Post image for Sensibill – Redefining Digital Receipts for FIs

Stretching the retail financial institution’s (FI) mission beyond checking account and debit card management is on that industry’s agenda. It’s what fires the imagination of fintech entrepreneurs too because retail financial services is an industry in need of creative, expansive approaches to accountholder services. Not every idea catches fire but fortunately there are those willing to light a match.

This Payments on Fire podcast looks at Sensibill, a digital receipting and data repository service for FIs. Join Glenbrook’s George Peabody and Sensibill’s CEO and co-founder Corey Gross in this discussion of how an FI can help its accountholders turn digital receipts into data far more useful than what’s on a statement or that piece of paper stuffed into a purse or wallet.

Transcript below the jump.

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Post image for Machine Learning in Fraud Management

Machine learning and the broader category of artificial intelligence are rightly attracting attention and discussion. These are powerful technologies. But, like many new technology conversations, there’s the suggestion that they can address all use cases.

Maybe focusing on a single use case is the better approach right now. Join Glenbrook’s George Peabody and Nuno Sebastiao, Chairman and CEO of fraud management firm Feedzai, in this refreshing discussion about the role of machine learning in fraud management, some of its limitations, and how services like these fit into an enterprise’s fraud and risk management operations.

Read the transcript below the line

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Post image for Biometrics, Big Data, and Tossing the Password

Digital identity is the black hole of the internet. Our online lives simply aren’t protected by a system without strong authentication. Killing the password is Mission One for security professionals because they’re so readily stolen through phishing attacks and malware. Users, warned to make passwords complex and unique, have no hope of remembering them. And a password is simply one factor of secure authentication. Biometrics and data, when used in combination, can relieve password fatigue and, for the relying party, increase security substantially, bringing some light to that dark place on the internet.

We talk with MasterCard’s biometrics and authentication leader, Bob Reany, about where biometrics work and the intersection of device-based tools with what the cloud provides through Big Data, particularly device profiling and behavioral analytics. Your fingerprint’s not just for unlocking the phone anymore.

Transcript below the break

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Post image for The Merchant’s Challenge with Chargebacks

Chargebacks are one of the card system’s great consumer benefits. If fraud happens, the merchant doesn’t deliver on what was promised, or you’re charged six times for something you bought just once, the chargeback mechanism returns your money or restores your credit. What’s not to like? Well, if you’re a merchant, a lot. While there are plenty of legitimate chargebacks, there are also consumers who take advantage of the system through “friendly fraud,” the “I didn’t do it” chargeback category abused by all too many.

Chargebacks are expensive for merchants. There’s a chargeback handling fee from the acquirer. There’s the cost of disputing the chargeback. There’s the cost if, at the network’s discretion, the merchant loses the chargeback. And then there’s the small matter of the cost of the goods or services. Take a listen to this audio primer on chargebacks with Glenbrook’s George Peabody and Chargeback’s CEO Dave Wilkes. Hear how they work, what the trends are, and how Chargeback assists merchants in the chargeback dispute process.

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Over the past several years, my colleagues and I at Glenbrook have been working on a variety of projects focused on bringing low-cost financial services to the poor in developing countries. While there has been a lot written on how mobile or eMoney payments systems such as M-PESA in Kenya have grown in many developing countries—and how they have brought much-needed electronic payments to the poor and underserved—there’s a critical missing piece that demands attention.

Specifically, few are talking about the criticality of merchant acceptance of eMoney payments.  At Glenbrook, we believe this is a problem, that the lack of widespread acceptance has both inhibited growth in these systems and remains a roadblock to “digital liquidity” in even the more successful of implementations.

Without exception in the developing world, the vast majority of transactions in mobile payment systems are person-to-person (P2P).  That’s fine since poor people, those at the bottom of the pyramid, derive meaningful benefits from the shift of cash to mobile transactions. Those benefits include reducing the theft risk of carrying cash—which can be very dangerous—and the efficiency of being able to send money to someone without losing half a day of work to travel across town. For someone able to afford it, the mobile eMoney service can also provide a safe place to store value but few poor people have the luxury of idle balances in their mobile money accounts.

