Post image for Bitcoin and Payments Survey 2014

We’re at it again. We’re conducting our second annual Bitcoin and Payments Survey. Please participate!

The survey takes about 7 minutes, maybe less. Do it from your smartphone while you’re waiting in the market’s check-out line or on the sofa using your tablet. The survey is mobile friendly.

This year we ask a few new questions about novel approaches to math-based currencies. We also dive back into your thoughts on Bitcoin’s future and its major use cases.


bitcoin and GB


Like last year, the survey is anonymous but if you want to leave your email, we’ll send you a copy of the report.

Last year, we were astonished to see how so many in the payments space believe that Bitcoin will have a long lasting impact and role in payments. No, it wasn’t a majority who thought that way but when north of 30% think that Bitcoin is going to change how we transact, that’s significant.

So, what do you think?

We can’t wait to find out how you view this phenomenon (and, yes, it’s still a phenom) now that we have another year under our belts, a whole lot more experience (good and bad), strong alternatives to Bitcoin itself, and new uses for the block chain ledger that will extend math-based currency utility well beyond payments.

So, take the survey. And help us get the word out. Let your friends know any way you can. The more participants, the better the results.


Here’s the URL:







Post image for What the BRICS Tell Us About Payments

As the leaders of the BRICS group of nations gather this week in Brazil (now that the World Cup crowds are gone), I’ve asked myself if that meeting has any important implications for payments. The BRICS moniker is often applied to a group of countries that share the characteristics large, young populations and high economic growth rates, Brazil, Russia, India, China and South Africa.

The BRICS share another characteristic, fast growing payment markets along with their economies, cash evolving toward electronic payments and young populations coming of age and, ideally, gaining access to formal banking and financial services.

These fast growing payment markets didn’t simply materialize spontaneously from the blessing of competition.  Each of the five countries has undergone focused national efforts on payment system improvements.

Brazil. Brazil totally revamped its payments systems around 15 years ago and has slowly made additional improvements. Currently they are focused on fostering a new interoperable environment for mobile payments.

Russia. In recent years Russia has been developing a national identity/payment card that appears to have regained lost momentum against despite the backdrop of geopolitical sanctions and related commercial tensions with the global card networks.

India.  India also has a national identity card that will enable payments and has  focused its energies on new, truly national payment platforms and standards.

China.  China has created a new platform for lower value credits and debits as well as an extension of that platform toward making online payments from bank accounts in real time. Don’t forget that the China UnionPay card network has reached global status in just over a decade under state-level sponsorship.

South Africa.  And certainly not least, South Africa finds itself at the center of a much larger regional initiative to improve payments in the Southern African region.

It’s also worth noting that Brazil, India and South Africa each have real time capability for retail payments. Hello USA?

In case you haven’t heard, the new group of fast growing countries is sometimes called MINT, including the countries of Mexico, Indonesia, Nigeria, Turkey (among other favorite acronyms for this category) but they haven’t yet organized their own summit as far as I know.

Are such state sponsored payments improvements the way to go? Am I prophesying that the end is near for private sector innovation in payments? Certainly not, or at least I hope not. My sample of five countries is too small to draw any fundamental conclusions but it is notable that these countries have concerted payments policies that focus both public and private energies on enabling the payments environment in ways that uncoordinated efforts do not.


This post was written by Glenbrook’s Elizabeth McQuerry.



Post image for Learnings from the Bitcoin Workshop

Bryan Derman and I led Glenbrook’s second Bitcoin: Basics and Beyond workshop a couple of weeks go, this time in NYC from the 22nd floor board room of the Downtown Conference Center, a great space (the staff took great care of us, too, thank you).

As with every Glenbrook workshop—especially with our smaller Insight workshops on topics like Bitcoin, Data in Payments, Payments in Europe and B2B Payments—the questions and discussion enriched the experience for Bryan, me, and the business leaders who joined us for the workshop. The combination of commentary, insight, and the process of clearing up misconceptions made for a rich dialog that served everyone.


Now that we have further experience leading groups through the often confusing details of math-based currencies, I’ve got a few observations:

Misleading Default Contexts. Those of us with strong US payments industry backgrounds use the context of consumer payments as the first lens through which we look at new payment methods. That’s no surprise given the primacy of card-based payments and the years-long heightened expectations for the always “about to take off, Real Soon Now” promise of mobile payments.

But in the case of Bitcoin and other math-based currencies, that consumer payments-based view doesn’t serve because, fundamentally, card payment aren’t broken and Bitcoin doesn’t offer US consumers a compelling reason to switch away from cards. Today.  The consumer payments focus, we sometimes find, can distract from other, more compelling use cases.


Another contextual mismatch operates at a broader level. Those attending our workshops come largely from the US, Canada, Western Europe and Asian countries with stable currencies. That stability puts into question the utility of shifting to Bitcoin as a currency or store of value. Putting the investment use case aside, for most citizens of these countries, the local coin of the realm works just fine.

