Category: Uncategorized

It is nothing new that people go dinner and split the bill on multiple credit cards. However, it takes much more time for the cashier to process the separate payments than it used to do, especially after the retail industry shifting to use chip card reader. In the past, it took a few second for cashier to swipe a card and print out the receipt. To combat fraudulent transactions and get rid of the liability of payment paid by a counterfeit credit card, many retailers have upgrade their equipment with stronger security chip reader, replacing the easy-to-forge magnetic stripe. Thus, the second difference of waiting time can be enormous for booming restaurants and retail stores.

As a quicker alternative, mobile payments have pouring into the market. A test shows that it takes about 9 seconds from inserting a chip card to printing a receipt, while it takes about 4 seconds for mobile wallets. But the actual transaction time behind is the same for chip card as mobile payment, which can be partly explained by, most chip reader terminals have an extra screen procedure telling you the payment is approved and you can remove the card.

 

Source:

https://www.nytimes.com/2016/05/05/technology/personaltech/in-the-race-to-pay-mobile-wallets-win.html?_r=0

With nearly all of the big technology companies in the mobile hardware and software space providing a product, payment processing has become one of the hot technologies going into 2017.

There are a few key components of the payment processing industry to look at, including: Mobile Wallets, Gateway Vendors, mPOS(Mobile Point-of-Sale) and Mobile Peer-to-Peer.

Mobile Wallets

In the Mobile Wallets sphere we see some of the largest companies entering the industry such as Apple, Samsung and Google along with retail giant WalMart and Chase. The three technology companies use their mobile hardware as a platform for the Mobile Wallet services, where other entrants such as WalMart and Chase have entered the business through the mobile application arena.

Gateway Vendors

Gateway Vendors are an extremely fast growing area in the payment realm. These vendors provide front end payment collection services that allow companies to escape the hassle of setting up and maintaining merchant services for businesses (think Venmo for companies).

Mobile Point-Of-Sale

Mobile Point-Of-Sale has created a new payment area supporting small businesses. This technology allows businesses to collect payments through mobile devices rather than using the expensive and static traditional POS systems. In addition these companies provide other valuable information such as inventory and marketing analytics along with customer retention information and payroll data.

Mobile Peer-to-Peer

Mobile Peer-to-Peer technology is one that we are all probably most familiar with, giving rise to such companies and services like Venmo, Google Wallet and Square Cash. The largest players in this space have branched out from other payment processing areas which creates a dynamic marketplace for the competitors.

In 2017 look to see a shakeout in the different payment processing areas with the companies each securing their users and enticing new customers, while the weaker positioned entrants retreat into niche markets or return to familiar business areas.

Source: http://www.businessinsider.com/payments-ecosystem-data-and-business-potential-2016-7

The digital revolution brings great disruption to the traditional banking and world’s retail financial institutions. Fintech competitors, who are real-time and low-cost, bring risks and threats to existing traditional banking. Because when compare to Fintech competitors, it is hard for traditional institutions to respond quickly to the changing in digital environment and customer expectations.

According to the article, some people believe that by 2020, the landscape is expected to be shaped strongly by both technology and non-traditional competitors. Retail banking will be automated, and people are more tend to welcome Fintech firms than traditional institutions. Since traditional institutions are more likely to handle cash transactions, they believe that there would be less cash transactions in the future.

I think although Fintech companies will become increasing popular in the future, traditional institutions are still greatly needed by customers. Technologies do bring changes to life, but they are hard to adopt and need great time for people to learn. I believe there will still be need in peer to peer transactions in the future and the trust and customer experiences the traditional institutions have built will remain. In addition, Fintech will also face regulatory problem.

https://fintechweekly.com/#fintech-latest-news

 

Changes in regulatory landscape is often considered one of the biggest obstacles to fintech industry growth. This is because the fintech industry is rooted in innovation. Innovation that utilizes technologies and processes that are new relative to outdated regulations for older practices.