However, since most merchants don’t accept eMoney as payment, their customers must “cash out” their mobile monies in order to spend, a relatively expensive conversion.  Those cash-out costs work against the goal of providing low-cost payment services to the poor.

We are fortunate to be part of an ongoing working group on digital financial services at the ITU, the United Nations agency for information and communication technologies[1].  One of our working group’s findings is that “digital liquidity” and the associated network effect are critical to the overall goals and growth of any electronic payment system. Keeping electronic money “in the system” creates transaction volume and velocity that keeps costs low, true not just within the processing system itself but also when calculating the “all in” costs of cash-out conversions. In short, digital liquidity reduces the expense of cash-out services.

A shift to fully electronic commerce to achieve those savings won’t be easy. Based on our experience in these developing economies, and affirmed by numerous studies, we have concluded that there just isn’t a silver bullet or a “waive the magic wand” solution to eMoney merchant acceptance.

In developed markets, merchants are happy to “pay to be paid” for a variety of reasons. While each merchant has its priorities—and many complain about the cost of accepting electronic transactions—merchants also realize that electronic payment acceptance produces incremental sales. And that they risk losing sales if they don’t. Incremental sales are driven by the expanded purchasing power made available by credit-based products and services, sales that would not have been made had customer spending been limited to the cash in their pockets. Other merchants understand they could lose sales to competitors if they don’t accept the customer’s preferred payment method (think rewards cards).  And of course, merchants selling to online buyers rely almost entirely on electronic payments.

To merchants in the developing world these benefits aren’t compelling, neither for small sellers (who may be poor themselves) or larger ones, for a range of reasons:

  • Their consumers are largely unbanked and don’t have access to credit products
  • Cash is the traditional payment method. Everyone is used to it. Cash is “good enough”
  • There aren’t enough merchants accepting eMoney to warrant concern of lost sales to competitors who do accept it
  • eMoney transactions are often viewed as costly to accept
  • Merchants usually incur costs of cashing out themselves since there isn’t a robust B2B ecosystem in place, i.e., for supplier payments. The alternative costs of transferring funds from mobile operators’ eMoney systems to a traditional bank account—if the option is even available—are high
  • Remote commerce, our online or mobile commerce model, doesn’t exist or isn’t on anyone’s radar screens
  • It costs a lot of money to develop a merchant ecosystem with uncertain economics
  • Merchants may be concerned that revenues would now be visible to tax authorities
  • Many merchants would have to buy equipment dedicated to eMoney acceptance, such as a dedicated phone for the store or at each checkout till

It’s a tough problem, so where do we go from here?  Is there hope?

I believe that it’s critical that eMoney systems develop a robust merchant business. I also believe it’s achievable if done right. But it’s important to understand that, while merchants will pay to garner new customers or generate more visits and revenue from existing customers, there isn’t a single factor that in itself will be sufficiently compelling to drive merchant adoption.  In my opinion, success will be driven by a combination of factors:

  • Credit History Development. By accepting eMoney payments, merchants can create a “digital history” that enable prospective lenders to extend all-important working capital and other forms of credit to merchants. Recognizing that traditional credit bureaus simply don’t exist in most of the developing world, coupled with the fact that many small merchants don’t have access to credit, we are starting to see an explosion in alternative credit decisioning, of which eMoney transaction history is an important factor. In addition, some lenders could be more likely to extend credit given access to an electronic settlement stream they could tap into for regular or ad hoc loan repayments
  • Contextual Ecommerce. The notion of remote payments is hitting more and more radar screens and it doesn’t need to look like traditional developed-world web and app-based ecommerce. Remote transactions for bottom of the pyramid customers could be a merchant taking payment for goods now that will be picked up or delivered later
  • Merchant-provided Credit. Merchants could increase sales by extending small amounts of credit to their own customers, knowing that repayment isn’t necessarily tied to when the customer happens to next visit the store
  • Embedded Payments. As in the developed world, payments will eventually become an embedded part of commercial or community relationships, providing benefits to payment acceptors
  • Cash Reduction. Reduction of cash on hand to reduce theft and loss risk
  • Light Regulation. Government entities are viewing a robust eMoney systems as a priority, often under the financial inclusion umbrella. Relaxed or grandfathered tax policies could go a long way in the critical, early years of building a robust merchant ecosystem
  • Social Messaging and Payments. Social networks with commerce-enabling capabilities using eMoney are turning toward the developing world and could quite conceivably enable merchants of all sizes
  • Broad Payment Method Acceptance. There is increasing focus on the notion of interoperability at the payment acceptor level, the ability to accept multiple forms of electronic payment. Open payment platforms based on standards, APIs, etc. are key components to not only help achieve digital liquidity, but also to help ensure payments providers compete on both price and innovation
  • System Interoperability. Some eMoney players are increasingly open to cooperating – pursuing the notion of working together to bring up a merchant business by sharing the cost of some non-strategic functions, creating merchant joint ventures, etc. The network effect could build ubiquity, benefiting all participants in the ecosystem

