Written by Jacqueline Chilton based on a speeches and panel discussion at ATPS 2009 – Airline and Travel Payments Summit (Link to presentations) – Save the date for ATPS 2010 in San Francisco, Nov 30 – Dec 1, 2010
Localization is one of the key trends influencing the future of payments. At Glenbrook we believe that although businesses and consumers travel, sell and source globally, payments are inherently local. Many merchants are looking to expand Internationally and as they do so are confronting domestic payment options in foreign markets. Many are wondering whether or not acceptance of these incremental payment methods will improve the bottom line.
The most important thing in selling anything – a service, digital goods or physical goods – is to get paid. Lower cost is nice, but growing the top line is even more important than reducing expenses
So why consider local payment alternatives? There are three reasons: 1) the promise of increased sales, 2) lower transaction costs and 3) improved processes.
[click to continue…]
I spent most of 2008 and early 2009 completely obsessed with the credit crisis (evidenced by this index of the best crisis coverage I created just over a year ago). Reading this Andrew Ross Sorkin piece in tomorrow’s New York Times got me all riled up again:
What the Financial Crisis Commission Should Ask
NYTimes’ “Dealbook” column by Andrew Ross Sorkin
Tuesday, January 12th 2010
The Financial Crisis Inquiry Commission hearing on Wednesday will partly be political theater, but used correctly, it could help direct the national conversation.
On Wednesday the commission’s opening witnesses are chief executives from Goldman Sachs, Morgan Stanley, JPMorgan Chase and BofA. [click to continue…]
Editors note: This post describes the third in a series of panel discussions on mobile payments. The series is organized by MPay Connect and seeks to tap innovators in Silicon Valley and link them to mobile payment pioneers overseas, fostering understanding and discussion of how to apply lessons from the developing world to other markets. See also our Payments Views posts from the first and second events in the series.
Thursday evening a group of Wharton, Harvard alumni and payments professionals met at Google to discuss “Will Mobile Payments replace cash in the last mile?” Money in is the “first mile” of using cash to fund a mobile account and Money out or payment for goods is the “last mile.” Today, typically agents – called human ATMs – are receiving the cash to get it into the mobile payment scheme and a subscriber must go to an agent to get the cash out. Agent commissions make these programs difficult to scale as costs grow as volume grows, unless the mobile money transfer network can move to electronic payments in or out.
The session was moderated by Menekse Gencer from mPay Connect Consulting. The panelists were
[click to continue…]
Glenbrook launched this Payments Views blog back in February as a place to debate and discuss the Payments News of the day. We’re thrilled with your participation in the comments and pleased with the steadily climbing traffic. Looking back over the past year, seven popular topics and recurring themes stand out: [click to continue…]
A few weeks ago, Glenbrook issued a challenge to Payments Views readers: “What Are the Best Ways for Banks to Replace Lost Overdraft Fee Income?“ Given how significant the financial hit will be (JPMorgan Chase estimates a 2010 impact of $500 million after-tax), we thought we’d at least get some good ideas. Well, we got very few ideas at all, and none from bankers! The no-news-from-banks could, of course, be because banks are keeping their well-laid plans a deep and dark secret. Or it could be …. there are just no good ideas?
What was interesting was that some of the ideas that did come in seem to be more likely to reduce, rather than increase bank revenue – or at least are challenging, to put it mildly.
[click to continue…]
The team at Glenbrook wishes you and yours a bright and cheerful holiday.
We’ll be back next week with a round-up the most popular themes on Payments Views in 2009.
For the last several months, Glenbrook’s Carol Coye Benson has been interviewing a number of companies involved in mobile payments in the U.S. and Canada. You’ll find all of the analyses she’s written following those interviews here on PaymentsViews.com. The companies included are Billing Revolution, Blaze Mobile, Bling Nation, Boku, CashEdge, First Data Corp., mFoundry, mPayy, Obopay, Payfone, Zong, and Zoompass.
