rules about authenticating the ages of gamblers are enforced more strictly in Europe than in the U.S., he noted.

However, things are likely to change.

“We do think Europe will kind of adopt this regulation,” Hochrieser said, referring to the recent FDA ruling. He added that public smoking bans are “the first” stop toward more regulations. “The next step is to target the selling process.”

Authentication Process

That, of course, means more business for online and mobile authentication service providers. Underage consumers are often clever enough to fool even digital authentication checks (granted, some are rudimentary and even meant to be tricked, as per the wishes of shady operators), but technology is making that harder.

In Jumio’s case, the authentication effort comes down to ID data points, biometrics and computer intelligence. A consumer who tries to make an online purchase of eCigarettes might be asked to prove their age by — depending on the retailer — submitting a scan of their driver’s license, for instance, or entering the last four digits of their Social Security number, with that merchant then doing a background check.

Jumio’s authentication technology asks for those ID details, and requests for the shopper to submit a selfie. That provides another layer of proof that the consumer is who they have said they are — not a parent, grandparent or an older, ne’er-do-well uncle, cousin or friend.

To authenticate the consumer, Jumio does not use information from any government databases, which are not exactly accessible to anyone. Instead, the company relies on its artificial intelligence (AI) and machine learning technologies, and its experience with analyzing more than 150 million documents. Furthermore, Jumio has human experts ready to review any borderline cases, with the results then fed back into the system so it can get better, he explained.

Are retailers ready for a potential “surge” in online eCigarette sales, to use Hochrieser’s words? Some are, but many are not, as they have not deployed robust authentication technology methods. Many underaged consumers do, in fact, gain access to eCigarettes, and not always because some older friend or relative makes the purchase. Hochrieser expects the FDA to crack down on some sites, with some retailers being pushed out of business.

“It will happen quickly, because the FDA is strict,” he said.

Not only that, but the use of eCigarettes among teens is a natural and ongoing news story. The next few months, no doubt, will bring further demonstrations of how authentication is becoming a more vital part of online retail.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

Walmart CTO Steps Down

Walmart‘s Chief Technology Officer Jeremy King is stepping down. According to an internal memo obtained by CNBC, King will be starting “a new adventure soon,” although no specifics were given about where he is headed to next.

Fiona Tan, Walmart’s current senior vice president of customer technology, will be stepping up into an “elevated role” while the company looks for a replacement. King’s last day will be March 29.

“While Jeremy will be missed, he leaves us with an outstanding leadership team and organization well-positioned to advance Walmart’s strategic priorities seamlessly and with excellence. We wish him the very best in the next phase of his journey,” the memo stated.

For eight years, King has been working to boost Walmart’s technology presence to compete with eCommerce rivals, specifically Amazon.

“Jeremy joined Walmart during the inception of ‘a startup within the world’s largest company’ — now known as Walmart Labs, an important enabler for our business,” according to the memo. “Ever since then, he’s had a laser focus on building capabilities that empower our associates and better serve our customers.”

However, it hasn’t been easy for the world’s largest retailer to rebrand itself as an eCommerce company, even as more consumers are choosing to do their shopping online.

“People all have their own perceptions of Walmart,” said King about his role in leading Walmart Labs. “For years now, … I’ve wanted people to understand we are building a tech organization. I’ve got a machine learning team. We have some of the best apps in the world.”

The company added that, during King’s time at Walmart, important technology partnerships were created with Microsoft, Google, NVIDIA and others, which will carry its digital transformation into the future. In addition, King helped build and strengthen relationships with organizations like Grace Hopper, Girls Who Code and Path Forward.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

Fintech News Issue #209

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Wirecard Maps Out The True Path To Innovation

It’s one thing to want to improve or innovate. That’s the easy part, the stuff of daydreams, scribbles, memos, charts and PowerPoint presentations. What’s harder — and what really makes the difference — is figuring how, where and when to innovate, a task that must take into account various factors and even wildcards that keep popping up in the growing and global digital economy and its various ecosystems.