My colleagues at Glenbrook and I will continue to participate in many developing world projects, helping to bring affordable financial services to bottom of the pyramid people and businesses. We do this with incredible optimism and enthusiasm. It doesn’t get much better than this for “payments geeks” like us!

[1] See


Post image for Shoptalk Conference 2016

This episode of Glenbrook’s Payments on Fire podcast comes from the Shoptalk conference, mid-May 2016. Focused on the entire customer engagement cycle, the attendees are all about influencing consumer behavior, the processes of moving customers through that cycle, about making some portion of enterprise IT work more smoothly, or, yes, even about payments.

Take a listen to my conversations with start-ups Tuku (in-store digital content delivery), Belly (in-store loyalty), Bold Financial Technologies (payout management for Treasury) and established fintech provider ACI Worldwide.


Post image for A Large Merchant Focuses on its Payments Strategy

Payments industry professionals naturally have a hard focus on the industry’™s own dynamics. So, it’s not uncommon to lose sight of who the customer is and who pays the freight. In retailing, yes, the consumer pays, but payments is a direct cost to the merchant. With all of the changes underway in the U.S. payments landscape, merchants now address payments as a complex, strategic element of their business, both as a way to drive new sales as well as a cost component to be tightly managed.

To learn what’s top of mind for a large scale retailer, take a listen to Dean Sheaffer, SVP of Financial Services at Boscov’€™s Inc., the U.S.’s largest family-owned department store. In this Payments on Fire podcast, Dean addresses payments as a sales tool (Dean and his team have upped usage of the Boscov private label card to 40% of tender!), payments and data security, and the potential of Faster Money.


Post image for Five Answers – Sort of – to the Big Questions on Blockchain and Bitcoin

I’m back from two days at Consensus 2016 in NYC, and reporting as promised into my investigation of the Five Big Questions.

1. Bitcoin technology: will the problems (versions, processing time, scalability) be  resolved?

Yes. My belief that we are all writing this off too soon in favor of “all things blockchain” was reinforced. Glenn Hutchins of Silver Lake Partners drew a parallel between private blockchains and intranets in the early internet days: important for enterprises but not radical or transformative in and of itself. He headlined his talk “Blockchain good, Bitcoin better”. Balaji Srinivasan of 21 spoke persuasively about how Bitcoin is the mechanism which will “free API’s to be API’s” and interact with other machines (my paraphrasing…)

2. Big banks: will they join hands in a single (or several) new blockchain-based networks? Will there be a new SWIFT? Will it be SWIFT? One of the currently formed consortia? Someone new?

Hard to tell. David Rutter of R3 bragged about 46 large financial institutions, and Chris Larsen of Ripple talked about the opportunity, but I didn’t hear from SWIFT, and there are other players out there…

3. Central banks: will they issue digital versions of fiat? Other digital currency? Support Bitcoin?

Yes. Fabulous panel with David Andolfatto of the St. Louis Fed (I’ve been reading his blogs on “Fedcoin”, MIT Media Lab, others – the energy on the topic is strong and clearly central banks of all kinds and stripes are thinking about it… but perhaps the most fascinating thought is that we could go back 100 years to a pre-central bank world, with central banks, commercial banks and other players issuing their own currencies…

4. Private blockchains: how many are there going to be? Thousands? Millions? Just how different is a private blockchain from a plain old secure database?

Millions. See above re: intranet. Not that different…

5. Interledger – incredibly cool, but how will it play out?

Not clear at all, but multiple private blockchains (or non blockchain ledgers) may need to interconnect. Interledger was referred to but not in detail; other options (Chain, Hyperledger) were more visible but we’re still in theory-land here. I wish there had been more on this.



