What a difference a year makes, especially in payments.
Innovation Project 2015’s “Innovation At The Intersections” theme was all about the direction that payments had come from, which way it was headed and the crossroads the payments industry had found itself at. Fast forward one year, throw in an EMV shift, a lot of cyberattacks and a whole slew of new payments tech, and we’ve found ourselves on a path, moving full speed ahead, in a direction still very much unknown.
Now, following the theme of Innovation Project 2016, we’ve found ourselves entering “Payments at the Edge.”
What exactly is “Payments at the Edge?” It depends who you ask, of course. But during Day 1 of Innovation Project — a day focused on (as MPD CEO Karen Webster said) “sparking intellectual curiosity and moving beyond the status quo” — the jam-packed slate contained scintillating conversations about IoT security, payments fraud and authentication, payments’ roadblocks and enabling financial inclusion. It was also a day that brought together an eclectic mix from across the payment, commerce and tech ecosystems, including the man who coined the term “Internet of Things,” PayPal CEO Dan Schulman, an ex-NSA director and even a slam poet.
“Thanks to the proliferation of connected devices, software, the cloud, ever faster and more ubiquitous broadband, new technologies and the great imaginations of innovators everywhere who see a future that most can’t yet comprehend but work tirelessly to make our reality.”
But to discover what “Payments at the Edge” really means, it means looking into a world away from where payments actually happen. A world, Webster notes, where “payments and commerce can happen anywhere and anytime a consumer and a business want to transact.”
That’s the edge of payments, commerce and beyond. But what defines an innovator? Of course, there isn’t just one way.
“An unshakeable belief that something better lies ahead. A commitment to go first and unlock that potential for others. The courage to see the journey through, no matter the personal price. The willingness to pivot along the way. The understanding that any journey to the edge can’t be taken alone. And the insight that sometimes the journey really begins once you get to the edge,” Webster said.
As you can see, Day 1 conversations produced plenty of versions of what innovation in payments is really about, which, increasingly, is less about payments and more about what those payments enable. Whether it be cross-border commerce, access to faster and cheaper financial services or a better checkout experience.
So, how did Day 1 wrap up? Don’t fret. We’ve got your eight-hour recap right here. Or, in case you missed it, the details behind the PYMNTS.com Innovation Project Alexa challenge that will provide 12 innovative companies with the opportunity of an innovator’s lifetime by inviting them into the Alexa ecosystem. But more on that here.
Internet Of Things — At The Edge
The day kicked off with a conversation with Kevin Ashton, the inventor behind the term “Internet of Things,” who shared his thoughts on the framework expected to commerce-enable over 20 billion devices by the year 2020. But even Ashton admitted he didn’t know how big the concept could be.
“What we couldn’t see is why there would be a rapid development of this technology,” Ashton told Webster during the first fireside chat of the day. But, of course, there was one device that gave rise to the IoT revolution that’s dominating the industry chatter today: the mobile device (or that mini computer no one is ever without).
And then, of course, there was the chip in the lipstick packaging in the 90s that was the inspiration of the very early days of IoT. Like any new innovation in the market, there have always been skeptics about the concept of having virtually every electronic device connected (security concerns, privacy, etc.), and that won’t change. Now, however, the conversations have also shifted to the next important aspect of IoT: giving things, like a smart speaker that can order you pizza, a widespread use case.
The conclusion from the panel to get that done? Transparency, security and making sure consumers are comfortable with both sides of the equation. Like all things in payments and commerce, there’s always two (or more) sides to the equation.
That’s not far off from what PayPal CEO Dan Schulman said in his fireside chat following the first panel about how merchants should think about the value of consumer experience and the value of apps within an in-store environment. Or why PayPal’s platform is built to be unbranded for merchants.
It’s all about merging different interests to enable the most bang for everyone’s buck. This means overcoming one major challenge in today’s payments ecosystem: the lack of cross-industry coordination.
The Payments Enablers
Which brings us to the next batch of conversations from the Payments At The Edge panel: the back-end technology powering it all. And how countless companies have tried and failed due to a combination of factors, including the roadblocks impacting the payments landscape bound to shift in the next few years.
This discussion revolved around the complexities of omnichannel, the rush to boost mobile payments adoption rates (and the challenges holding them back — hint: value proposition) and the uncertainty about how consumers are reacting to shifts in the payments marketplace as they adopt a forced behavior (dipping over swiping at the POS).