In the latest edition of the PYMNTS Masterclass video series, Deirdre Ives, regional managing director of North America for Wirecard, a digital payments platform, takes viewers on a trip through the various issues involved in building a better payments and commerce machine — tech innovation, FinTech partnerships and other factors — to help them figure out how to best make progress in this fast-moving, increasingly complex world. Her observations cover a wide range of topics, but among the main themes is to look beneath the surface of technology, processes and innovation ideas.

B2B Payments

As one example, take B2B payments — an area in which Wirecard is striving to build an even bigger presence.

This month, the firm launched a partnership with B2B networking platform Mercateo in a deal that has Wirecard powering B2B payments on the collaborative platform. Mercateo Unite connects buyers, retailers and manufacturers to facilitate B2B trade and procurement. Mercateo said Wirecard provides a custom accounts solution as well as same-day payment processing for transactions on Mercateo Unite.

In the PYMNTS Masterclass video, Ives noted the slow but (mostly) steady trend of bringing more digitization to B2B payments, where legacy paper-based processes, along with longstanding relationships and cultures centered around supply chains and invoices, can slow down online progress. At the same time, as technology spreads around the world to enable faster or even instant payments and disbursements, that appeal of quicker transactions is being felt in the B2B world.

Not Just Faster

Yet, as Ives said, it’s not just about “getting faster,” but also about thinking through the entire B2B payment process, and finding value from that. The adoption of digital technology that enables faster payments can open up room for B2B operators to offer, say, more discounts or financing options, which in turn lead to more market share. “Instead of 90-day payments, they can be facilitated in five days or less,” she noted. “Once you can crack that nut, you can really see the benefits of faster payments delivery — alternative kinds of financing and improved cash flow across the corporate space.”

But it pays to keep in mind that payment involves various steps, all of which need the proper consideration. Ives offered the travel industry as an example. Payments typically involve an individual consumer (or business travel office) and the organization on the other end, and those transactions require not only speed, but also a high level of fraud prevention defenses. Thinking about how to improve those various parts of the payments journey can itself lead to significant innovation.

FinTech Partnerships

Bringing more speed and efficiency to payments, like other upgrades to technology and operations, often requires partnerships with FinTech providers — something that’s becoming an increased area of focus for those companies taking part in the global digital economy, thanks to regulatory factors such as Europe’s PSD2, along with other reasons. “Open up the doors and take those meetings,” Ives advised corporate executives about working with FinTechs — just agreeing to meet can sometimes require overcoming reluctance and inertia ingrained in some corporate cultures, though even when it comes to traditional banking, those barriers are being eroded.

But as Ives tells it, companies that open their doors to FinTech will benefit from fresh thinking from experts who might have a different but useful point of view.

FinTech companies can “come in and through a consultative manner talk about those pain points” that organizations are trying to alleviate, she said. “The ideas [FinTechs] bring to the table can mesh with the ideas [those other businesses] have already had, but struggled to implement,” she said. Not only that, but what amounts to the outside counsel of a FinTech can serve to get things moving for other businesses. After all, “one of the challenges corporates have is setting priorities as to where they want to improve” their operations that relate to payments and cash flow.

On one hand, the world is becoming simpler, given how digital technology gives companies efficient global reach. But as payment continues to morph from a simple, mundane and even boring process into a multi-part digital experience, more complexity is introduced, creating challenges for businesses. With the right mindset and consideration, these challenges could become opportunities.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

Will Instant Payments Spur Healthcare Innovation?

Healthcare is an undoubtedly complicated space for all the players involved (the providers, insurers, patients, pharmaceutical manufacturers), particularly when it comes to payments. Not an entirely surprising fact, given that it is the collision of two highly specialized and extremely regulated worlds.

The good news, TransCard CEO Greg Bloh noted in a recent conversation with Karen Webster and Mastercard EVP of Digital Payments and Labs Jess Turner, is that progress has been visible in recent years. On the business-to-business (B2B) side of things, payments have improved quite a bit in terms of digitization. Large providers, drug manufacturers and insurance firms have big innovations that are moving them away from checks.

That’s not such good news on the business-to-consumer (B2C) or business-to-small-and-medium-sized-business (B2SMB) front, where checks still, more or less, dominate the landscape. The payment flows are often a bit indirect, Bloh noted, such that the disburser is one or two entities removed from the end consumer — making the secure routing of a payment from its source to its proper destination both challenging and slow.

