- payments, trends
At this Feb 9 2017 event, we were updated on what’s happening in the industry by experts from Mastercard, Bird & Bird, Copenhagen FinTech and hiveonline.
Sasha Krstic, Head of the Nordics & Baltics, Mastercard, talked about digitization and how the trend toward a connected lifestyle is driving the rapid evolution of payments forward, as well as about the ever-growing pressure for safety and security.
In the past, Mastercard might have been a synonym for a “credit card company”, but it is in fact a technology company in the global payments industry, connecting consumers, merchants, financial institutions and many more to make life easier for all parties. The US is not a leader when it comes to digitization– only 66% own a smartphone in the US and 20% use it for in-store payments, and the US’s fragmented banking system has not enabled the scaling of new technologies as it has in the Nordics.
Mastercard no longer thinks “payments”, but instead, how to make people’s complex lives easier. They are working to make people’s information, transactions and goods secure, including use of biometrics, with the Mastercard Identity Check solution, and tokenization, which is essentially digitizing your credit card to any device, to make sure consumers can continue to make safe and secure payments in the new digital landscape. Apple Pay and Samsung Pay run on Mastercard technology now.
Mastercard is also eagerly driving connections between themselves, their partners and the FinTech innovators globally, with their Start Path program, aiming to help companies gain access to Mastercard’s global ecosystem and break into new markets through relationships and networking with Mastercard and its customers.
Scott McInnes, Partner, Bird & Bird LLP, did a great job covering the MANY regulatory developments impacting payments, including giving the merchant more power to decide what cards to accept, PSD2 (Payment Services Directive 2) and in particular the Strong Customer Authentication (SCA, which is essentially identifying you using 2 of 3 factors about who you ARE, what you KNOW, or what you HAVE), instant payment scheme, and more.
In relation to PSD2, he also talked about TPP (Third Party Providers) and how banks will have to open their infrastructure to enable those third parties (such as Klarna in Sweden) to access your multiple accounts and/or push money to merchants you want to pay, as well as the debate about whether these should get direct or indirect access to your data. There is still a lack of clarity on definitions of many of the terms, and lack of enforcement of whether TPPs always have consumer consent, as well as lack of agreement on whether these TPPs will also have access to your savings, investment and other accounts.
He pointed out that while Europe is very advanced in terms of regulation, US is not yet even having these discussions, and essentially shows more support for RBA (Risk Based Authentication) rather than SCA.
Thomas Krogh Jensen, CEO, Copenhagen FinTech, talked about the trend he sees in startups working to remove friction from the customer experience. Copenhagen FinTech is working with a modified “triple helix” concept, meaning becoming a bridge between corporations, university researchers, and startups, educating all sides on how to work better together for growth, and helping build a stronger ecosystem in Denmark as well as link to the other global FinTech hubs. This picture shows their areas of focus:
Sofie Blakstad, CEO and Founder, hiveonline, a veteran of the banking world who has founded this startup, explained in simple terms the benefit of the blockchain as a distributed ledger which removes complexity, but doesn’t currently authenticate who you are. hiveonline will use the blockchain in a unique way to help Scandinavian small and medium businesses validate themselves based on facts from their behavior over time, to show potential customers whether they are trustworthy and are who they say they are (similar to what a credit report for an individual would be, but based instead on a wide variety of facts from their previous business activity, which are impossible to fake and more trustworthy than reviews, “likes” and other subjective measures. The goal is to reduce friction in the identification of your business, using multiple views of who you are as a company within your ecosystem.
See the event agenda here. DABF members received the presentations.