Post image for Data Analytics, Lending, and the Next 100 Million Borrowers

Extension of credit to people in developing markets has been a long time challenge. Banks, of course, look to repayment history to make such determinations but in much of the world, banking relationships and repayment track records are few. But history has demonstrated that extension of credit in developing markets can be effective and profitable. Just look at the Grameen Bank’€™s high micro-loan repayment rates.

To address this repayment data dearth, built a lending data set in multiple developing countries, having gone into the lending business just to generate the data it needed to tune its machine learning capability. Lenddo then built its algorithms
that examine some 1,000 characteristics in the data drawn from social, mobile, and other sources. This Payments on Fire podcast with’€™s founder Jeff Stewart takes a look at lending in developing countries, social and mobile data sources, and examines the algorithmic “black box” that is at the heart of the company’€™s approach to making credit decisions in “thin file” markets.


Post image for Five Big Questions on Bitcoin and Blockchain

I’m headed to New York next week for the CoinDesk Consensus conference…”Making Blockchain Real”. I’m going because I’m trying to get my head around some big questions. I normally have a sense, even with new things, of the path forward. Not in this case!

Here are the questions I’m thinking about:

  1. Bitcoin technology: will the problems (versions, processing time, scalability) be resolved?
  2. Big banks: will they join hands in a single (or several) new blockchain-based networks? Will there be a new SWIFT? Will it be SWIFT? One of the currently formed consortia? Someone new?
  3. Central banks: will they issue digital versions of fiat? Other digital currency? Support Bitcoin? Support big bank blockchain networks? Is what is happening going to fundamentally change the role of central banks in the economy? Do we go back to pre-central bank economies?
  4. Private blockchains: how many are there going to be? Thousands? Millions? Just how different is a private blockchain from a plain old secure database?
  5. Interledger – incredibly cool, but how will it play out? Is this just a small (albeit important) bit of infrastructure, or does it fundamentally change the way payments systems work? The whole Bitcoin/blockchain conversation over the past few years has made everyone think about what money is – and realize that often (not always!) it is a ledger balance representing a claim on someone (bank, carrier, store…). An electronic transfer is simply an instruction that tells one ledger to go up, and the other down, in a way agreed upon by the ledger owners (and their accountants!) A settlement transaction is another version of the same thing. Can this all be restructured? What about the business rules? Do they need to migrate from their three ring binders into the transfer message itself?

I promise I’ll report back if I discover the answers to any of these questions….



Post image for Coachella Takes Payment Cards – Mostly

I spent the weekend in Indio, California at the Coachella Music and Arts Festival (often referred to as the “Modern Day Woodstock” for you Boomers). Over the few weeks leading up to the event, Square and Apple advertised quite a bit about how every single vendor on the festival grounds would have a new contactless Square reader to accept Apple Pay and payment cards.

In the past at Coachella, paying for a bottle of water or a slice of pizza could only be done with cash. The ATMs at the festival grounds were hard to find, charged high fees, and often broke down. A news release from Square a couple of weeks ago explained that there was going to be no reason to bring any cash to the festival or even a wallet. Hearing such news is a dream come true for festival goers who want to keep track of as few personal belongings as possible.

For the first half of Friday, I was able to easily buy anything I wanted using my chip-enabled credit card and it was a painless process. I simply asked for a bottle of water and the seller took my card and proceeded to insert it into the EMV slot. I chose to abstain from using Apple Pay because smartphone battery life is an extremely precious commodity at the festival—which makes me wonder how those relying on the NFC“Pays”alone got along.

The vendors had their staff swipe or insert the cards, rather than having us do it ourselves, because many people still get confused over when to swipe or dip. With over one hundred thousand people attending this festival, even the smallest hold-up can cost a lot in time and money. Beyond that bottle of water, I also purchased chicken strips and a beer with ease that afternoon.

By early evening on Friday, however, some vendors began stating that the “system was down” and they could no longer accept cards – only cash. I asked a few more of those nearby vendors throughout the day and was met with the same issue. By Saturday and Sunday, I had given up asking altogether and simply came with cash on hand.