More so than certain regulations being an issues, the issue lies in ambiguity and confusion of how to regulate. This includes the difficulty of deciding which regulatory bodies should govern, and further, which specific rules and regulations. This is especially an issue because many current rules and regulations are from before mobile phones, E-commerce, and the Internet. In addition, small teams on fintech companies have the challenge of defining complex and broad regulatory models.

A combination of these challenges will push back on fintech growth but with increasing amounts of investment in the industry, the matter while gain more attention and focus. Along with recognizing the financial and efficiency opportunities that fintech provides, many are realizing that the face off between private innovation and regulatory policy will rage on. I believe regulatory bodies will feel the push to improve regulations in order to gain maximum benefits from the innovative industry.

http://blogs.wsj.com/riskandcompliance/2015/11/24/where-fin-tech-is-struggling-with-regulation/

Fintech has been a new player in the world of financial services. Small fintech startups have been challenging large traditional financial service providers in recent years and many of them seek to expand in to developing countries. The challenge of expanding into developing countries is the lack of infrastructure. The lack of infrastructure has created a new branch of fintech called “regtech” and “infrastructure as a service” (Iaas). Trulioo is a company trying to fill the void by creating individual government identity databases around the world accessible through a single streamlined interface. Another company, Flutterwave, seeks to create payments and banking interfaces to power fintech offerings in Nigeria.

While the lack of infrastructure is the first notable thing developing countries lack, many fintech companies looking to expand into this market also need to take note that many of their users don’t have an existing digital footprint. This renders many of the traditional predictive algorithms and user tracking algorithms useless. Many of these new companies need to utilize new methods to create new user data. Developing countries are hold large untapped potential for fintech companies. The first fintech company to successfully capture a large user base in these markets will hold a huge advantage over other countries.

Reference: https://hbr.org/2017/01/fintech-companies-could-give-billions-of-people-more-banking-options

The FinTech startup ecosystem infused about $14.5 Bn globally just in venture funding in 2015 which is almost twice from what it gathered in 2014 and next year, an astounding amount of $36 Bn. i.e which is an increase of 5 x in 2 years and perhaps rightly so because it impacts everyone. This has allowed innovation and flexibility in financial services. With the cross domain application capabilities of big data and machine learning, it has in itself surrounded the main business model of plenty such startups in FinTech especially in the cyber-security domain. In the coming years it is expected to play a major role in the same with its application expanding in Predictive Analysis for Credit Scores, Fraud Detection, Identity Management, Trading Algorithms and Information Extraction etc.

However, advances in machine learning to ensure cyber-security in FinTech also makes it vulnerable to attacks that are based on Machine Learning algorithms. Not only that, it would make it hard for the system’s human designers to understand system behavior and it’s associated security weaknesses.

This scenario resembles an arms race where machine learning has made its entry and increased the complications. This puts the system designers in a spot when building machine-learning based platforms as they now need to pay particular attention to the biases that could be inadvertently built into solutions and thus create cyber-security vulnerabilities by themselves.

 

 

Link – http://www.forbes.com/sites/johnvillasenor/2016/08/25/ensuring-cybersecurity-in-fintech-key-trends-and-solutions/#73fa9cc8e1fa

PayPal 
PayPal has been highly successful with its Digital wallet and is currently a market leader. It is cloud-based and does not require an NFC-enabled smartphone.

Apple pay
Lets users make payments using their apple devices which have Near Field Communication (NFC) enabled. It uses NFC, Secure Card (SC), Host Card Emulation with tokenizations. It uses the best of both worlds to give a very high level of security to customer information.

Android pay
Android Pay is a mobile wallet that stores credit cards, debit cards, and loyalty cards. It works with all NFC-enabled Android devices. Android Pay has collaborated with American express, Discover, Master and Visa cards. Functioning of Android pay is similar to that of Apple pay, the only difference being Android Pay uses HCE.

Samsung Pay
Launched in September 2015 by acquiring a startup called Loop Pay. Loop Pay’s app manages and stores the card details on a mobile device and Loop Pay’s device processes the payment at the checkout. The biggest advantage of Samsung pay is that it allows payments that do not have NFC readers.

