Top Ten Predictions in Retail Payments for 2020

Today’s consumers are demanding more purchasing options and convenience than ever before. This has spurred a digital transformation that is reshaping how retailers and issuers do business now and in the future.

The need to reinvent cards for the digital world, solve for digital commerce and continuously innovate in consumer payments are imperative to enhancing customer satisfaction and gaining a competitive edge.

Join IR, Celent and your peers as we discuss the top ten predictions for retail payments in 2020 and how evolving your payment solutions will help you stay ahead of your customers’ expectations while providing you assurance your payments are being processed smoothly and efficiently.

IR | BrightTALK

Janae Smith: Good morning or good afternoon depending on where you're tuning in from and welcome to today's webinar on the Top 10 Trends and Retail Payments for 2020. My name is Janae Smith and I'm the Global Products Marketing Manager here at IR. 

With us today we have Zil Bareisis the Head of Retail Banking of Celent, who has over 20 years of experience advising senior executives at leading financial institutions and their technology and service providers. His research is focused on retail banking technologies with a particular emphasis on consumer and card-based payments.

Alongside Zil, we also have Jim Bowers the Payments Solution Specialist here at IR, who has over 30 years of experience in the payment industry covering infrastructure, retail banking, wholesale banking, and risk management solutions. He is experienced with both domestic and international having held numerous positions and payment software and services.

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And with that, I will pass it over to you Zil.

Zil Bareisis: Thank you very much, Janae. Good morning, and good afternoon, everybody, depending on where you are in the world. Thank you very much for joining us. And thank you to IR for hosting this and inviting me to present. 

My name is Zil Bareisis. I'm the Head of Retail Banking at Celent, and we are a research firm. We focus on financial services technology research. We follow the trends. We keep an eye on what's happening in the market in terms of technology, vendor space, how banks are using technology. And we write research reports. We speak at events such as this. And overall, try to help clients navigate technology changes in this uncertain world.

One of the things that I've been doing for the last 10 years now is writing a report on top trends in retail payments. Always looking at “What's happened in the last year?” “What does that mean?” “Where is that pointing us for the next year?” And that tends to be one of the more popular reports because everybody likes to read: “Okay, what’s happening next?” And we're at that time of the year now where we thought it would be good to share with you some of our thinking now, looking forward to 2020. 

By the way, the format changes slightly every year. When you look at payments you can have a very broad range of ranging discussion. 

So what I'm going to talk about today is not really exhaustive about payments, but it focuses more on the card side of payments and what that means for the card issuers. And the way we did it last year, back in 2019, was looking at kind of the three broad imperatives for in consumer payments and specifically for cards, and we categorize them based on the timeframe horizon. So, is it happening now? Or is it a little bit later on? What's the impact and what's the degree of uncertainty? Obviously, the further out you look, the more uncertainty you have. 

And the three imperatives—basically I said—you've got to reinvent cards for the digital world by blending physical and digital across the entire value chain. And my point was that you have physical cards, they're not going to disappear, at least for the time being. But digital is becoming more—and it's not just for providing information and alerts—that is important, but it's actually moving all the way into the issuing side of things.

Similarly, in the near term, it's solving for digital commerce by adopting EMVCo standards. The three ones that you see on the screen here. 

[On slide, #3] And then for longer term, I said, you got to keep an eye on how to remain relevant in consumer payments by considering some of the more provocative scenarios. “What if front-end customer experiences loss to others?” “What if rails migrate from cards to account to account?” For example, for retail payments for actual merchant payments. “What if central bank digital currencies or stablecoin take off?” And what's really interesting is that the events in 2019, showed that a lot of these things almost accelerated and started happening even faster than we thought they might do. And so I thought, this was actually quite a valuable framework to understand trends and consider strategic responses and for this year. 

And what we're about to present now is actually to talk about 10 predictions for the year. Which are informed by and based on what we've seen so far, and as you'll see later on sort of maps again, quite nicely, back to these imperatives. 

So let me move on to the next slide.

And let’s start with the first one of these predictions which is quite broad and something that we've started talking about as a potential scenario. The payments-led race to build out broader financial services ecosystems will intensify among the technology giants.

We've had Apple Pay and Samsung Pay for a while. But last year, we had Apple launching Apple Cart, which I'm sure many of you are familiar with, probably some of you even have it.

And if you have that card you would have noticed that—when it was launched, when it was announced first, I blogged about it—and I said, “The difference between an Apple card and the regular credit card is like a difference between mobile banking and mobile first banking.” They're both similar. They're both mobile banks. They’re both banking initiatives. But the difference is qualitative. And there are maybe some super external. But in general, it sort of shows what truly digital product could look like when it's done by a technology giant. 