But don’t expect residents of Buenos Aires to view the Argentine Peso from the same perspective. The fiscal mismanagement of their currency makes alternatives like bitcoin attractive. Imagine how good bitcoin would look to the powerless citizens of Zimbabwe who suffered from hyperinflation and a currency collapse in 2008 only to confront deflation today.

We are certainly intrigued by the capabilities of math-based currencies, but think it’s unrealistic to believe that they might quickly overtake incumbent payment systems that already work well for common use cases.  We’re far more focused on identifying payments use cases that still exhibit significant points of friction that might be neatly lubricated by the application of MBC technology.

“It’s going to take a long time” vs. Jerry Brown. Another observation is the multi-speed nature of the Bitcoin ecosystem’s evolution. Our default opinion has been that the evolution is going to take a long time because the Bitcoiners have a lot to learn about payments and the payments industry, as the incumbent, is both properly focused on shorter term concerns and suffering from the incumbent’s myopia when viewing new market entrants.

Then we’re reminded that Bitcoin has momentum.  Take California’s legislature and Governor Jerry Brown signing legislation making the use of alternative currencies legal in the state. Canada recently passed a bill giving stronger guidance to virtual currency operators with respect to AML.  Both steps should broaden legitimate uses of math-based currencies.

Bryan and I are hoping more payments industry incumbents make the time, now, to take the deep dive into Bitcoin, Ripple and other math-based currencies, either through a private one-day workshop or our upcoming public workshops in Atlanta and New York. While I hesitate to use the D-word of disruption, niche-based opportunities are out there and shifts can happen at unexpected speed.

To wrap up, we are grateful to those who attended and for their universal appreciation for the session and how we conducted it (thanks for the kind words!). While not everyone’s opinion of Bitcoin changed from black to white, we painted Bitcoin’s many shades of gray and that was the mission.

This post was written by Glenbrook’s George Peabody.




Post image for MCX – Now I Get It!

In various venues — our Payments Bootcamp, our private client sessions or our merchant group meetings — we have talked a lot about MCX, the Merchant Customer Exchange initiative, created by a number of the largest US retailers to establish a merchant-centric wallet and payments solution. In these discussions, I’ve often joked about the name, since the last thing we think this is about is the participating merchant’s exchanging customer data as the name implies. But it dawned on me yesterday, MCX makes perfect sense if you think of it as enabling merchants to better exchange customer spending habits with manufacturers, consumer packaged good manufacturers (CPGs) and others to create more timely, relevant and compelling offers to those merchants’ customers!

Manufacturers are willing to spend a lot of money to attract and reward customers, but have little insight into individual customer behavior — thus the old adage that “half of our ad spending is wasted, we just don’t know which half”. What if the MCX service is able to help the participating retailers throw their customers really great, targeted offers? What would that be worth to those merchants? To manufacturers? To CPG’s?

So, here’s my back of the envelope design:

The MCX server sits between the consumer, merchant and the interested third parties: manufacturer (think Panasonic), CPGs (think J&J), and other service providers (think car loan providers, insurance companies, etc.) The MCX server, with the customer’s permission, plays Santa Claus — since it knows what the customer’s been up to, it can broker and exchange that data with a third party to throw a relevant third party ad or offer on the spot. Win, win, win: the third party has an effective ad spend, the merchant has either an additional sale or some payment or residual (collected by MCX), and the consumer gets a terrific deal. What’s not to like?

Now, maybe my MCX scenario is all wrong, but I tell you, if the merchants behind MCX haven’t at least thought of the above, then I can recommend a payments strategy firm that will help them flesh it out!

This post was written by Glenbrook’s Jay DeWitt.



Post image for Who’s the Better Fraud Investigator Survey — What about Merchants?

Our Card Fraud survey is still open — we’re trying to answer the question of who first detects card fraud: cardholders or their banks? The survey can be found here.

I’ve received a couple of comments suggesting I left out an important fraud detector in the survey: merchants! In the card not present (CNP) space, merchants are often the first detectors of fraud, noticing suspicious buying behavior even though the issuer is happily approving the transaction. This is a big issue and challenge in the CNP world today: how do merchants communicate information and insight such as this to issuers? There is no good way to carry this information in the current authorization message and “out of band” information transmission systems between merchants and issuers have yet to land on a single standard.

Merchants know things about consumers and transactions that issuers don’t, just as issuers know lots of things merchants don’t. For example, what if the merchant was able to tell the issuer “I’ve seen this customer many times before, but this is the first time he’s using your card”? Or an issuer could tell a merchant: “That is my cardholder’s current billing address, but it was just changed in the last 3 days”? This kind of two-way dialogue could certainly make the authorization decision smarter.