Driving home with friends on Monday morning, I asked how they paid for food and beverages throughout the weekend. They all responded that they used their cards whenever they could, but were met with some resistance by certain vendors here and there.

Now, none of my friends are nearly as fascinated by the payments industry as I am, so they were not paying (no pun intended) very close attention. But after digging a little deeper, we realized that we heard “the Square system was down” excuse at only the small tents that exclusively sold bottled water. Those tents get a tremendous amount of traffic, with people of all ages pushing and shoving to get to the front (it is very hot out there!)  I imagine those vendors all agreed to abandon the Square readers in order to boost throughput. I highly doubt that there were actual technical difficulties at just those tents while all the others selling food, beer or merchandise were unaffected. Since these tents sold only one product at one price, it is much faster to collect cash $2 at a time because, let’s be honest, dipping an EMV card can be a tad slow.

All in all, Coachella and Square teamed up to offer a much easier payment experience than in the past. Although I ended up using cash the rest of the weekend at all vendors – water or not – many people throughout the festival grounds were able to buy their meals, merchandise or beer with their cards.

And despite having to carry cash in my pockets, I was still able to enjoy some of the best acts of the weekend—from hard-hitting rapper Ice Cube to soft-spoken singer BORNS to DJ duo Disclosure. Who knows what incredible new artists and different forms of payment acceptance will be there next year!




Post image for On Internet Money – Talking with Jeremy Allaire

The world of moving money is changing. And faster is the theme. Domestic real time payment systems are showing up across the planet. Today’s discussion is full of bitcoin, open and permissioned blockchain approaches to speed asset exchange. But the competitive balance between proprietary and open systems is in flux.

The view that moving money is or should be an internet-wide capability is a guiding principle for Jeremy Allaire, founder and CEO of Circle. Take a listen to Jeremy on how Circle is connecting US dollars to British pound sterling, his plans for the euro, and how multiple technologies – blockchain and machine learning among them – enable money movement for Circle’s customers.

Read the transcript below.

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Post image for Faster Payments Survey – Your Immediate Reply Requested

It’s been just over two years since we first reached out and asked for your views on the question of faster payments. There have been a number of interesting developments in that period – the launch of FAST in Singapore, the announcement of the New Payments Platform in Australia, development of an instant payment scheme in Europe, a new platform in Kenya as well as multiple initiatives in the United States, among others.

We also have several different adjectives in use to describe how payments should be:  faster, real time, immediate, and instant. By any name, decreasing the end-to-end time to execute a funds transfer has become a top discussion in the industry.

We invite you to take the survey and add your voice to the evolving industry discussion. At Glenbrook, we are keenly following the issue and will host our second Insight Workshop on Faster Payments on May 12. We’ll breakdown the key concepts and look at case studies of how the concepts are being implemented around the world. And we’ll also share our views on how faster payments fits in other industry dynamics underway. The workshop will also be the first opportunity to discuss these survey results in depth.

Click here to take the survey now. Many thanks!


Post image for What Blocks the Blockchain

Given the high rate of press releases and articles on fintech applications of blockchain technology – and the growing number of financial institutions expressing interest in its potential – I’ve been considering this high signal to noise ratio. A few thoughts:

Hype cycle inflection point

We are, hopefully, cresting the top of the blockchain hype cycle. In recent months, a number of bitcoin technology efforts shifted their focus from bitcoin to blockchain technology as the step most likely to gain positive attention, the theory being that blockchain beauty shines brighter when extracted from bitcoin’s murk. So, in 2016, both hype and serious discussion of blockchain technology are plentiful. Sometimes this serious exploration flirts with flights of fancy.

Welcome to the pilot stage

Almost all of the blockchain initiatives today, especially those looking to automate back office functions, are pilot programs—some just requirements documents, others are early iterations of software running across a handful of devices. This is exactly what we should be doing—but remember how far away from production this stage can be.

Blockchain built for Bitcoin

Glenbrook partner and my colleague Russ Jones said to me “the best blockchain use case I’ve seen so far is bitcoin itself.” Bingo. The blockchain data structure and the cryptography that secures it is optimized for the open, permissionless nature of the bitcoin protocol. I could make the argument that we’re only now seeing interesting bitcoin uses now that third parties are using it within their own operations to effect value transfers.