Samsung Pay announced a money transfer partnership with Travelex, which allows you to send money across the border. Google, there was all this sort of talk about Google looking into partnerships with Citi and potentially credit unions to launch a checking account or at least access to checking accounts. And at the 2020 conference last year in Vegas, Uber Money was announced. Which really pulls together a series of products and packages offered by Uber for essentially financial services propositions to the community of drivers and riders that they have. And they've already had a card in partnership with Barclays, for the drivers, sorry for the riders. For drivers, they already made payouts relatively easily. But now it's a more coherent, more cohesive set of products, getting even into things like—they know their drivers. So if one of them is running short on money to fuel up, they would accrue and can easily extend up to $100 credit, for example, so that they could fill up the tank and carry on driving and earning money.

And what's interesting about this is that each of those is really targeting a specific set of users, specifically communities whether it's drivers and riders in the Uber marketplace, or perhaps Airbnb, or the Apple users.

And we've talked about how the banking distribution is changing, how the value chain is getting fragmented. And traditional bank products used to be sold through bank channels. With the advent of open banking, we now increasingly see banking products being sold through either third party channels, or sometimes banks might create a marketplace and start source products from third parties. And I think we're now moving to this phase where we have this—some people call it banking as a platform—where you co-create and co-develop on that platform. And a lot of these products that they talked about earlier, they're still created in partnership with banks. 

So one way to look at it for banks is to see that: “This is a threat to me. This is clearly taking away the experience that I have in my customers.” 

Another way to look at it is “If I'm flexible enough and I have the technology and the partnership strategies; I can actually work with these, so this could be an interesting and important distribution channel.”

So that's really the question, I think, the bank should be asking and considering themselves. “What is my strategy towards these technology giants because they are clearly coming into financial services?”

And one tech giant, I deliberately left out of that previous page is Facebook. Facebook made quite a big announcement and caused quite a bit of uncertainty and concern in the industry by announcing Libra. Many of you probably know what Libra is, but it's basically a form of stable coin. It was a proposed digital currency that could be linked to a basket of fiat currencies that was made available to a community of all Facebook users across the world and would allow them to quite easily transact with each other submitted to each other.

And, of course, with the power of Facebook behind, potentially could be quite a radical proposition in terms of takeoff. Of course, that created a lot of concern for many regulators, a lot of pushback. Many of the original partners left the coalition. So my prediction is that Libra will certainly struggle to get off the ground in 2020. But what that does, it propels to the forefront the debate on the future stack of payments and those debates will only get louder. 

And what I mean by that is, basically, you have two big camps. One is saying: “Cryptocurrency is the future.” And even there you have some arguments. Some people say, “We've got Bitcoin. What else do you need?” Others are saying, “Bitcoin can never be anything. No banks will work with Bitcoin so we need something different. We need a Libra-like solution.” 

Central banks are now looking at this very seriously. And individual banks have been exploring this for many years, and now they're banding together, they're coming into a coalition of their own to see if we could launch digital currency that would be issued and controlled by a Central Bank crowd and a decentralized cryptocurrency.

On the other hand, others are saying: “Well, why bother with crypto at all if we continue to make investments and improvements in real-time rails, cross border payments, card rails? As long as we have a workable digital identity model—that is missing at the moment—perhaps that would be enough. That the banks would obviously play a central role in that.”

The trouble is that even in the digital identity, you have another dichotomy where people again debate.“Okay, so who should be providing that?” “What's the right model?” “Should it be done by a trusted third party whether it's banks or governments?” “Should it be a self-sovereign identity, more of a decentralized approach?” And perhaps blockchain comes into play again.

So, again, I don't have the answers. I don't think it will even get resolved in the next year. But expect to hear a lot more of these debates in the future.

The next one is sort of falling off the cliff a little bit. If we're talking about very broad and big strategic changes happening in the first couple this is more tactical, more day-to-day. And the prediction here is that digital-first competitors, the likes of Apple Cart, will raise awareness and demand for advanced features in card issuing.

If you look at the value chain from issuing the transaction to management and servicing, as I mentioned, we've always already had controls and alerts. But there's more sophistication into those now, in terms of what you can control and what sort of alerts you can get: insights into transactions, relevant real-time offers. So even in that management and servicing category, which is where mobile started getting useful, the digital side of getting being useful for cards, there's still innovation happening. But the more interesting stuff is really on the issuing on the product design side, where now people expect;

• real fast and onboarding, digital identity verification, 
• push provisioning - which is a feature basically where you have your digital wallet, and you can have your card credentials, tokens sent directly into that wallet so you don't need to take pictures of the card anymore and it can be done directly through your mobile banking app, for example,
• issuing a virtual card.