“The way the whole industry has evolved, it is very layered. Having the ability to facilitate getting those payments to the receiver, and doing it in an expedient fashion, is a huge issue in the marketplace,” he said.

It’s an issue that TransCard is committed to remediating, in partnership with Mastercard Send. Instead of forcing customers to take checks as their only option (with all the unpleasant waiting that comes with that form of disbursement), firms that work with TransCard will be able to offer their customers instant digital payments — delivered to their debit cards via the Mastercard Send rails.

“Healthcare alone has so many intricate needs that I had no idea about until we dug in,” Turner said of the project, noting that it was exactly the kind of use case the technology was built to tackle. That’s because, when a customer is dealing with the healthcare system, worrying about how to receive the payment is likely their least important concern.

Cutting The Clutter Out Of The Process

While from a consumer standpoint, the payment process in healthcare might look like a payor cuts a check and a payee gets it in the mail, Bloh noted that the process is rarely that simple. In between the decision to pay and the customer getting paid, there is “a lot of back-and-forth verification of information, and packaging and sending out supplementary data like explanation of claims or documentation.”

It’s a complex transaction, and partnering with Mastercard to tap into Send allows TransCard to cut much of that complexity out of the flow for any of the common payments in healthcare, like claims payouts, rebates and incentive programs. Instead of that entire verification process, Mastercard can easily and directly verify consumers via their debit card numbers — thus, making it possible for the disbursers to push funds immediately.

“One of the big concerns with the corporations we deal with is security, and how do you know that the person getting the funds is the person who is supposed to be ultimately getting the funds,” Bloh explained. “This is where the networks have a big advantage, because of the verification system[s] they have built in. To be able to not just move money, but also validate it in between is a massive offering.”

Moreover, the consumer isn’t handed a complicated or onerous validation process — they aren’t digging around for a credential or trying to find an account number. It’s a good experience, an experience the customer is familiar with and trusts. They pull out their wallet, enter their debit information and the funds flow directly to the account associated with it.

Plus, that process can happen for both smaller payments and much larger payments, and “you have a requirement to really understand where the funds are going and where they are coming from,” Bloh said.

Customers, he added, are under no obligation to choose this method. If they prefer, they can stick with the check. However, what TransCard has tended to see so far is that, when people are offered the option to be paid now, they generally take it.

A reality, Turner noted, that the team at Mastercard Send has observed in many more verticals than healthcare.

The Foundation For Innovation

Healthcare, she explained, is not a place where consumers are particularly excited to find themselves — and, generally, they like it even less when money is on the line. Yet, for all the ways it is different (and infinitely more regulated and complex than most other verticals), Turner noted that the needs “go hand in hand with what we’ve seen in places like SMB payments or the gig economy, or in lending.”

The similarity, she explained, is in how opening the door to instant payments can become a launching pad for a host of other innovations within the segment. Payments are powerful motivators, and the ability to tie instant payments to something can often give the initiative built on them a powerful push.

Both Bloh and Turner were tight-lipped on the specific use cases one might observe in healthcare, though both noted they might have a lot more to say on the subject as 2019 rolls on. However, they both agreed that the benefits are a myriad, and will probably be surprising as they come up.

Today, for example, insurance companies can pay out claims to patients or offer them reimbursements. Tomorrow, with the power of instant payments, they could offer direct cash-rebate incentives to go to the gym or reduce one’s BMI.

“This could be a great way to … influence people’s behavior throughout the year,” Turner said. “The use cases in healthcare are almost limitless.”

Healthcare, Bloh and Turner noted, needs the push. Though its various issues and difficulties can’t be solved by better payment infrastructures and processes, offering consumers and small practices a way to accept payments from large corporate entities that doesn’t involve a multi-week wait period for a check? Well, that’s certainly a step in the right direction — and every turnaround starts with making many of those.

That’s because, as Bloh noted, instant payments in healthcare make life easier and more transparent for everyone involved — and good experiences are a breeding ground for other, better experiences. That, Turner agreed, is exactly the experience Mastercard Send was designed to support.

