Money2020 Packs Punch with Big Numbers, Startups and Product Demos (October 2013)
By Kate Fitzgerald, Emerging Payments Editor
The second annual Money2020, held in Las Vegas earlier this month, created an atmosphere high on ideas centered around financial services technology innovation, as the biggest names from major payment companies, startups and investors convened to glimpse the future of payments.
The question of how mobile devices will reshape banking and payments was the central theme during the four-day conference that drew more than 4,300 attendees. But just how and when the mobile financial future will unfold—and which companies will prevail—remains very much up for debate.
Numerous big payment industry initiatives and product announcements punctuated the event, beginning with American Express Co.’s relaunch of its Serve prepaid account, backed by a free nationwide cash reload service via InComm; PayPal’s introduction of Payment Code, a QR-based approach to mobile payments at the POS and Amazon’s unveiling of plans to extend its proprietary one-click payment system to the broader e-commerce market.
Answers for the Unbanked
Money2020’s Twitter feed registered a wave of positive buzz following an impassioned keynote speech from Dan Schulman, American Express’ group president, enterprise growth, describing the frustrations he endured when he spent a day trying to live like an unbanked citizen without convenient banking services. “Tens of millions of people are relying on high-cost, time-consuming and out-of-date ways to pay for things,” he said. Serve’s low-cost, mobile-centric package of financial services answers those needs and is part of a new industry movement Schulman dubbed “the era of the nonbank.” Serve operates on the same platform as Bluebird, the Paybefore Award-winning prepaid card American Express launched last year with Walmart. He noted that 87 percent of Bluebird enrollees are new to American Express, with more than half under age 35.
Younger consumers in particular are driving the new mobile-centric financial services movement, Steve Streit, Green Dot Corp.’s CEO, said during a conference session. He described the advantages of hatching a product solely on a mobile platform, as Green Dot did last year with GoBank. Once consumers get in the habit of using ever-present mobile devices for payments, “it’s very hard to go back,” Streit said.
But make no mistake: Banks also have big plans for the industry’s shift to mobile technology, said Aditya Bhasin, Bank of America Merrill Lynch’s senior vice president of consumer marketing, analytics and digital banking. Innovators would be wise to realize banks already have created very solid rails to handle payment authorization, settlement, fraud and risk management, and they do it quickly and securely, according to Bhasin. “We propose to all you innovators to build on top of our platform,” he said, outlining diverse new products and processes Bank of America Merrill Lynch recently has developed through such partnerships. One example Bhasin pointed to was versatile new countertop POS systems Bank of America Merchant Services has developed with First Data Corp.
Mobile and digital wallets, which dominated discussions at the inaugural Money2020, were a hot topic once again, primarily centered on specific initiatives (see sidebar). But e-commerce and merchant-oriented payment innovations also drew a great deal of interest. “Wallets are where you store things,” Patrick Gauthier, PayPal’s general manager, retail services, said during a panel discussion. “The post-wallet platform is where real innovation will take place,” he said.
|MCX Panel: Mobile App Still in Development, ‘Will Excite the Masses’
One highly anticipated session during Money2020 was a panel consisting of key retailer members of Merchant Customer Exchange (MCX), the merchant-led mobile commerce venture formed last year that has generated great curiosity and few details. Some attendees expressed disappointment and skepticism when the panel failed to announce MCX’s customer-facing brand name or launch date, but others said it was reassuring to listen to the group in action and gauge its commitment to the venture.
“Don’t confuse the lack of announcements with lack of progress,” Jamie Henry, senior director, payment services at Walmart, a core MCX participant, told attendees. “It’s only been a year since MCX was formally announced … we’ve made the decision not to get out in front and talk about it ahead of time,” he explained.
Why is it taking so long? MCX is moving carefully and deliberately as it builds a mobile payment app that will “excite the masses,” said Kate Jaspon, vice president, controller and corporate treasurer at Dunkin’ Brands.
MCX’s participants shied away from describing exactly how MCX’s payments platform will work when it goes live, only confirming plans to deploy technology from FIS for its platform and software from Gemalto. Panel members said merchants’ proprietary apps may stay in the foreground, with MCX powering the underlying payments system.