And what’s interesting on push provisioning, just a year ago, we asked that question when we did a survey of our financial institutions in North America, saying, “What do you think of push provisioning?” “Do you already offer or do you plan to offer?” It was basically either half or two-thirds of people that said we don't even plan to offer that. And I suspect that part of that was driven by simply not even knowing necessarily what that is. And if we were to rerun that survey now, which we intend to do, then I suspect the results would be very, very different. And just simply because of that raised awareness.

My view is that, I think, the credit cards unbundling will continue with a point of sale lending and installment purchases poised for growth. And this is basically saying that every credit card is really a dual instrument. It's a payment product as well as a loan, associated with it. You can rip that apart. And what's driving that, I think:

• is that there are some customers, especially the younger generation, that either don’t have a credit card or maybe don't want to use it,
• maybe some of them want more transparency of fees and control overpayments, and don't necessarily want to get into debt
• of course, lenders are always looking for alternative revenue sources,
• and for merchants, as long as it's a payment that can help with conversion, they'll be very open to listen to you.

So if you just look at together what happened in 2019, we always have players like Flora, Affirm, PayPal Credit that have been at the forefront of this and been providing this digital credit prepared online. What we see happening now is that some of those players are partnering with other institutions to go more into actual point of sale, physical presence, and banks are really waking up to this as well. So they're now looking for ways on how to engage with this. And you see some of the announcements here in that page:

• Affirm and  Walmart talking about an “omnichannel partnership,” 
• JP Morgan announcing “My Chase Plan” - which essentially is an installment purchase plan, 
• MasterCard just buying a company called Vyze,
• Visa pushing the ball forward with an installment solution API's. And just made an announcement, I think, today or yesterday with another investment into point-of-sale lending firm. So my point is here, it's a pretty hot space. 

And the one thing I would say, just as a word of caution, if you're thinking of taking part in this, just be very clear about what you're building and what partners you're engaging with because there's quite a lot of differences and solutions that are out there: 

• Even the other kind of lending that's being offered, because it can vary from an installment versus financing versus short term credit. 
• Do you need to have a new credit approval? Or can it be built on an existing credit line? 
• Who provides that credit line? Who takes the risk? 
• Obviously, the business and commercial model,
• and most importantly, what's the customer experience? 

So thinking through those questions is important.

And the other one specifically for the US. In the US, there's obviously a lot of contactless cards now coming into the market. A lot of issuers are starting to issue call cards. My point is that education is going to be essential to ensure usage and growth of those contactless card transactions. So issuing by itself is not enough.

An example I give here is, I recently had a friend from the US. He already had a Chase card and had no idea that it was contactless because somehow the card itself has this new functionality. And so he was very excited when he was able to buy a beer at the bar and just tap the card rather than put it in and then enter the PIN number.

And that indication needs to be addressed to consumers from merchants. And also clarifying, for example, the situation with limits. In the UK, which is where I'm from, we have had contactless cards for a long time and we have a transaction limit of 30 pounds. Because typically our card transactions are chipping thin, so we have to enter a PIN for larger value transactions, but up to 30 pounds, we can just tap and go. I think in the US, given that it's a chip and signature mostly, the PIN is not necessarily being used. I think contactless are also going without that limit. But I think it's important to speak to customers and address the potential concerns they might have around security, for example.

So my point here is a simple one, focusing on the issue—yes, it's important and it's the right thing to do. We're moving into the next phase of the MV card reissuing. But don't forget to tell people about it.

And the other thing is, you may read reports, you may have seen, even some recently, some reports about people predicting the death of plastic; plastic cards are going to disappear. And possibly, maybe sort of decades from now—who knows, right? It's very hard to have a crystal ball and gaze that far out. But at the moment, I don't think we're anywhere near that point. And we still have technology innovations and consumer inertia, first and foremost, that will keep plastic cards alive and well. And one of those innovations, for example, is a potential for biometric cards. Now, biometric cards basically would be a card that has a fingerprint sensor built into it. So when you pay you to touch it on contactless, for example, that sensor will recognize that it is you. So it's a far more secure experience. And this is touching without a lot of PINcode, for example. and it's actually very convenient. 

Typically my reaction to a lot of these, what I call sort of “gimmick cards” is always a bit skeptical. We've seen cards with different buttons and programming and screens that might change your CVV code, there have been so many innovations around plastic. But I think the fingerprint actually does have potential. I think it certainly would help address the strong customer authentication challenge that we have in Europe. 

Of course, the critical arguments against it is always, for a card like that, is always: “But it’s more expensive.” And yes, it is more expensive as it needs an extra chip essentially, plus the actual fingerprint, and the sensor itself—that once you read that fingerprint, the additional chip is processing and creates the template, which then is stored securely on the main EMV card chip. 

