News

02 May

Payments

Mastercard today announced the appointment of CIO Ed McLaughlin to president, Operations and Technology. In an interview with PYMNTS’ Karen Webster, McLaughlin spoke to the developments and challenges in the latest payments industry shift toward device-based and contextual commerce, the role of operations and technology in meeting consumer demand and what’s next for payments on the global stage — especially as it relates to financial inclusion. “This is the third wave for our industry,” McLaughlin told Webster. “I think we’re in the middle of an accelerating shift which is just as profound as plastic.” Mastercard started completely offline with charge plates and knuckle busters, he noted. The push to put a machine-readable device in everyone’s pockets — a piece of plastic — and to create a real-time network around it was a major industry undertaking. Now, the industry is in a similar position — only digital and moving ever more toward device-based and contextual forms of commerce. In this space, customer experience is more important than ever. “Everyone likes to talk about the T in operations and technology,” McLaughlin said. “But the O is the consumer experience that everyone, justifiably, is so focused on. That’s how it lives every day, everywhere — the consumer experience is the operation.” The challenge for a payment network then becomes finding ways to maintain a consistent, reliable consumer experience across a growing number of devices. For Mastercard, this means operations are also about enabling people in the broader technology ecosystem to manage that payment experience and make it good for consumers. And likewise, knowing when to hold back. “There are lots of things that you can do,” he noted, “but what you really should be asking is: is this a better context? For decades, we wouldn’t allow merchants to have a terminal that failed every third time, and we’ve always had standard about things like responsiveness. This directly applies, and probably even more so, when it comes to the digital world.” The only reason customers begin to do something — pay a certain way, for instance — is because it’s easier and better than previous methods. Many would even argue that shifting entrenched behavior requires a 10x improvement over past methods, McLaughlin said. It’s all about knowing your audience — recognizing first and foremost who the consumers are, what they want and what they’re ready for. In navigating the growing device- and context-based commerce, ensuring products and services that roll out don’t diminish the overall consumer experience is key. “I need to know not just that it’s working as designed, but that it’s working in the consumers’ hands everywhere, every time,” McLaughlin said. “That’s another big part of this shift to digital.” Likewise, consumers aren’t one for diminished options. “When Apple Pay was launching, one of the first questions from consumers, which I didn’t even think would be a question was, ‘can I still use my card?’” McLaughlin said. In general, he noted, consumers are enthusiastic about new technology — as long as it works with what they already have and ties everything back together. For the ecosystem, this means that collaboration between device makers and payment companies is moving upstream. And more than ever, anticipating where the technology is headed is key. As an example, McLaughlin pointed to Mastercard’s work in the mobile point-of-sale space as the movement first emerged. Thinking about some of the more profound digital disruptions in recent years — Amazon in retail, iTunes in digital media or Uber in personal mobility — it was in a sense, he said, the underlying payments services that enabled those to take hold on the market. Collaboration and anticipation in the ecosystem points to one of the promises of digital payments, McLaughlin noted — the combinatory effect. “As you get more API-based services operating in an absolutely secure and well-behaved way,” McLaughlin said, “that can now be combined with services to create these new commerce context or experiences for consumers. Having it all work together is powerful.” All of these points are converging globally. But nowhere is it more apparent than in rapidly digitizing emerging markets. India, for example, is a huge market for Mastercard. The company has been involved developing systems within the context rapid adoption of mobile payments in the country of 1.2 billion since the beginning, noted McLaughlin. The recent push to demonetization has only worked to accelerate it. Some examples include a QR standard that allows brick-and-mortar merchants to be able to display code that, when scanned, would push funds into a prepaid or electronic receiving account. “With mutual inclusion through prepaid with the ability to have a trigger to push a transaction using this QR code along — whether it’s a Mastercard, Visa or RuPay transaction,” said McLaughlin, “that merchant moved beyond cash which