“We have the technology — it’s scaled, it’s here and now we have to find a way to help people with it,” she said.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

How Smart Kiosks Are Solving Retail’s Last-Mile Problem

When it comes to fulfilling consumers’ need for instant gratification, physical retailers might have an upper hand, but they can struggle to gain the depth of insights that eTailers have on their customers’ demographics and buying behavior.

In the March Unattended Retail Tracker™, PYMNTS explores how smart vending solutions aim to bridge this gap with kiosks that offer in-the-moment access to goods and software, capturing insights, such as demographic data, while improving conversion rates.

Around the Unattended Retail World

One of the biggest names in smart unattended retail continues to be Amazon Go. The company recently obtained a London location, where it plans to introduce the cashierless grab-and-go concept. Yet, even as it grows abroad, Amazon is facing some difficulties back home, where several U.S. states and municipalities are moving to ban stores from refusing cash payments, as Amazon Go does. Among the latest to do so is Philadelphia, where one city councilor noted that rejecting cash has a discriminatory impact.

As unattended retail solutions become more robust and versatile, they’re also being introduced into new sectors. That includes healthcare, where a new self-serve solution intends to enable patients to conduct more of their check-in processes and medical payments without having to engage staff members.

These offerings are leveraging artificial intelligence and facial recognition technology in an effort to gather valuable customer data, such as customers’ ages, genders and emotions.

To read all the latest headlines, download the Tracker.

Deep Dive: Retail Reimagined — the Evolving State of Self-Service

Unattended retail is an ever-changing space, as merchants work to sate consumers’ increasing need for convenience. Thanks to technology enabling improvements in digital payment acceptance, kiosks are now being used in sectors ranging from entertainment to pharmaceuticals. Meanwhile, smartphone technology, shelf-based sensors, biometrics and more are spurring new forms of automated concepts, such as Amazon Go stores.

Read about the changing shape of unattended retail in the Deep Dive.

Catering to “Immediate Gratification” with Automated Retail

The two-day delivery standard of eTailers is meaningless when consumers need their products in the moment. Take, for example, the traveler who’s rushing to catch a flight, only to realize they forgot their headphones. To meet this need, eTailers are now tapping smart vending solutions that can bring their brands where and when they’re needed, explained Gower Smith, CEO of automated solutions provider Swyft.

In this month’s feature story, Smith discussed how the smart technology provides robust customer data that can help eTailers better run their kiosk operations, and enable an omnichannel shopping experience.

Get the full scoop in the Tracker.

About the Tracker

The Unattended Retail Tracker™, powered by Worldnet Payments, serves as a bimonthly framework for the space, providing coverage of the most recent news and trends, as well as a directory that highlights the key players contributing to the segments that comprise the expansive unattended retail ecosystem.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

Parametric Insurance- The Least Known Best Response to Unfortunate Happenings

What if a policyholder could be immediately paid when an event or circumstance occurred, with no claim to file, no investigation other than confirmation that the triggering circumstance did happen?  This type of payment does happen now- consider travel insurance hybrids that provide benefit for delayed flights, and pay immediately based on a delay parameter. Could the same be accomplished for natural disasters, failure of crops, or other situations that can be set as a parameter?  Yes, it can.  Welcome to the world of parametric insurance.

Insurance is a known product- in return for payment of a premium a policyholder can expect (within the terms of the insurance contract) indemnification for a covered loss.  The loss occurs, a claim is made, the claim investigation proceeds, an estimate of loss is made, and a claim settlement is paid.  Outside of health and life cover this is the typical framework of the contract that is insurance.  The value of the insured property is determined at policy inception, a premium is generated based on underwriting guidelines re: probable loss characteristics for covered perils, and the insurance contract is bound.

A nagging problem with that centuries old framework is the need to prove a value of property, to experience an occurrence or claim, prove the claim, and wait for indemnification- if the claimed damage is covered by a policy.  There are many perils that are not covered by most policies, e.g., flood, earthquake, long-term effects of weather (drought), wear and tear, and so on.  Additionally, in some circumstances the nature of the damage exceeds the ability of individual policyholders to adequately respond- of particular note flooding, cyclones, earthquakes and agriculture issues where damage is a regional problem that simply requires regional response.