But the group made clear it believes MCX’s inherent scale—more than 30 major participating U.S. retailers representing 90,000 locations, 4 million employees and $1 trillion in total annual sales—will be a huge advantage over rival mobile and digital wallets whose biggest challenge is building scale. “Having that scale from the start is huge; it’s like putting lightning in a bottle,” according to panelist Mike Church, vice president of interactive ecosystem, Darden Restaurants.
Another key advantage will be MCX’s ability to spur its employees to help promote the app at the POS, which is not the case for many other mobile wallets, Henry told attendees. “Merchants participating in MCX have a vested interest in making it work, getting behind it, training associates to promote it, use it and explain it to customers,” he said.
Participating merchants expect MCX will improve efficiencies at the POS. “As a merchant I’m getting concerned about having many different [potential mobile wallets] out there and how to figure out how to use each one,” said Jim Macari, director of innovation, new products, at Phillips 66 Co. “You press a button on this [mobile wallet], click a box on that one, but with MCX the payment experience will be consistent from merchant to merchant.”
Walmart’s Henry said MCX’s goal is not to replicate the card payments system of today. “We think there’s a great opportunity in the smartphone and in moving payments to a new domain. One of the biggest mischaracterizations is that we’re focused just on the cost of payments or any single approach. What we’re really focused on is bringing forward a new, more balanced payments system. We think mobile has the opportunity to help address those issues.”
Push for Partnership
Jim McCarthy, Visa’s global head of innovation and strategic partnerships, also emphasized the significance of the global surge in e-commerce and the rise of mPOS devices during a keynote address. To capitalize on that shift, Visa recently joined with MasterCard and American Express to promote a global tokenization standard to make online payments simpler and more secure. “We are in early days, and developing a common global standard is the first part,” McCarthy said, noting that when networks connect, it will expand opportunities for all players in the payments ecosystem.
In another keynote, Ed McLaughlin, chief emerging payments officer, MasterCard, called for cross-industry support for global online payment standards: “If we all had to work with our own proprietary magnetic stripe technology on cards, [the payments system] would never work,” McLaughlin said.
Diane Offereins, president of payment services at Discover, also talked up the power of partnerships to advance payments in her keynote. “We love to partner,” she said, describing strategic moves Discover has made in recent years to be the payments backbone for third parties, citing Discover’s landmark overseas card-acceptance deal with China UnionPay. “The next evolution of commerce will require a new degree of collaboration,” she predicted. But Offereins declined to say whether or when Discover will join the other big three networks in pushing a global tokenization standard. “Not at this point, but everything in the future is up for grabs,” she told Paybefore, when asked about the initiative.
Facebook’s Mobile App Focus
Deborah Liu, Facebook’s social commerce and platform monetization product manager, drew a big crowd eager to learn more about the social network’s unfolding payments strategy, in an early-morning keynote on the conference’s last full day. As mobile apps multiply, 80 percent of the time consumers spend on mobile devices now is centered on apps, Liu said, and Facebook wants to harness apps for e-commerce. Liu demonstrated Facebook’s test of in-app purchases with the online menswear purveyor Jack Threads, which enables consumers to use their Facebook logins to make purchases directly from the app, minimizing steps. “The consumer can go from the [Facebook] news feed to purchase and back in just a minute,” Liu noted.
The payments industry’s biggest brands shared the spotlight at Money2020 with dozens of startups and innovators who were showcased in a series of “launch pad” presentations. One that grabbed attention was Loop Inc., which offers a downloadable LoopPay app and a dongle that plugs into any smartphone to enable tap-to-pay and instant redemption of merchant offers without requiring any technical changes to existing magnetic stripe card-based POS equipment. The dongle, powered by magnetic resonance technology, instantly replicates a card-swipe when users hold it over the card-swipe slot on a countertop payment terminal. Users may load their cards into the app by swiping them through a slot built into the dongle, available from LoopPay for $34 each. A $99 sleeve that accomplishes the same function as the dongle is coming early next year, Will Graylin, LoopPay’s CEO, told attendees.
Keeping with the spirit of Money2020, which nurtures invention and investment, it is worth noting that LoopPay’s dongle is not yet available. Like several in the latest crop of payment technology startups, LoopPay is selling its dongle and raising funds through crowdfunding Website Kickstarter beginning next month, Graylin said.