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Highlights from Money 20/20

on Friday, 14 November 2014 in Banking Update

Money 20/20, a leading payments conference, concluded last week after more than 7,000 payments industry representatives gathered to discuss the rapidly evolving payments landscape. A wide array of emerging issues were discussed and debated, a few of which we would like to highlight here:

  • Apple Pay. Much fanfare accompanied the launch of Apple Pay, due to its combination of near-field communication (NFC) and biometric technologies. However, for payments professionals, the real headline was the implementation of “tokenization,” a technology that replaces the 16-digit primary account number with a “token” that can be used only once. While Apple adopted tokenization technology developed by the global payment association brands (Visa and MasterCard), industry watchers concurred that significant developments in this space are likely, with some calling for the deployment of a bank-owned tokenization technology and others calling for open standards that would enable multiple, interoperable tokenization technologies to thrive.
  • Interchange. The interchange debate remains deeply divisive, with the National Retail Federation pressing its challenge to the Federal Reserve’s Regulation II to the U.S. Supreme Court at the same time that large merchants have opted out of a proposed multibillion dollar class action settlement related to credit card interchange fees. Both instances make clear that the interchange fee debate is likely to be with us for a long time.
  • Bitcoin. While the future of bitcoins as instruments of currency remains uncertain due to issues with respect to its volatile valuations and limited acceptance in the marketplace and inability to affect chargebacks, the technology underlying bitcoin transaction processing may have many applications and is attracting the attention of a large number of entrepreneurs and investors. Many believe this technology, which creates a public ledger of all transactions involving bitcoin known as the “block chain,” could be applied one day to asffect transactions involving other property, such as cars or real estate.
  • EMV Migration. Visa and MasterCard have published rules effective October 15, 2015, that would shift liability for fraudulent transactions from banks to merchants if the terminals at which the transactions occur are not EMV compliant. Multiple breakout sessions on these topics made clear that EMV migration will be top-of-mind for many banks and merchants, but the limitations of this technology—namely, its inability to deter card-not-present fraud—appear not to have been as well-publicized as its benefits.
  • One-Click Transactions. Many service providers are focusing their development efforts on creating one-click transactions or other methods of limiting the amount of data that must be entered between the time that the customer clicks checkout to the time the customer completes a purchase. The elimination of “friction” from payments is a major focus of networks and payment processors.
  • Gamification. Several services are shifting focus from making payments safer or faster to making payments more fun. A number of developers demoed products that seek to create a social experience or a customizable game that accompanies digital gifts in an effort to add a “social element” to gift cards and other forms of payment.

Jonathan J. Wegner

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