Parametric insurance, or, “a type of insurance contract that insures a policyholder against the occurrence of a specific event by paying a set amount based on the magnitude of the event, as opposed to the magnitude of the losses in a traditional indemnity policy” (NAIC) is becoming the insurance option that allows a policyholder a payment for an occurrence or circumstance that can be defined and established at the inception of coverage.  An apt example of a parametric option is provided by Jumpstart, a firm that will make payment to U.S. policyholders when a seismic event occurs and reaches a ‘peak shaking intensity’.  The firm simply monitors US Geological Survey data, when a trigger event occurs the firm identifies policy holders within the affected area and sends them a payment.  No claim action needed by the customers- the agreed parameter occurrence happens, the policy pays.  Traditionally an earthquake would need to damage covered property, the respective property owner would need to have earthquake coverage (an optional cover in most jurisdictions), a claim be filed, investigated and settlement made.  Indemnification for damage.  Parametric products simply promise payment if an agreed parameter is met- in Jumpstart’s case a ground shake of a certain magnitude.

One must keep in mind that parametric insurance is not intended to be a full ‘indemnification style’ coverage- it’s meant as a first payment option for traditionally covered perils, and an alternative/immediate recovery source for perils that may otherwise not have practical insurability.  Prudent insureds may even layer parametric cover onto traditional policy coverage, almost to act as a hedge against a large deductible.

Applying the method to the market is not as simple as generating the policy- there must be an identified, measurable trigger for the respective policy, and the carrier needs to be able to conduct that ages-old act- apply probability of risk to the potential payout.  What makes that exercise more direct than with indemnification policies is that there is a specific trigger, and there is an agreed payment.  If X occurs, amount Y is paid.  Claim adjustment expense is administrative cost only, and customers may not even have to report or confirm the triggering event as the carrier may have methods in place to automatically confirm the triggering event.  Consider if the parametric agreement is captured as a smart contract in a distributed ledger format- perhaps an inroad into Blockchain as an equal to other methods in administering insurance?  (see Etherisc )

So what uses are there for parametric cover?  Not everyone is in a high frequency earthquake zone, and awareness of parametric cover is relatively low.  If we look to the current placements of the cover there can be an understanding of where the industry sees opportunities.    Travel insurance options have been noted, and exemplify how the cost of inconvenience can be reimbursed. There are insurance organizations that have established themselves as industry experts, e.g., Swiss Re, who have initiated parametric plans in collaboration with individuals and governments in many areas for:

  • Earthquake
  • Cyclone
  • Crops  (Better Life Farming) – also includes comprehensive agricultural advice
  • Wildfire

And the firm’s thought process does go beyond individual policyholders to regional parametric programs that partner with government agencies, for example, Sovereign Insurance (options for regions across the globe), or other organizations such as Hiscox Re ILS with ongoing involvement  in a variety of initiatives including the linked Philippines plan.

Broad spectrum parametric programs have been in place for some years to assist governments in more prompt recovery from disasters:

  • Caribbean Catastrophe Risk Insurance Facility (CCRIF)- provides post-disaster assistance to nineteen Caribbean and Central American countries, is funded by various governments and government organizations, and makes payments to participants’ governments for earthquake, hurricane and excess rainfall triggered events
  • African Risk Capacity (ARC)- planning and guidance program that also funds/administers a primarily agriculture parametric cover for participating countries

And in addition- there are initiatives being developed as this article is written where counties in China are being used as model plans for regional parametric cover, particularly earthquake-prone areas and regions subject to landslides (see Insurance Asia News ).

Are there also funding opportunities for parametric insurance, both from a provider and recipient standpoint?  One would think so as this cover fills a gap for recovery, and, in combination with existing schemes for catastrophe and disaster bonds capital can be encouraged to make a foray into parametric plans.  Insurance linked securities (ILS) that have taken some hits during the last few years with unexpectedly frequent and unexpectedly severe cost events might have more stability functioning within a more predictable loss environment of parametric programs.  Improvements in data collection, analysis, AI and immediacy of event data have all contributed to the increasing viability of the programs.