To make it easy to access all of Carol’s analyses in a form that you can download, print out and take with you, we’ve created a PDF booklet titled “Musings about Mobile Payments 2009” that includes each of Carol’s commentaries. You can download a free copy of the PDF by filling out the following form which will take you to a download page. Happy holidays from all of us at Glenbrook!
As always, Carol welcomes your comments and suggestions – either here on PaymentsViews.com or via email to her: carol@glenbrook.com. If you’d like to learn more, the upcoming 2010 editions of our Glenbrook Payments Boot Camps include an expanded and updated focus on emerging payments – based on Carol’s on-going mobile payments research, new options for online payment for digital content, and ACH-based payments across online and physical domains.
Note: If you do print the PDF, print it using double-sided if possible – as the formatting assumes double-sided output.
It’s the holidays and the online retail sales are… well… who knows? We’re seeing data points all over the map. comScore is reporting better-than-they-expected 4% growth over the the previous year.
U.S. online holiday spending has grown 4% to nearly $21 billion during the first 43 days of the November-December shopping season, according to comScore Inc. (SCOR). The Internet researcher, which had forecast a 3% increase from a year earlier, attributed the better-than-expected results partly to retailers’ heavy promotions. During the most recent week ended Dec. 13, spending reached a record $4.74 billion. The previous record was $4.7 billion during the week ended Dec. 16, 2007.
- WSJ
But in Chase Paymentech’s eCommerce holiday index, transactions and sales are both up — way up — from a year ago.
Even with the big online retail promotions from Black Friday and Cyber Monday behind us, e-commerce has continued to grow at a healthy pace vs. last year, and this past week maintained the trends seen in the first days after Thanksgiving. In the second full week of holiday shopping, transactions grew by over 25.3 percent, while sales were up 14.8 percent. Average value per ticket, meanwhile, was still down 5.9 percent, but that decline has narrowed from previous weeks.
- Chase Paymentech
Why the big difference? [click to continue…]
The pre-workshops and part of the first day at ATPS 2009 focused on fraud. Here’s a round up of my impressions after a full day of panel discussion, presentations, and breakout sessions. Once the presentations are up on the ATPS site I will provide links to each speaker’s deck. Presentations are here.
According to 41st Parameter, a fraud detection firm focused on device intelligence, card not present fraud and account opening fraud, 21st Century cyber criminals are highly sophisticated:
- They have credit cards that pass validation
- They can mask their IP, country and city location
- They book reservations under the cardholder name often burying the traveler as an additional passenger on the reservation
- They tumble and swap names and email (e.g. Jan123@xxx, Jan456@xxx)
- They create imposter agencies where real customers pay them real money for fraudulent or non-existent tickets
- They book multi-leg flights and ditch all but one leg of the trip.
Profit losses for 2009 in the airline industry are estimated to be $11 billion according to International Air Transport Association. The new study from Cybersource estimated online fraud alone in the airline and travel segment to be $1.4B in 2008 or ~1.3% of online revenues (see previous post). Fighting fraud and reducing false positives across all channels can have a real impact on airline profitability. The three most significant themes from ATPS on fraud were around patterns of fraud, positive data and collaboration.
The three most significant fraud themes from ATPS were patterns of fraud, positive data, and collaboration:
[click to continue…]
Alternative payments were the first topic of the day at ATPS 2009. Here’s a round up of my impressions after a full day of panel discussion and presentations. Once the presentations are up on the ATPS site I will provide links to each speaker’s deck. Presentations are here.
Merchants have increasingly moved to accept payments other than credit cards. Moneta’s Dr. Guido Sacchi suggested that this move to alternative payments has been driven by:
- Consumer adoption of debit
- Decreasing credit supply
- Interchange fee pressure
- Regulatory actions
- Security concerns
He cited PayPal as evidence of the trend with over 15% share of the US ecommerce market and 9% of global ecommerce payment volumes (Forrester estimates). Alternative payments are now accepted by 63% of the airline respondents surveyed by Edgar Dunn produced in cooperation with SeaMountain and Airline Information. Several presenters throughout the event discussed the move to accept debit and prepaid cards and the consideration of wallet players like PayPal.