This is going to take a lot of work

Reading through these articles and press releases, a common theme of technical experimentation emerges. Blockchain experiments are underway, testing the performance and scalability of permissioned blockchains built for specific use cases. There are plenty of applications where bitcoin’s 10 minute transaction confirmation timing is too slow, never mind its current inability to scale up in transaction volume. (We’ve spoken with developers testing blockchain designs capable of processing transactions at Visa-like scale, beyond 20,000 transactions per second.)

That’s as it should be. Every new technology needs to be thoroughly vetted to determine its optimum employment.

But the harder work lies elsewhere, in the domains of governance, rules development, regulatory change, back office optimization, and standards development.

Governance and rules

In our blockchain workshop, we make the point that the bitcoin protocol is rules-based. Its rules are enforced in software rather than by a contract or rule book. New block creation intervals of 10 minutes and the 21M bitcoin maximum are examples of its rules, each choice made and defined by human beings. Subsequent rule changes impact not only the system’s functions but the philosophical and economic lives of those affected.

The current division within the bitcoin development community over expanding the size of each block, in order to accommodate today’s higher transaction rates, is an example of the challenges that governance and rule change represent. Bitcoin adherents have celebrated the protocol’s lack of a central authority as a signal characteristic and advantage. While that may be true at the level of each bitcoin transaction, the keepers of the code are a de facto central authority responsible for rules evolution. Their governance struggles could limit bitcoin’s future. The wide open, largely permissionless internet succeeded because of rules and standards that evolve to address changes in the environment. Bitcoin, or its successors, can be no different.

The same need for rules and clear governance holds true in the domain of permissioned blockchains, where a closed group of parties, such as a collection of financial institutions or asset traders, transact among themselves. While satisfying the needs of a limited set of participants may constrain rules scope and governance complexity, it would be foolish to underestimate the difficulty of getting even a small community to agreement. After all, most are composed of competitors looking for advantage over one another.


We’ve all observed how local, state, and national regulations struggle to keep up with technology-driven change. Uber’s multi-jurisdiction confrontations is just one example. As blockchain applications and smart contracts spread into traditional custodian-based businesses such as bank trust departments, law firms, and insurance, expect similar push back from incumbent businesses and the regulators guiding them. Regulations that grow over decades like the U.S. Uniform Commercial Code don’t change overnight.

Back office applications

Many blockchain startups are looking to automate back office functions of enterprise scale business. Most know something about blockchain and very little about the back office functions they propose to support. Complex back office processes make the maths of blockchain protocols look straightforward. Blockchain proponents could well heed Abraham Maslow’s caution:“I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” In the back office, an entire tool chest in the hands of process craftspeople is what’s required.

Standards development

The internet succeeded because smart people came together to write standards for email, FTP, HTTP, DNS and the other tools that form its foundation. That foundation has enabled the innovation we enjoy today largely because it is not proprietary to an individual company or platform. The future foundation of bitcoin and/or its permissionless successors should be built along similar lines. The Linux Foundation’s Hyperledger project is an example.

Be critical

At its simplest, we can think of a blockchain as an unalterable ledger, a permanent database of transaction flows. Just remember, database technology is already highly evolved. While there are plenty of functions that could be served by a blockchain, record keeping functions for example, such uses have to be demonstrably better than current database tools to win.

So when you see the next flurry of blockchain stories, keep in mind that the technology of blockchains could be the least of the challenges.

Let me know your thoughts!

This post was written by Glenbrook’s George Peabody.



Post image for Expanding the Smart Card’s Role

The Smart Card Alliance has been educating payments, government, and security professionals since 2008 on the fundamentals of smart card technology and how smart cards are put work across a range of use cases. In this Payments on Fire podcast, Randy Vanderhoof, Executive Director of the SCA and the EMV Migration Forum, talks about the organization’s training programs, their evolution and the establishment of the new National Center for Advanced Payments and Identity Security, an expansion supported by a grant from Heartland Payment Sy

Talking with Randy is always refreshing. He lays out the important elements of payment security and speaks directly about how they interrelate. Hardware-based security is always at the core of his mission but he’s well up on the expanded use of data and mobile devices in authentication and payments security.



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