You also need to think about enrollment and enrolling in the branches and options, but it's going to be expensive and probably not the most convenient one. But you could also have a self-enrollment via a pretty inexpensive battery-powered sleeve basically, which allows you to register that fingerprint and then activate the cards through secure channels that you normally would do. 

So my point is that these additional costs are of course there and they may start as more of a premium product but as volumes grow, I think the cost will come down and it will become more manageable. So I think just like EMV cards looking far more expensive than magnetic stripe and then contactless is yet more expensive because it's dual purpose, I think we'll come to see biometric cards potentially as another incremental addition to the card itself, which is quite practical and sensible and makes sense.  And there's a lot of pilots going on around the world now. Visa MasterCard is looking at, and already have approved, some of the fingerprint sensors and certified some of them. And so, again, this is real rather than just talking about it.

Another example of innovation is a standard that’s just come out, the specifications have been published in December 2019. And a wonderful, catchy name of CPoC which stands for Contactless Payment on COTs, which in itself stands for Commercial Off-The-Shelf device. Basically in plain English what that means is that it allows a smartphone to become a card reader. So you can tap your contactless card against the smartphone with no additional dongles or point of sale devices and you can accept cards. So if Square democratized card acceptance and rolled it out into smaller merchants, this can do that even more so. 

This is not specific to cards because you could easily tap your Apple Pay Wallet, for example, as well. But it's definitely something that, as an innovation, it will be interesting to see how that gets taken out. And in fact, it's in a bit of Europe. Just today, there's been an announcement, launching exactly that kind of product.

We've talked about EMVCO standards briefly at the start of the presentation. The rollout of those, I think, will accelerate, really driven by the networks themselves and also the strong customer authentication (SCA) requirements in Europe.

Secure remote commerce for example, as a standard:

• the final specs got published midway through last year
• the first implementations were announced in October 
• and it's moving to this new “click-to-play” button
• so Visa Checkout, MasterPass, and the other wallets are now being decommissioned and moving into this more unified single customer experience. 

But it's much more than that, of course. It's a way to transact digitally, in the same way as we have at the point of sale, which is more standardized, more secure, and more EMV like environment.

And the one standard I just want to highlight here is really the 3D Secure—the first iteration of which had a pretty bad reputation and bad name in the industry. A lot of merchants complain about loss of conversion as customers get hit with additional screens and additional password requirements to check out. 

• it's PSD2 in Europe - there's a requirement now for us to have strong customer authentication (SCA) for the majority of online transactions and 3D Secure can make that a far more palatable experience
• and so the deadline for that implementation got extended across Europe, now we're extended to the end of 2020
• so the European issues are very much busy working on getting that in place and rolling that out
• but the standard itself is a global one and if there's anything that was learned, I think, over the years is that standards like EMV or like 3D Secure, may pick up an inertia in Europe but then get rolled out to the US and the other parts of the world as well.

And the other thing that is very pertinent, again to us in Europe—I think, in the US it's going to be more of a “wait and see” approach—is the more account-to-account merchant payment solutions. What essentially works with VSD2-enabled there's this notion of PISP, payment initiating service providers, that could be between a merchant or merchant acquire PSP that essentially can help merchants have a button where the customer presses that and instead of going over the card rails they are sent to a mobile banking environment and are authorized to push the payment out, directly through the bank account.

Again, my view is that what we have now is more important than necessary, but not sufficient. Because payment initiation is not quite the same as the payment method. There are still issues with that on its own. So we’re going to need to see more specific solutions that will be launched. And one of those is an initiative that 20+ banks are working together now across Europe.

It's called PEPSI at the moment, I think it's about to get a more formal name. But it's basically banks looking at “How can we launch something that essentially would offer this as an alternative to merchants?” 

I'm conscious of time. But just to wrap up with the last two. I think this is the year where we might see a voice starting to make inroads as the interface for shopping, not necessarily payments just yet. 

If you go to a lot of conferences I've been to over the last year, there's always somebody from Amazon Pay talking about this voice commerce. And as Patrick Gauthier says, “we are now at an inflection point for devices to become fluent in our language.” So devices are getting smarter and the likes of Alexa and Amazon, obviously, are going to play an important role. 

My prediction is that it will start again a bit like transactions. You don't start with transactions, you start with pre-transaction, post-transaction events. So things like, “Alexa, where is my stuff?” is already available today. “Alexa, pay for gas” is something that's been announced at the CES show in January, as a partnership between Pfizer for Alexa and ExxonMobil where you can actually pay for it to fill up your tank, potentially without even leaving the car, directly through words.

And the final one is really just a word of warning that a lot of these technologies that we have, we can get very excited about. Some of them, of course, are going to be essential like machine learning tools are essential to fight fraud. But AI and other technologies may also be a double-edged sword longer-term.