The fact is, today’s authorization system wasn’t designed for a world where merchants worked to actively detect fraud as they do today, at least in the CNP world. When the world was mostly “card present” transaction, as long as the merchant got a mag stripe read, an authorization and a signature, they were generally off the hook for fraud. So the authorization just needed to carry a few pieces of information one way for that issuer to make the authorization decision.

Contrast that to the CNP space, where merchants are always on the hook for fraud — even if authorized by the issuer — and therefore have implemented sophisticated fraud monitoring activities, doing a sort of “authorization” themselves often before sending the traditional authorization out to the issuer. In this new world, we need a two-way street of authorization data, not the one-way street that used to work so well.

Anyway, back to our Card Fraud survey… I didn’t allow for the choice of “merchant” as the first fraud detector because this is a consumer facing survey and I don’t think consumers are usually aware that merchants are often the first fraud detectors in a CNP environment. But maybe I’m wrong. Maybe a lot of merchants are proactively contacting consumers when a suspected fraudulent card transaction is turned away. In fact, that seems like a really good idea, since it would create cardholder pressure on issuers to shutdown compromised cards.

I think I have enough elements in the survey to test whether consumers are learning of card fraud first from CNP merchants and I’ll certainly be looking for that as we study the survey results. And heck, if I didn’t get it right this time, it will be an opportunity to try again — the one thing I’ve learned in doing surveys, it’s really important (and hard) to get the questions just right. Or, as e.e. cummings said: “Always the beautiful answer who asks a more beautiful question.”

This post was written by Glenbrook’s Jay DeWitt.



Post image for The Fed Gets Some Mojo?

Faster Payments May Get Here Faster than We Thought

Some of you may know that I’ve been an ardent advocate for a faster-payments infrastructure in the United States. I’ve been closely following the Fed’s process towards payments system improvements.

On Thursday in San Francisco, I attended one of the Town Hall meetings they’ve been holding to explain the results of their research and to share their preliminary thoughts with a broad (i.e. not just banks!) group of industry participants.

They’ve evaluated multiple options, as is necessary and appropriate given just how big, and how complicated, the U.S. financial services and payments marketplace is. I was delighted to hear that they believe that a new, faster-payments infrastructure may be the best option for our industry. This, they reported, represents thinking from within the Fed – but also, increasingly, from industry participants, based on the results of their public consultation process as well as in-depth research and discussions conducted over the past six months.

Anecdotally, I’ve also been told that there have been only a few “no” responses, heard during multiple Town Halls across the country, to the question: “Should we have a faster payments system in the U.S.?”

We still have a long road ahead of us – how to get this done is not clear. Our market, after all, is not for the faint of heart. But it is encouraging to see the Fed step up to a leadership role in this arena – and to be including in the process so many participants in the industry.

The post was written by Glenbrook’s Carol Coye Benson.

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Post image for Who’s a Better Fraud Investigator — You or Your Bank?

We often get interesting questions about payments, and the latest one stumped us: “How many credit and debit fraudulent uses are first detected by the bank? By the customer?”

We don’t know the answer to that one ­­or of any good source for this data ­­ so we thought we’d ask you, members of the Glenbrook community, to share your experience with card fraud detection!

So please consider taking our short 10 minute survey.  We’ll share the results with you and more importantly, we as consumers will either get bragging rights or sulking rights on the question of who the better fraud investigator is — us or our banks!



This post was written by Glenbrook’s Jay DeWitt.


Post image for It’s Not About Payments

I just attended NACHA’s Council for Electronic Billing and Payments and I’ve come away with an even firmer opinion that this payments business I’m in isn’t about payments. It’s about data.

A retail payment transaction has the potential to throw off a lot of valuable information: what you bought, what you bought along with it, when and where you bought it, how much you paid, what method of payment you used to buy it, etc. This information is hugely valuable to a whole ecosystem of companies, each of which is dying to spend money to better understand consumer’s spending with the exclusive goal of throwing them relevant and compelling offers to encourage even more spending. Merchants want this, of course, but also manufacturers (thing Sony) and CPGs (think Unilever).

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Post image for The South Korean Card Market’s Fascinating Structure

My partner, Bryan Derman, and I just returned from a week in South Korea and a deep immersion in the local card market.

As consultants serving clients across the globe—including payments -related companies in Europe, Africa, Latin America, and Asia—we are repeatedly reminded of the remarkable differences between adjacent countries in any given region.  A very common conversation we have with clients goes like this:

 Client“We need an Asian payments strategy”

 Glenbrook: “Well, to be a bit more precise, you need an Australia strategy, a Japan strategy, a China strategy, …”

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Post image for What’s Your GPA?