[click to continue…]
Today, I tried an experiment – holding office hours. Isn’t that such a throwback to your old college days? Several folks have asked about how it went – so here’s a brief summary. Turns out it was good fun – and hopefully this also proves to be productive for Glenbrook in terms of future business.
Over the course of the day, I had a total of about 8 calls. Several were from old friends – in between jobs, just catching up, etc. One from an entrepreneur who’s starting a new financial services business and looking for both some data and my quick reactions to his idea, and a couple of from private equity investors who seem increasingly interested these days in learning more about opportunities in the US payments system. Lots of very interesting conversation, indeed!
All in all, today’s office hours experiment was really worthwhile. I wasn’t inundated with calls, I had some very enjoyable chats, and hopefully good things happen as a result. I’m thinking of trying it again – perhaps weekly or at least a couple of times a month. I’ll try to provide a bit more advance notice the next time I do it.
Meanwhile, feel free to call or email me anytime – my office hours are really just reserved blocks of time when you’ll more likely find me available to chat! Normally, I’m much more responsive to email – during office hours, I’m more responsive to the phone!
PS: One of the inspirations for my Office Hours experiment was Bill Taylor’s HBR blog post.
Bank income from debit card overdraft fees is variously estimated as $25 billion to $38 billion annually. The recently announced Federal Reserve Bank regulations requiring opt-in procedures will result in a gigantic hit to retail bank P&Ls, as we wrote about recently. JPMorgan Chase, for example, in a recent investor presentation, estimated the impact of their implementation of the new rules at $500MM after-tax.
So what’s a bank to do? Glenbrook is inviting its Payments News and Payments Views readers to submit their ideas.
Here are the requirements:
- Keep it short! a paragraph would be nice
- Explain what a bank would need to do and how it would capture revenue
- Let us know who you are – but also tell us if you want a published piece to be signed either anonymously (”debitgirl”) or not (jdimon@jpmorganchase.com)
- Get it to us by December 15th.
Payments Views will publish the top ideas. We’ve invited fellow bank-watchers Jim Breune of NetBanker and The Online Banking Report, and Steve Williams of Gonzo Banker and Cornerstone Advisors to help us rank the submissions. The criteria will include a) potential revenue impact b) feasibility (from “slam dunk” to “never gonna happen”) and c) innovation!
Have fun and let us know what your ideas are!
You can either complete the form below, or follow this link to complete the submission form.
The Airlines & Travel Payments Summit 2009 held a preconference session on fraud yesterday.
Managing online fraud is a significant cost for carriers around the world. CyberSource’s Paul Brock spoke on improving automation to increase fraud detection. The key to identifying fraud is finding common characteristics, which can be used in automated detection and defining manual review processes. Different channels have different risks and agent sales fraud has different characteristics than direct online sales.
Currently in the airline and travel segment on average 30% of transactions from the direct sales website are manually reviewed. Manual review levels vary dramatically by geography and the airline’s experience in online sales. The move to automation can save time and also lead to higher sales with lower false positives.
For more information on fraud rates and risk management practices of airlines and travel companies you can download the Airline Online Fraud Report 2009.
So you really want to be a merchant – and accept card payments simply and easily? Jack Dorsey wants to be your friend. Hope you’ve got an iPhone!
Earlier today, Dorsey and friends announced the launch of Square. Dorsey, co-founder and chairman of Twitter, is certainly a celebrity founder and CEO. TechCrunch notes that apparently Square is worth something like $40 MM – before they’ve launched.
What’s all this excitement about? According to Michael Arrington’s TechCrunch post: “What PayPal was to eBay, Square is to the real world,” said one person close to the company.
[click to continue…]
