Here are some questions for you: what are this week’s payments industry events takeaways? Who do Gen Z and Millennials trust more with their data: banks or tech giants? What’s the main reason that has triggered new hopes among Bitcoin enthusiasts? Is WhatsApp already live in India? What is beyond PSD2 and GDPR?
In case you haven’t found the answers to such questions while browsing your media sources this week, read on.
All Eyes on Visa, Money 2020 Europe and IRCE in US
In Europe, all eyes have been set on this year’s edition of Money 2020 in Amsterdam, while the US keeps the bar high with its biggest retail and eCommerce event – The Internet Retailer Conference & Exhibition (IRCE).
Banking, blockchain, crypto, risk, AI, conversational commerce, their impact on online shopping, companies coming together to create new products, the blurring line between consumers social life, retail life and financial life. These are only some of the topics that dominated high-level discussions in Amsterdam only a few days after Visa Europe’s card payment problems.
At the same time, Chicago has been on the cutting edge of retail and eCommerce. And we are also there, attending the largest eCommerce trade show in the US. We will dedicate a separate blog post on the main IRCE event takeaways. For now, you can follow our event coverage on our Twitter channel.
But coming back to Visa. It has been a difficult week for the card network, grabbing the headlines with its massive service disruption across Europe a week ago. At Money 20/20 EU, Visa Europe CEO started her keynote speech with an official apology for the outage and mentioned that the service disruption was the result of a “hardware failure”, without disclosing any precise details.
As expected, the service crash sparked various industry reactions. There were reports of “chaos” at supermarket tills, frustrating customer experiences, followed by pessimistic prospects on the future of cashless societies, and debates around the need for decentralized or other alternatives that are immune to such failures: Bitcoin, cash, a central bank-issued equivalent of physical cash?
By the time of writing this blog article, the extent of the Visa outage has not yet been fully clarified. This has already raised some eyebrows in the UK Parliament. How many retailers were affected, how many payments did not work, what led to this failure and what measures will Visa implement to prevent similar future situations? Nicky Morgan, UK Treasury Committee Chair and Conservative Party lawmaker, has given Visa a deadline of June 15 for such answers, and could compel Visa representatives to give them in person.
While Europeans might now still have second thoughts when paying with their Visa card in supermarkets or online, let’s take a moment to ponder on the many more things that are moving to the right direction:
Meanwhile, Mastercard Reaffirms AI Interest
While Visa was experiencing outage issues, Mastercard did not waste valuable time. Its newly launched AI Express is one example of how Mastercard plays an active role in accelerating the adoption of artificial intelligence and machine learning by opening up its platform to the wider industry.
The company has also revealed “conversational commerce” plans to partner with Google and Amazon to integrate its payment system with voice assistants. Mastercard’s Masterpass product allows a user to upload credit card details and acts as an easy way to pay for online products and services. Recently, Masterpass was introduced as a way for customers to pay for products that are being sold via Facebook Messenger.
In the US, almost USD 40 billion will be spent via voice commerce by 2022, as compared to USD 5 billion in the UK, representing 6% and 3% of all online spend (source: strategy consultants OC&C).
Challenger (i.e Digital) Banks? Getting Stronger and Stronger
Digital banks have certainly come a long way. Offering new money management features, as well as payment functionalities, these players aim to offer eye-catching services in particular niches, in a bid to enrich the banking experience for consumers.
This week, Revolut has reached 2 million clients in Europe and it is now expanding in Russia. The company is actively working on a commission-free trading platform and also seeks US banking license.
Another digital bank, N26 now has over 1 million customers, transacting EUR 1 billion a month. Originally launched in Germany and Austria, N26 has been slowly expanding across the Eurozone and now serves customers in 17 countries.
In related news, BBVA is set to increase its stake in UK digital bank Atom with a GBP 85.4 million investment. In the future, the mobile-only bank will be looking at ways PSD2 and Open Banking can help it support its customers further in their financial decision making.
Privacy Fears Holding Back Indian Payments Expansion for WhatsApp
In our previous industry news coverage, we touched upon the Facebook move to make its WhatsApp payment services available in India. Meanwhile, the official launch is expected to be delayed further “as parent Facebook battles a slew of concerns, including how it will store and share user data”, as The Economic Times reports.
As of February 2018, WhatsApp has been testing a pilot payment service in India in partnership with ICICI Bank, available to a limited number of users who could in turn invite their friends to test the service. Until now, the number of users who have tried it has reached 700,000.
Millennials, Gen Z and Trust: Key for Long-Term Relationships
Large retailers have been investing efforts into adapting their strategies to become more appealing to both Millennial and Generation Z shoppers. But who do these customer segments trust more?
A survey of 2,000 people across the UK indicates that young people trust Amazon and PayPal more than banks when it comes to protecting their personal data. Other survey findings reveal that 77% of all people don’t trust Facebook with their data in the wake of the Cambridge Analytica scandal that highlighted the amount of data Facebook collects on users and how advertisers use the platform.
A McKinsey report mirrors similar preferences by US counterparts: 73% of Millennials claim they would be more excited about a new financial services offering from Google, Amazon, or PayPal, rather than their own bank.
Data, Data, Data
And since we like to save the best for last, we conclude this industry news summary with some food for thought for the weekend, as expressed by Chris Skinner, leading industry commentator and strategist, on his blog:
“another recurring theme of the last two days: regulating the technology firms. It started with a dialogue around PSD2 which forces banks to offer Open APIs for other firms, particularly the technology firms and internet giants, to be able to access customer data if the customer gives permission. What about the bank accessing the technology firms’ data, the banks are asking? Where is the regulation forcing this through?
The answer is that it’s coming. PSD2 is just the first step towards regulating and requiring an Open API market of data. The next step is to force the Mobile Network Operators, Internet Giants and Technology Firms to do the same. In fact, my bet is that PSD3 will link with GDPR to build a regulated world of data. Whether that data is with a telco, an internet giant or a bank does not matter.”
Until next week.