So the unexpected benefit and under-publicized parametric insurance industry may be the best hedge for many against uninsurable (in a traditional sense) perils, and for almost anyone that needs a source of immediate payout when a trigger event occurs.  Picture the coastal towns of the U.S. after a major hurricane as recipient of a parametric cover distribution, a ‘prime the pump’ amount to give some immediate recovery light for residents, or tsunami victims whose livelihoods have been washed away receiving funds to re-establish businesses, or wildfire victims who need immediate distributions until primary insurers can catch up.  Yes, insurance payments can be made without the burden of proving a claim- set the trigger point/parameter, and count on the underutilized benefits of parametric insurance.

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Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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Postmates Adds Cost-Free Group Delivery

Delivery and pickup company Postmates has added a free group delivery option, according to reports.  

The service is called Postmates Party, and it lets customers have meals delivered as part of a group. The food is still delivered separately, but it goes out all together with one driver making stops for each order.

The food will take longer to arrive but it will not carry a delivery fee. The service is starting in major U.S. cities and it’s not known if it’s going to be available in all restaurants.

Postmates said people can order from Shake Shack, The Halal Guys and Blaze Pizza, among others, and use the group option.

Party ordering isn’t always available, however. It will be activated during busy times and when a lot of people are ordering from the same place. If someone joins an ordering party, they have five minutes to complete the transaction.

Last month, Postmates confirmed that it filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC).

“The size and price range for the proposed offering have not yet been determined,” the company said in a statement at the time. “The initial public offering is expected to commence after the completion of the SEC review process, subject to market and other conditions.”

Bloomberg reported that Postmates has picked JPMorgan Chase and Bank of America as its lead underwriters for the IPO. The company hit a valuation of more than $1.85 billion earlier this year after it raised $100 million from a funding round that included participation from BlackRock, Glynn Capital, Tiger Global and others.

That funding round came after a year of considerable growth for the company, which late last year debuted a delivery robot named Serve that uses cameras and Lidar to navigate sidewalks, but also has a human pilot working remotely who can take control if needed. A “Help” button, touchscreen and video chat display also allow customers or passers-by to call for assistance if an issue comes up.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

New Apple AirPods Charge Wirelessly, Have Siri Support

Apple announced the second generation of its popular AirPod earbuds, which now have a wireless charging case, a new chip to improve battery life and voice support for AI-powered assistant Siri, according to reports.

The charging case utilizes standard Qi charging and is compatible with most wireless charging products. The case looks identical to the first generation except it has a new LED light on it, to indicate battery life.

“AirPods delivered a magical wireless experience and have become one of the most beloved products we’ve ever made. They connect easily with all of your devices, and provide crystal clear sound and intuitive, innovative control of your music and audio,” said Phil Schiller, Apple’s senior vice president of worldwide marketing. “The world’s best wireless headphones just got even better with the new AirPods.”

The new chip that helps battery life is an H1 chip, which is an improvement over last generation’s W1 chip. The W-series chips were taken from the Apple Watch line, and those will continue to use W chips in the future.

Apple says the new chip adds an hour of talking time, which is a 50 percent increase. The device supports Bluetooth 5 as well.

It also has more mic clarity, faster device switching, and of course, Siri capability with the famous “Hey, Siri” activation phrase.

There are two price points for the new AirPods — with the new wireless charging case for $199 or with the regular case for $159. Customers who already have AirPods but want the new case can buy it for $79.

For the first time with AirPods, customers can also add a personal engraving for free when they buy the product on Apple.com.

Although the case charges wirelessly, Apple still hasn’t introduced its wireless charging pad, called the AirPower, which it announced in September of 2017. AirPower supposedly had the capability to charge an iPhone, AirPods and an Apple watch at the same time, and it was supposed to be released in 2018.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

Square Expands To Offer Retail Online Store, Improved POS App

Square has two new offerings: the revamped Square Online Store and Square For Retail, introduced in an announcement by the company on Wednesday (March 20).