A couple of examples that I have are: one is deep fakes. Which is—there was a famous story during the rounds just a couple of months ago, when a CEO of a UK firm was tricked into making a large payment to a supplier somewhere in Eastern Europe, because he thought that he was talking to his German CEO. When in fact it was a fake voice recording that managed to mimic the voice so well that it fooled basically the person on the other line. And the irony, of course, is that the AI algorithms are an actually better place to fight that and so one of the big questions for us all to think is whether the future fraud is one AI algorithm fighting another potentially.

Quantum Computing is another example. As a technology, it's nowhere near yet to be at scale, but people are looking at it, people are working on that. And one of the potential challenges is that, of course, if nothing changes, then a lot of encryption that's being used today would become useless with quantum computing because they would be able to crack that very quickly. The reality is, again, it's not that simple. We already have quantum-resistant encryption that can be built. And if and when these computers do get launched, then, of course, we probably will be ready by then. But the point here is that with every new technology there come benefits and there come threats. And if we keep our longer-term perspective, it's important to think about both sides of that coin.

So this is just a summary page. I'm not going to go through this anymore. But again, just to show that a lot of what we talked about kind of map into those three imperatives that we introduced at the beginning of this presentation.

So that's me. And that's my section and you can see the contact details if you'd like to get in touch with us. And now I'm going to turn it over to Jim. With you, Jim, please.

Jim Bowers: All right. Thank you, Zil.

As I segue into the Integrated Research portion of today's presentation, I'd like to begin by addressing what we've called the Four Major Waves of Change that we've seen while monitoring payments.

The first being the adoption of cards as the primary means of payment. Some of you may remember the time before the internet when retail payments were really composed of cash, checks and cards. And cards really became the dominant preferred method of payments since the ’70s and moving onwards here. First, it was initially credit cards and convenient cards and then debit cards exploded into the ‘80s reducing check usage. And now we're in a world where we have co-branded cards, prepaid cards, closed and open-loop store cards, loyalty programs. Many of us now still carry more cards in our wallets, and we have cash notes.

And over that time, we've seen pause terminals and cards change from offline processing to online processing, from magstripe to chip, and now even to contactless. We’re still largely using those payment foundations as payment rails created in the ‘60s and ‘70s. But just continually enhanced. In fact, one of the few things that really hasn't changed is the competition for front-of-wallet that we see from issuers and merchants. The first card that you looked to turn to use when you make a payment and still see plenty of ad advertisements and TV and magazines for what's in your wallet. And making sure that their brands are the first brands that you turn to when you initiate a payment. But we can't really lose sight of the fact too that merchants have sort of the last say in the game. They can offer incentives to say, “Hey, I'll offer you a better rate if you use a debit card and a credit card.” Or they can even offer you incentives to sign up and use one of their cards.

The second way was really the rise of the Internet, where we saw a tremendous amount of growth and cards not present transactions. And with that, inevitably, we saw increased risk and fraud and security concerns and all those changes led to the early attempts of various card authentication schemes. We ended up with simple changes like CVC and CVV to more complex solutions like the 3D Secure that Zil was kind of referring to earlier. The winners here were really the merchants and service providers that provided a clean and intuitive shopping cart and checkout process. But the end results to the industry were that there were clear changes, a clear delineation between physical store purchases and digital, or online PC purchases with new e-commerce indicators and liability shifts, pushing people to adopt new technologies.

The third wave is the rise of mobile payments, where our mobile phones are used to conduct either face-to-face payments at a point of sale or even remotely, which is kind of unique because it really covers the first two waves of being able to use your phone as your payment instrument, with a merchant or, even remotely as you shop over the internet. The other bit that Mobile really addresses is the authentication issues that some of the card not present internet transactions introduced. As we see more biometric authentication, face and fingerprint recognition on the mobile devices, it may not be completely ubiquitous yet, but it is very consumer-friendly, or at least as friendly as entering a PIN or signature than to you authenticate yourself to a merchant or to an online buyer. Mobile payments are now bringing us into the tokenized payments that we see available today. As again, Zil covered some of those with Apple, Samsung, Google, and others. Much of this leverages the existing card rails that are still in place today, but clearly in a much more complex manner, with registration and authentication being the clear delineations and differentiators between what we've seen in the past.

The final wave we see here is the Internet of Things. I don't have a very good crystal ball to say,  how many devices in the future we're going to have around us that are connected to the internet. But when you stop and think about it, we already have quite a few. You either have or, somebody who has smart TVs or repurchase paper review movies or, gaming systems where you buy, download, and play the latest video games and, the voice assistants like Alexa and Siri, Cortana, Bixby, just to mention a few here. Where we can just talk out loud in our home and shop and play or pay for music all by our voice. So it's not too hard to imagine that in the not too distant future where we're initiating payments through cards and potentially other home appliances here as well too.