helps all of us, and then we get to have a share in that market as we transition.” This points to another promise of digital payments — growth in financial inclusion. “The digital divide is real,” McLaughlin said. “Everything online that we enjoy — just getting access to it isn’t enough. Unless you can also participate economically, you’re still cut off.” He pointed to work Mastercard had done in Zimbabwe working with local banks and HomeSend, the company’s digital remittance solution. Once remittance funds began flowing into mobile money accounts, they found that within a short time, over a third of what McLaughlin called “classic” eCommerce in Zimbabwe was coming from a population that hadn’t been able to participate before. This is what McLaughlin looks forward to most in his new role as president of Operations and Technology — the ability to connect the world. “That’s the power of having that 16-digit number — it’s the token that enables your passport to the existing online world,” McLaughlin said. “To have the ability to drive where it goes and what it becomes is pretty amazing.” Related Items:contextual commerce, customer service, Device-Based Commerce, digital payments, e-commerce, Ed McLaughlin, Featured News, financial inclusion, india, Innovation, interview, MasterCard, News, payments, technology ecosystem      Recommended for you NEWS: Mastercard Completes Acquisition of Vocalink Overstock.com’s Different Vision Off The Continent And Into Puerto Rico For Online SMB Lending Get our hottest stories delivered to your inbox. Signup for the PYMNTS.com Newsletter to get updates on top stories and viral hits. Click to comment Partnerships / Acquisitions First Data, Flywire Partner To Transform X-Border Business Payments By PYMNTS   Posted on May 2, 2017      Conventional wisdom may be conventional, but it is not always prescient. In fact, the most widely held beliefs are often the ones that miss the mark or are too early. Take the payments industry. In an interview with PYMNTS, conducted in March at Innovation Project 2017, Flywire CEO Mike Massaro reflected on what did not happen in the previous year that might have or had been expected en masse by industry observers. He and others expected more advancement around bitcoin and blockchain technology, for one thing, buoyed by headlines and partnerships between banks and FinTech upstarts. “We continue to not see a major innovation yet,” he told PYMNTS. “There is great technology, there are great ideas around the space, but there has never been a breakthrough moment, and I think a lot of people thought that would have happened by now.” And even as the world and payments become globalized, crossing borders and a 24/7/365 landscape, remittances have room for improvement. One feature ripe for attention: There may be too many touch points along the payments continuum. “I think one of the sectors that needs innovation is business payments,” Massaro said. “To run a business, you still need too many different relationships with banks … different procedures to send money abroad and receive money…. There are near-term challenges surrounding remittances, cross-border.” And with so many cooks in the kitchen, said the executive, “payers in the field are racing to the bottom for costs…. They do not add a lot of tangible value over traditional movement of money. Traditional players competing on price alone are going to have a lot of challenges over the coming year.” Geographically speaking, said Massaro, there are encouraging signs as payments and cross-border functionality improve and take shape in emerging markets such as Africa and Central America, among other areas, he said. To that end, Massaro’s March comments, on a large scale, seem to be encapsulated in an announcement fresh off the presses: On Tuesday (May 2), Flywire said it was partnering with First Data in a deal “aimed at streamlining cross-border transactions for their respective client bases,” the companies said jointly in a release. The partnership will hinge on a reciprocal relationship focused on referrals for users of Flywire’s international payments and receivables platform and First Data’s client network and technology offerings. For Flywire, the ability is there for expanded card payment options; for First Data, the benefit is to leverage Flywire to accept large-scale international payments, with greater presence in health care, education and B2B verticals. Related Items:cross-border payments, first data, Flywire, massaro, Remittance      Recommended for you Australia Tries Its Hand At E-Invoicing IBM’s Blockchain Lands At Japan’s Mizuho For Trade Finance Azimo Adds Payments Via Phone Number To Its App Comments B2B Payments Off The Continent And Into Puerto Rico For Online SMB Lending By PYMNTS   Posted on May 2, 2017 If expansion is key for SMBs, so too is it for lenders. Biz2Credit is linking up with Oriental Bank in Puerto Rico to boost SMB lending, digitally, in a move that takes into account some of the particulars of the market — and language is just one of them.      