The conclusion? “Payments have to be secure, and they have to be ubiquitous.” Ubiquity, of course, has been pitched by nearly every payments innovator, but there is a difference of opinion about what that term really means. One problem, one panelist said: “Too many people think about nirvana and the perfect transaction.”
When, really, the group concluded, it should be about the end goal of using payments as an enabler and not just enabling payments. This is also about using purchase (see: payment data) history to tap into analytics to see how merchants can better connect the in-store experience to the eCommerce experience. Otherwise, it’s just another missed opportunity.
The problem? “Next time we’re here at Innovation Project, the things we are talking about today will be outdated,” one panelist said. But what’s beyond the edge? We’ll have to wait and see what 2017 brings.
The Security And Cybersecurity Chatter
Former Director of the NSA General Keith Alexander also joined us at Innovation Project and shared enough stories to keep any payments guru on their toes about fears of what may come, as the breaches and fraud have seemed to get bigger, faster and more widespread.
The reality check? “We are way behind,” Alexander said during his chat with the group of security and fraud solution innovators.
“We have to up our game,” he said.
How? “Authentication, authentication, authentication,” one panelist stressed. And by focusing on identity, Big Data and how to harness that data with analytics and real-time solutions.
Of course, as we all know, making payments secure is job number one. That’s not new. What is new are the threats that face payments innovators today and that will confront those who want to take payments to whole new places and spaces tomorrow. That’s why we called the panelists that joined us today the “modern-day Clark Kents.”
Which led us into another major issue that payments innovators are tackling.
Protecting Those Payments
Where payments go, security threats follow.
It’s a fact that industry players have no choice but to address as they attempt to push payments to new places, devices and environments. One thing was clear as the panelists discussed the security challenges facing the industry today: Payments is not just about moving money around; it’s really about authentication.
“Fraud is always about identity. Stealing an identity has never been easier than it is today, and it will be even easier tomorrow,” said Forter CEO Michael Reitblat, noting how closely tied together the two things actually are. The panelists could agree that protecting businesses and consumers from sophisticated, well-funded attackers will require comprehensive solutions that focus not just on protecting and detecting but also on how to recover when threats become a reality.
Of course, there were conflicting perspectives on how to get there.
From multi-factor authentication to biometric security measures, the solutions used to fight cybercrime must be as adaptable and efficient as the fraudsters themselves. But when the question of where the responsibility truly lies for safeguarding the personal identifiable information of consumers — whether it’s the government, entities or consumers themselves — the hot topic of Apple versus the FBI was not far behind.
While many panelists took a stance on one side or the other, they also disclosed many of the other things keeping them up at night as they continue to fight the good fight of protecting payments, such as the enablement of IoT payments, widespread attacks on financial data, securing identities across devices and a lack of product design with security in mind.
Financial Inclusion — Who, When, Where And How To Make It Count
Day 1 wrapped up with discussions from players in the game about doing good by moving money via mobile, what their next solution will be and what no one has thought of yet. The challenge spans across borders and impacts more than 2 billion people worldwide.
During the Financial Inclusion At The Edge panel, participants took a deep look at a significant problem affecting the unbanked and disenfranchised across the globe. Not being a part of the formal financial economy is actually very expensive — forcing people to instead navigate a digital world with paper-based payments and risk falling prey to predatory loan services to get by.
“Poor people pay a lot to be poor,” one panelist explained, adding that it ends up costing them more to perform tasks that the rest of us take for granted, such as saving money, borrowing money and sending money. Whether the burning issue lies with traditional banks locking out portions of the population or financial services simply being unavailable in many of the places people need them most, a recurring question throughout the panel revolved around what it will take to address the brokenness of financial inclusion.
The capabilities and proliferation of mobile devices around the world have presented a new opportunity for players to step in and fill the gap of the unbanked where many banks or financial service providers are falling short. As one panelist pointed out, technology has the power to be a significant equalizer, and when it comes to smartphones, users are provided with the intimacy that sometimes isn’t found when dealing with finances through more traditional channels.
“Everyone benefits from an economy that includes everyone,” a panel participant concluded, and with nearly 700 million more people being included into financial systems over the past four years, the industry may be on the right track.
And, as we learned during Day 1 of Innovation Project, whether you’re talking payments, commerce, tech, IoT, security, fraud or financial inclusion, it’s all about providing a value proposition for the payments enabler and the one being enabled by payments innovations — no matter what side of the equation you’re on.
That’s just a taste of what “Payments at the Edge” is all about. At least from the start of the conversation.
Stay tuned for what Day 2 brings.