As I kinda wrap up on this slide, I do want to be acutely aware of the fact that the vast majority of our transactions that we see today, here are being monitored are still card present. And that the physical card is a long way from going away as a dinosaur as a telephone booth. We still see traditional card volumes growing. But we're also going to see clearly a rise in this mobile and the Internet of Things, where we see that payments are being conducted now, not just with a plastic card, but through all sorts of other channels.

We see changes taking place, and with all the change that's taking place in payments, we are certainly witnessing an increase in the complexity and various options that you guys have in front of you. And one of the first topics that inevitably comes up in conversations is the internal discussions you're having and with us that take place on whether your payment solutions remain on-premise or whether you're moving to a cloud or even potentially outsourcing to a processor. 

The cost associated with maintaining these payment solutions is not small. The data centre infrastructure, the security, the risk, the compliance, the auditing, these are intricate complex systems. And with the vast majority of the budget being spent to maintain the solutions, it's always a challenge for IT to meet business’ growing needs.

Another challenge and complexity that we see are certainly, one of the main topics we're discussing today, which is all the different new method payments and payment schemes that we're going to be seeing and introduce new partners, new technologies, new services, new apps and new SLAs that you guys have to monitor to ensure the health of the overall system. We see much more complex business and transactional dependencies. As these services, usually rely less on internal response times and internal processing, and more on the coordination and orchestration of services across your enterprise as well as depending on other entities.

We really can't lose sight of the fact that the investment that's taking place in open API banking is going to really lead to new Card Services, new payment services, where we actually move these payments off of those card rails and inevitably open up payments as Zil reported or was discussing. More of the account-to-account type transfers. So all the investment that's been made in open API banking, it's not just around internet banking, it's not just around corporate banking. We're going to start to see new payment initiatives and potentially new rails—if you will—pop out of this. I think, with the amount of IT investments that's being made in that space, it's inevitable.

Some of the questions that, ultimately we get asked in Integrated Research is, “How do we ensure the health of these overall solutions that we manage?” And the table stakes of this is really the availability and responsiveness of the solutions.

And what we get into in future discussions is the predictability. We're using our historical analytics to provide you guys with good indicators of where you should be processing today, and how you should be sizing and managing to potentially address the growth that you have in your payments. And then ultimately, the profitability. Everybody wants to do this for money, and so ultimately, with all this transaction processing and all this volume growth that we're going to see, it needs to be able to remain profitable. And so the “How are we able to manage all of these, thousands of transactions a second and determine that we're doing things and monitoring and routing these transactions in the most profitable manner possible?”

So we start dealing with questions like, “How do I deal with all this data? Because I'm constantly taking in new enhancements and new offerings and constantly have new partners offering me additional data or wanting my additional data. How do I sort and manage through all this?” And the ultimate questions that we really asked is, “How do I ensure that I’m receiving the full service that I paid for?” Or, “How do I ensure that I'm providing the best service to my tenants and to my customers that I can?” And those are really the key questions that we run into and in the monitoring space.

With Integrated Research, what we've been able to do with prognosis and our other product offerings, is we provide you with real-time and immediate visibility. And we provide you with that visibility through dashboards, through alerts, and through reports. And predominantly we do so to executives, at a CEO or a C-level, the business stakeholders of the various payment applications, and we work with IT operational folks. I’d like to say that the IT folks are responsible for all the nines keeping the system's up and available. The business stakeholders are looking at it purely from a business customer experience and a profitability perspective. And of course, the executives want to make sure the health of their payment. Regardless of what business you're in, your payment, your income is absolutely mission-critical. 

And so with prognosis, we've monitored those solutions. And over time we've started initially with your card and your card payment applications. And from there, we evolved into monitoring fraud detection solutions. And then after that, we moved into the internet era,  where we started to deal with all the various CNP and authentication schemes. And eventually, we extended outside of the retail payment space into the wire in ACH the corporate banking in the corporate space within banks and institutions. And from there, we've evolved back to the retail side with the new mobile token schemes so we can provide additional visibility to your Apple Pay or Samsung Pay all these tokenized mobile payment transactions. And finally, where we're preparing now in the future is working with immediate and faster payment schemes largely based off of ISO 20022 types of games rather than the two typical card ISO 8583 schemes. And those themselves are going to—you could almost put this into a circle if you will—where the mobile token schemes are going to eventually lead themselves as mobile apps are going to ultimately leave into account-to-account payment schemes. And we can see that through, whether it's a corporate experience or whether it's a retail experience, those faster and immediate payment rails could offer those account-to-account schemes. 

Banks and institutions are really starting to figure out: “How do I need to address the future growth that we see through the account-to-account payment capabilities? And are the drivers going to be more on the corporate side of the house or the retail side of the house?” it's inevitable that they're going to happen, it's inevitable those transaction volumes are going to increase and those capabilities will be brought to market. But the banks really just don't want to have those multiple silos where they're processing all those transactions and separate data centers with separate applications. 