As a biller or merchant, you are vitally concerned about your payments “back office”, that set of core functions involved with accepting consumer payments. Whether you are in Treasury or Technology, if you are concerned with payments, you are asking yourself, every day, questions such as:

  • Is my organization optimized to manage payments?
  • Am I staffed correctly?
  • Is staff working smartly?
  • Am I paying too much for payment services?
  • Does my technology platform help or hinder my payments goals?

Or even more basically:

  • Do I have goals for my payments back office?
  • If so, what are they?

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Post image for Back from the Future: Bitcoin2014 Musings

Last week I was in Amsterdam for the second annual conference hosted by the The Bitcoin Foundation. As a strategist and advocate for ever-better payment solutions, I was very curious to learn how the Bitcoin protocol and its emerging enablers can address some of the most intractable challenges facing payments.

For the most part, payments work fine today.  Yet at the upper and lower ends of the spectrum there are challenges – complex, cross-border transactions between businesses are slow, expensive and unpredictable; cross-border remittances remain largely cash, dependent on literally hundreds of money transmitters and their respective agent networks; and low value day-to-day transactions in the developing world where financial inclusion is a priority are still not adequately served. Microtransactions on the web are another ideal use case, as existing payment systems are not cost-effective for very small value transactions. It is at these extremes that bitcoin has the most potential.

I came away from the conference impressed by the power of the blockchain and the fervor of its advocates: it is the future of payments. It represents brand-new, global infrastructure that is resilient and adaptable. But it’s going to take awhile.

A few general observations:

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Post image for There Is No Such Thing As An International Wire

As globalization increases, businesses of all sizes buy goods and services from overseas suppliers and turn to new customers in overseas markets to drive growth. As a result, the demand for cross-border transactions steadily increases. The vast majority of these transactions takes place through correspondent banking relationships and collectively described as “international wires.” The reality is that there is no such thing as an international wire.

Each country has its own payment systems (with the exception of the EU, but let’s think of them as a country, for these purposes). There are typically two flavors of bank transfers: option one: an ACH or credit transfer system, generally slower and cheaper; and option two: wires, which are faster, typically irrevocable, and more expensive. These payment systems only work within their respective countries. Typically only banks that are licensed and regulated in a country have access to its payment system. Payment system transactions are denominated in the currency of their respective country.

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Post image for Square Grapples with the Payments “Poultry Problem”

Bilateral Adoption Claims Another Victim

Word came earlier this week that Square had sunset its consumer-facing app, Square Wallet.  The app had pioneered one of the great parlor tricks in payments, enabling a merchant using the Square Register POS app to recognize the presence of a Square Wallet consumer in its store and allow that consumer to pay for goods with his name and face as represented on the Square POS system.

In spite of this bit of mobile magic, it appears that the Wallet failed to gain traction with consumers.  A deal struck with Starbucks in 2012, designed at least in part to drive consumer uptake, failed to capture the consumer’s imagination in a venue already well served by Starbucks’ own, compelling mobile app. The combination of that failure and a perhaps too aggressively priced acquiring contact, may mark the Square-Starbucks deal as one of the great smoking craters in the annals of payments.

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Post image for Dark Wallet and Bitcoin Regulation

Here we go again. The discussion and debate over Bitcoin’s legitimacy and its labeling as the province of anarchists and criminals is about to get louder again. Why?  Because Dark Wallet, an easy to use browser plug-in that makes bitcoin transactions far harder to trace, is coming on the scene.

The release of yet another bitcoin wallet wouldn’t be of particular consequence except that Dark Wallet makes using bitcoin easier (a good thing) and much better for illegal transactions (a bad thing).  Dark Wallet, assembled by a team of programmers called unSystem, uses a recombinant approach to making bitcoin transactions untraceable. It combines transactions from multiple transactors and then splits and recombines them multiple times. The result is a blockchain ledger containing enough blended transactions that purport to make it impossible, and certainly much much harder, to recreate original the transaction flow. That means law enforcement, the agencies tasked to “follow the money,” will have a tougher time reading the blockchain.

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Post image for Transactions Get Smart

Glenbrook held a great “Innovations in Payments” workshop this week – a group which energetically debated many topics, including Bitcoin (of course), tokenization, beacons, authentication, wearables, interoperability and mobile ad spend.

As I reflect on the day, it seems that an interesting theme emerged.  Many of the topics were about payment transactions that are – or will be – a whole lot smarter than the transactions of today.

The EMVCo Payment Tokenization spec – a document well worth reading – lays out a framework by which payment tokens, (dummy numbers, essentially) are  provided to wallets, merchants, billers or other service providers by card networks or third parties acting as a “Token Services Provider”.  These tokens have useful limitations – they’re only good if used by a particular merchant or wallet, for example.  But they may have additional “smarts” attached to them: they may identify the required level of identity assurance (from nothing to full-blown 3DSecure) required for use, or they may be good for only one use (in which case the one-time dummy card number becomes something like an account-number-length dynamic CVN).

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