For small businesses, expansion is key, and expansion needs capital. For small business lenders and for FinTech too, expansion is key; but for Biz2Credit, expansion is literal. In a partnership formed recently with Puerto Rico’s Oriental Bank, Biz2Credit said late last month that it has begun offering its digital lending platform to the bank’s commercial clients. The company has said that it is the first bank in Puerto Rico to offer digital services, ranging from business credit cards to working capital loans to SBA loans. In an interview with PYMNTS, Rohit Arora, chief executive officer of Biz2Credit, stated that the digital platform and online lending applications are conducive to a mobile-centric interaction between Oriental Bank and smaller businesses. The focus, he said, “has been on offering an end-to-end digital process” with loan applications, from initial interaction to scorecard to approval and underwriting. The movement to digital, he said, helps avoid the costs of beefing up efforts in physical branches nationwide to draw in customers for face-to-face meetings. Through cloud-based processing, applicants upload their documents electronically, and, similarly, commitment letters and closing documents (along with disbursement of loans via Oriental) are done electronically as well. In addition, said Arora, whose firm has arranged for $1.7 billion in small business financing across the last decade, customer applications are offered in both Spanish and English. The dual language option is a nod to the bilingual culture extant in Puerto Rico, he continued, but also allows Biz2Credit to springboard that platform to other multi-lingual regions, such as Florida and California in the United States, along with, eventually (and longer term), as a gateway into Latin America. For Oriental, he said, the move to embrace digital lending is a strategic one, where in a marketplace with four large traditional lenders (via banks), market share is important. That is a different business dynamic than might be seen in the United States, said the executive, where there are thousands of financial institutions in an environment that he termed as “still very fragmented.” Drilling down a bit into the Puerto Rico market in particular, Arora noted some differences between small business lending versus, say, the United States. Verticals within the SMB realm that may be receptive to online lending, he said, include manufacturing and retail. Loan size tends to reflect the smaller size of the businesses in Puerto Rico, said Arora, with $250,000 for Puerto Rico vs. $500,000 in the United States, with terms of three to five years. “Working capital is key,” he told PYMNTS, and typically can be used to fund equipment and other items that are geared toward expansion. Though the regulatory climate is not that different, said Arora, the fact that Oriental is the first bank to come to market with digital lending with any size speaks to a tough economic climate that may have kept demand dormant — yet the picture is improving. Smaller firms in Puerto Rico, he said, have yet to fully embrace other loan and capital conduits, such as corporate credit cards, where perhaps more education is a way to bring smaller firms to adopt those instruments in wider force. The advantage of small business lending done digitally — available when traditional lending might not be — remains, said Arora. The two companies are coming to market with an emphasis on technology — specifically mobile — to bring SMBs to online lending. He noted that Biz2Credit’s own site and platform are geared toward mobile, with interfaces and processes in place that are more intuitive than might be seen with a desktop setting. The company has said in the past that in the U.S., 37 percent of its applications are initiated during timeframes surrounding typical business hours. Throw weekends in, he told PYMNTS, and that tally shoots to 52 percent, testament to the appeal of doing transactions over mobile. Related Items:B2B, B2B Payments, bilingual, Biz2Credit, digital lending, Featured News, Lending, Mobile Payments, News, online lending, Oriental Bank, partnership, puerto rico, Rohit Arora, SMB, working capital      Recommended for you Mastercard’s New President Of Operations And Technology On Payment’s ‘Third Wave’ Ecommerce Fraud To Surge, Says Radial Data FleetCor To Buy Cambridge Global Payments For $675M Comments TRENDING RIGHT NOW News FTC Gives Dollar General Approval To Buy Dollar Express Stores B2B Payments Visma, Youredi Partner To Help Small Suppliers Act Big Apple Apple’s $250B Cash Hoard Mobile Payments Mastercard President On How Networks Drive Innovation B2B Payments PayPal Powers Payments Ecosystem For SMBs Real Estate Home Ownership Outpaces Rental For First Time In Decade Artificial Intelligence Tencent To Open Seattle AI Research Lab Politics The President May Replace Top Banking Regulator