Well, we provide the visibility to monitor all the applications. And so as the banks look to merge and move from one platform to another, or from one solution to another, just be aware that we already plugin and we monitor all this kind of capability together. And so to provide all this information on a single pane of glass, while still allowing you to drill down to the specifics of this application, that's really the power and the strength of what we bring here at Integrated Research.

And we provide this capability to merchants and retailers, merchant processors and ISOs, the large international and domestic switch networks, financial institutions and financial intermediaries. We've been doing this for years and we have some of the largest customers on the planet, around the

• US
• UK
• South America
• Latin America
• Asia
• The Asia Pacific
• Australia
• China and the rest of the planet. 

We really have customers everywhere, and monitoring systems that could be monitoring either tens of transactions a second all the way up to thousands of transactions a second. So our ability to scale and address all these different market segments is again another one of our strengths.

And finally, whether you're a merchant processing your transactions by the minute, or you're a processor handling thousands of transactions a second and we provide the analytic tools to pull all your payment solutions into a single real-time view and slice your transactions by geography brands store terminal, card type. Drilling down even to specific transaction detail. We provide the key business metrics to your payment stakeholders.

With our proactive alert capability, we harden your payment solutions, automating scripts and commands to maintain the highest level of operational availability, ensuring that your solutions achieve as many nines as possible with minimal operation intervention.

And then finally, our monitoring capabilities also provide you with risk mitigation to ensure this successful rollout of new and enhanced payment solutions. I spoke briefly on the previous slide of how the banks are constantly bringing in new technologies and new solutions are migrating and merging with other banks and other institutions. As they begin to consolidate and even upgrade their existing systems. We provide incredible visibility to reduce the risk as you move and migrate and provide and rebalance the type of payments that you're receiving and processing in your system. And ultimately, this leads to improved customer satisfaction and ensuring that your payment solution is running in top form.

So with that, Janae, I think I'll turn it back over to you and see if we have any questions.

Janae Smith: Great. Thanks, Zil and Jim for a super insightful presentation. And thank you to our audience for joining us today. 

As a reminder, if you haven't had a chance to submit your questions, please do so now. I also just wanted to remind the audience to connect with us on your favorite social networks. This is the place where we share all of our latest up-to-date industry information. And if you're interested in learning more and requesting a tailored solution conversation, please reach out to Jim Bowers, his contact information is on this slide. And lastly, again, if you could just please rate this webinar, it will help us improve for next time. And with that, we will open it up to questions.

It looks like we have a couple here as ZiI think this one is for you. 

Question #1

So you mentioned the importance of digital identity in your presentation. What successful approaches have you seen to deliver digital identity?

Zil Bareisis: Well, so there's digital identities. It’s one of those questions that are, I think, we've been looking and grappling with this, depending on where you are in the world and using different approaches. Certainly, what we see in the US in the UK now is that basically the standard way today is to use a government-issued document but being able to onboard digitally. So you scan the document—whether it's a driver's license or a passport—and the solution verifies that it’s your documents against the information that you might enter about yourself, against some proprietary databases. So basically does all the KYC and the checks that are necessary and onboards so quickly. So that's becoming very quickly almost table stakes. 

What some of the other countries have done is the move to more federated identities solutions. And those can be either government-led or bank-led. So you probably heard of Aadhaar, which is an initiative in India, that essentially is a massive biometric database of pretty much every citizen in India. And that can be used to authenticate and identify customers.

In other European countries, you have in the Nordics in particular, there are various bank ID schemes. Which are banks getting together and saying, if I issue an identity credential to somebody, they can use that same credential to log into other banks, and are now looking to expand those into all types of banking; into government, telco insurance, other services.

There's a similar service like that being launched in Canada where the largest Canadian banks got together, verified.me is the scheme name. And then you have also a whole raft of sort of specialist companies that may offer a solution. Some of it even uses blockchain to store security attestations and information about you. But then that is ready to go and sign about the customers as well as the enterprise users to fulfil that identity verification. So there are many different ways of doing it. And I think they are the biggest debate in the US is certainly: “How do we get to that similar point when we have so many banks?” And clearly, a bank-wide consortium is probably not necessarily a viable option.

Janae Smith: Great. Thank you, Zil. Another question that just came in. 

Question #2

So which card payment applications? Do you monitor Jim?

Jim Bowers: Okay, yeah, I really didn't rattle off any list of our partners or others. But we actually support a number of the industry leaders in the card payment industry. So we're actually partners with ACI worldwide. And we work with NCR and FiOS and many, many other institutions that provide card authorization and card routing solutions.