Conclusion
Apple’s main intent is to continue innovation and improve user experience with Apple products. For Samsung, it’s more about staying abreast with the competition and not missing out on future trends. For PayPal, it’s all about user transaction, ways to increase revenue and customer base. The biggest advantage for PayPal is that it is payment agnostic making it a clear winner in the war of digital wallets.

References:

http://www.gartner.com/document/2878822?ref=ddrec&refval=3162318

http://www.gartner.com/document/3093921?ref=solrAll&refval=164792540&qid=bd2476f24fb1a0a96ed4df41103a8715

http://www.cheatsheet.com/gear-style/apple-pay-android-pay-and-samsung-pay-what-you-need-to-know.html/?a=viewall

Greenlight is a startup company in Atlanta, Georgia that is trying to solve a problem that has plagued parents around the world. How to give money to your children to use without them losing it or using it to buy things that they should not be buying. Greenlight’s solution is to use a prepaid card that can alert parents to their children’s purchases and that can be reloaded with money by the parents all from an application on their smart phone. This idea from Greenlight seems very promising with all of the built in features that they have. One of the most interesting features is that Greenlight is able to allow parents to specify which stores or websites their children can shop at and how much they can spend there. This to me is the single most important selling point of this service. Being able to make sure that your children do not spend the money they are given on anything illegal or items that the parents would not want them to purchase is definitely a great selling point.

Reference: https://techcrunch.com/2017/02/03/greenlight-is-a-debit-card-for-kids-that-parents-manage-from-their-phones/

By the end of 2016, almost 1.81 million U.S. merchants had switched to card chips, which are supposedly harder to counterfeit. With the usage of credit-card chip technology, credit card thieves are turning to the internet. According to a report from Javelin Strategy & Research, there has been a 40 percent increase in stolen card data used to pay for merchandise online and mobile apps. U.S. government entities as well as retail companies alike had 1,093 data breaches last year, potentially exposing private customer and financial information and leading to identify thief. This forces retailers to spend and invest billions of more dollars to protect their sites and data. The fraud-fighting industry is blooming as more companies are trying to find solutions to prevent fraud and thieves.

It is good idea for companies to enhance their security systems and constantly improve their systems to stay ahead of online thieves because online fraud is very prevalent today. Thieves are constantly finding new ways of committing fraud and stealing customer information. Protecting data should be the number one priority for companies.

 

Source:

https://www.bloomberg.com/news/articles/2017-02-01/credit-card-thieves-move-online-as-chips-thwart-in-store-fraud

There is a huge untapped market out there that Fintech has yet to try and penetrate: the unbanked. The consumers that do not have bank accounts and whose financials are basically off the grid. However, with the vastly developing technological age that we live in, the unbanked have adopted the use of the smart phone.

In “Uber-Competitor Grab Plans $700 Million Fintech Investment in Indonesia”, Das stated, “Of Indonesia’s near 250 million people, only 75 million have bank accounts”. And with this huge untapped market, there is a huge potential for fintech.

“We see this huge, unbanked population becoming bankable. If we can…give access to those won don’t have access to credit, it’s a massive opportunity.”

– Anthony Tan, CEO & Founder

Grab, Uber’s number one foreign competitor, saw this opportunity and has invested $700 million dollars in Indonesia. They are planning on also investing in smart phone distribution to get more access to the working class people with emphasis on “mobile payment and financial services” (Das). To spread the work load of exposing an entire community to these relatively new ideas, they are also investing $100 million in start-ups in Indonesia. Indonesia is a perfect starting point for this new market penetration because it coincides with the government’s plan on becoming the largest digital economy in the area by 2020. With the support of the local and federal government, Fintech could explode in the region. However, if other countries want to follow this model, I don’t believe it would be viable because of the different political and economic levels of the different countries around the area.

Source: https://www.cryptocoinsnews.com/uber-competitor-grab-700-million-fintech-indonesia/