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Brave New World of Payments

By: Michael Scheibach

For three days last month, New Orleans served as the epicenter for the Brave New World of payments by hosting the Electronic Transactions Association’s Annual Meeting & Expo. More than 3,000 attendees learned about the latest developments and trends, and had an opportunity to see the newest technologies being showcased by some 200 exhibitors — ranging from start-ups to global companies entering the U.S. market.

What they heard is that major retailers are scrapping their cash registers for iPads and iPhones. Smaller merchants are replacing their current point-of-sale terminals with smaller, feature-loaded models equipped to handle not only today’s credit cards but also the new EMV — Europay, Mastercard, Visa — chip-based credit, debit and prepaid cards that must be accepted by October 2015. And everyone in the payments chain, including payment processors, card issuers and card acquirers, is preparing for the exponential growth in the mPOS market. According to a new report from Javelin Strategy & Research, “Mobile Point of Sale Business and Market Impact 2013,” mPOS could expand current payment card acceptance by as many as 20 million firms and result in up to $1.1 trillion in annual new-card payments.

So where do community financial institutions fit into this picture? The answer is self-evident: They are the panoramic backdrop in the payments landscape. All payment transactions take money from one account (the purchaser’s) and enter it into another account (the merchant’s); and both the purchaser and the merchant more than likely have accounts in financial institutions. More important from the economic viewpoint, though, is the ability for FIs to benefit from the transaction itself:

For banks with small-business customers, the migration to EMV offers an opportunity to provide branded POS terminals to merchants, restaurants and micro businesses (e.g., consultants, electricians, plumbers, etc.), thus strengthening their relationships and ensuring their role in future mPOS transactions.

Banks that issue credit, debit and prepaid cards must now replace these cards with ones enabled with EMV contact or contactless technology. Rather than an added burden, however, this process provides an opportunity to expand card services, particularly with EMV-enabled prepaid cards for the underbanked and unbanked.

Banks offering mobile banking have an opportunity to introduce new payments solutions and authentication safeguards integrated with their current apps, thus providing customers more services in a more secure environment.

Among the more innovative companies partnering with banks is Mozido (, based in Austin, Texas. The Mozido mWallet offers consumers the ability to link their mobile stored-value accounts to their bank accounts, debit cards, credit cards and even prepaid cards. According to David Luther, executive vice president, business development, the company’s Enterprise Cloud Payment Network provides financial institutions the ability to white-label, or brand, their mobile solutions and to add custom services to the mWallet.

Another company partnering with banks is ValidSoft (, a U.K. company entering the U.S. market with online and mobile fraud prevention solutions. Emmanuelle Filsjean, global head of marketing, explained that the company’s SMART platform, standing for Secure Mobile Architecture for Real-time Transactions, provides a layered architecture of voice and mobile network-based security protocols and technologies to protect mobile payments and mbanking transactions. Of significance is the fact that ValidSoft’s solution can be integrated into a bank’s existing mobile banking app.

The introduction of EMV into the United States, the expansion of mPOS and the continued emphasis on security presents real challenges — and opportunities — for merchants and community financial institutions alike. Mozido and ValidSoft were just two of the many exhibitors offering payments solutions.

Michael Scheibach is executive editor of BankNews.

Copyright (c) June 2013 by BankNews Media