We should also probably point out that we have a number of customers who have homegrown solutions. Even if you don't have one of our Off-The-Shelf, plugins and monitoring capabilities with our solutions through our ubiquitous extracting collecting tools and capabilities, we integrate with a number of homegrown payment solutions as well, too. And again, that’s not just for card but wire fraud, ACH—there are a number of predominant players in the marketplace. But we frankly haven't run into a solution that's out there that we haven't been able to monitor and collect and provide business value to.

Janae Smith: Great. Another question that just came in. 

Question #3

So what are the top three challenges you see in the payment industry, especially in the USA?

 Zil Bareisis: Jim, shall I? Maybe sort of.

Jim Bowers: So yeah, you want to jump in on that? Then I can comment. Sure.

Zil Bareisis: Yeah. One of them is around deploying those standards that we've talked about the EMVCO, Secure Remote Commerce. And that's very much a merchant challenge. But also issuers need to make sure that they're ready to support that as well.

Probably the big one that we actually haven't really much addressed in this deck is also the emergence of real-time payment networks. And of course, in the US, there are multiple competing solutions, both at the interbank infrastructure level and also as consumer propositions, whether it's Zell or or Venmo, or other alternatives. And so, I think, that's how that will shake out and it is going to be interesting to see. And then I would probably add, again, the learnings from open banking in Europe. Banks are looking to open up in the US as well at the moment it's more proprietary standards rather than a PSD2 like standard for API's but that's definitely coming. Jim, what do you think? 

Jim Bowers: Well, yeah, I was gonna just add into that. There are so many new different payment schemes and initiatives that in different banks have different levels of investment and partnership entities as well, too. Like when you mentioned Zell and some of the others.

And so you run into a situation where there's almost too many options again, the complexities and the options. And you get into these debates, which ones will succeed, which ones will fail, and what do you think the adoption rates are going to be, etc. And ultimately, when I'm talking to the banks and the processors it's about the trade volumes, the adoption rates and the profitability of these. When we look at Zell and some of the adoptions of those bits on the consumer side—I don't want to call it a loss leader but—the banks and the institutions are really interested to see what they can do more on the corporate and commercial side to try and improve the whole bill payment and the collection process over there, to try to leverage those technologies.

The other aspect that you get to look at is the consolidation that we’ve just seen in the merchant processing in the US,. If you move away from the banks and just look at the processors, it's very much a volume-based business.  And we've just seen a massive consolidation in that merchant processor space. Those institutions are going to be trying to sort out—again, it's the monitoring of how do I take all these disparate systems and combine them or bring the best of the breed and merge those together. So usually, you see a sort of a dip where everybody tries to understand what their new jobs or new responsibilities, their new roles are, understand all the new technology and capabilities we've just acquired. And then you start to see explosions in the market of new capabilities and new feature functions.

So, ultimately the winner there is going to be, I believe, will be merchants, but you're going to see a lot of a lot of work being done in that space over the next few years here.

Janae Smith: Thanks, Zil and Jim. We also have a couple of other questions rolling in. But I know we're out of time so maybe we could answer one more and then follow up via email after the webinar.

Question #4

So in particular, to voice payments, do you foresee any challenges? For example, what precautions could be taken to ensure Alexa doesn't reorder coffee when a young child says the statement or orders their own goods?

Zil Bareisis: Yeah, we've certainly seen some examples and stories in the press. When somebody’s TV was on all night and then things got ordered. So that's clearly a challenge. And building in that authentication is something the industry is going to have to work through. 

The good news is that voiceprint or voice authentication is definitely one of the biometrics that many are looking at. And it's not going to work in every situation. Sometimes it can be too noisy, too much additional background noise. But all the leading players like the likes of Alexa are looking at—I think Alexa already has something like a buyer ID that helps recognize the customer that's speaking and passes the information to the merchant. 

So it's a challenge, but it can, it will be solved. 

Jim Bowers: Yeah, it'll be solved. Again, it'll be solved by the devices and the manufacturers themselves. There's been a tremendous amount of investment in that space—in the AI space and voice recognition. When you think of all the different variants of English that we even have in this call and the different accents around the world with Australia and Singapore, in the US and the UK. There's just been tremendous strides made in this space. And I think that they'll be able to adjust to the consumer demands.

Janae Smith: Awesome. Well, great. Thanks, Zil and Jim for a super insightful presentation. 

And I just wanted again to thank our audience for joining today. I think I covered this slide by accident on mute earlier. 

So just a reminder to connect with us on your favorite social networks. This is where we share our latest up-to-date industry information. And if you're interested in learning more and requesting a tailored solution, please reach out to Jim Bowers, his contact information is on this slide. And lastly, if you could please rate this webinar to help us improve for next time. Thank you, everybody.

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