The two products will “offer sellers the tools to have one cohesive solution to start or grow an omnichannel business,” and will be fully integrated with Weebly, which Square acquired about a year ago.

“The new Square Online Store allows sellers to grow their business in person and online, with a professional eCommerce website and integrated tools including Instagram selling, shipping, in-store pickup, and more,” the company said. “The new product also brings the Square Online Store experience to restaurants, allowing sellers to offer seamless online ordering from their website, customized pickup times across multiple locations, and the option to easily pay ahead for online orders.”

David Rusenko, head of eCommerce at Square, said it’s important to reach customers on a myriad of channels.

“It’s crucial that sellers are able to reach their buyers on any channel, whether in person, online, or in apps,” Rusenko said. “With the new Square Online Store, we’re excited to integrate Weebly technology and bring the Square omnichannel experience to everything from retail businesses to restaurants.”

Point-of-sale (POS) app Square for Retail has been optimized for and redesigned with retailers in mind. Aspiring online business owners now have the ability to make a website and connect it easily to their Square Online Store and sync items, prices, and data.

“Sellers that use Square for Retail and Square Online Store can also enable their customers to easily shop online and pick up their purchases in store, a feature typically only available to larger retailers,” the company said. “Finally, the Retail point-of-sale app has been redesigned to make managing online orders alongside a brick-and-mortar store quick and intuitive.”

Brian Smith, director of retail operations at K. Hall Studio in St. Louis, said Square for Retail has been instrumental to his business.

“The new Square for Retail has been a home run product and has saved our business a lot of time and effort,” he said. “We love the inventory management and multiple location features because it makes it extremely easy to run our business from anywhere.”

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report 

BI Ignite 2019: What Does the Bank of the Future Look Like to Startup Founders? [Video]

To conceptualize tomorrow’s bank, a fundamental question needs to be asked: What is the value the bank brings to the table? Answer that question and the bank of the future will materialize — a specialized, consumer-centric, data-driven, networked financial entity. That sums up the video below from the Bank Innovation Ignite 2019 conference last week, …Read More

Is Subscription Management the Bridge between Insight and Action?

It’s time to move beyond merely presenting data and toward helping customers take informed action on their finances with that data, according to Jonas Karles, co-founder and COO of Minna Technologies, a PFM provider for subscription and recurring payment management. “We’ve done the pie chart thing,” he told Bank Innovation. “We have seen how we …Read More

Starbucks Invests $100M In New Valor Fund Focused On Food Startups

Starbucks announced Wednesday (March 20) it is investing $100 million in the new Valor Siren Ventures fund, which aims to invest in the next generation of food and retail startup tech companies.

In a press release, Starbucks said the new fund, which is being managed by Valor Equity Partners, will identify and invest in companies developing technologies, products and solutions geared toward the food and/or retail markets. Those areas are becoming more important to Starbucks as the company seeks to drive growth by inking external relationships to drive innovation.

Starbucks said in the press release that the investment is the first of its kind for the company, and that the new fund is seeking $300 million in additional capital in the coming months from strategic partners and institutional investors. Starbucks also said it will explore direct commercial arrangements with the startups.

“We believe that innovative ideas are fuel for the future, and we continue to build on this heritage inside our company across beverage, experiential retail and our digital flywheel,” said Kevin Johnson, president and CEO of Starbucks, in the press release. “At the same time, and with an eye toward accelerating our innovation agenda, we are inspired by and want to support the creative, entrepreneurial businesses of tomorrow, with whom we may explore commercial relationships down the road. This new partnership with Valor presents exciting opportunities, not only for these startups, but also for Starbucks, as we build an enduring company for decades to come.”

The investment from Starbucks comes as the operator of coffee chains is opening up hundreds of locations each year in China, and hit a milestone by opening its 30,000th location in Shenzhen. The company launched its first store in Seattle in the 1970s. “The opening of Starbucks’ 30,000th store is a proud moment for all Starbucks partners” said Johnson. “Over the past 48 years, we have worked to build a different kind of company based on a mission grounded in the human experience, the world’s finest coffees and a constant pursuit of doing good.”

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our February 2019 B2B API Tracker Report