Post image for Faster Payments in the US

Sending money in real-time is a capability that is growing around the world. “All bank” systems in the UK and Mexico are thriving. Mobile money services like M-Pesa are changing economies and individual lives in developing countries. But in the US, “things are complicated.” We have a crowded landscape in the US without, as in many global markets, a clear mandate from a regulator. In this Payments on Fire podcast, Glenbrook’s Carol Coye Benson and Dwolla’s Jordan Lampe join George Peabody for a discussion on the evolution of Faster Payments in the US, directories, bill pay, and the challenges of interoperability. And best wishes for a relaxing and happy Thanksgiving!


Post image for Inside the Digital Payments Workshop

As new forms of digital payments begin to take hold, the old assumptions no longer work. What does it mean to issue a card when there is no card? How can transactions be risk-managed when payments credentials are masked and scrambled by design? And what is the impact on the loyalty and reward programs that are designed to depend on the presence of card data?

Those are the questions we asked ourselves when we set out to design Glenbrook’s new Payments Insights Workshop: Digital Payments. But what exactly are digital payments?

I first noticed American Express use the term “digital payments” in 2011 to describe a category of payment-related technologies that went beyond the traditional issuance of a card. They described P2P transactions between accounts as an example of a digital payment transaction.

More recently, Visa and MasterCard have embraced the term as a way to describe their push to store payment credentials in the cloud with tokens, instead of cards, being used to initiate payment. The networks even talk about their token-related services as “digital enablement” services. And their “checkout” products, of course, are a big part of token delivery.

We’ve structured the Payments Insights Workshop: Digital Payments to break down this new segment of the industry and explore the implications of the shift from physical to digital payments instruments. Here’s what we plan to discuss:

  • Digital Payments Overview – Provides an introduction to digital payments and puts them into market context. Why are digital payments happening now and not five years ago? We’ll look at the role of tokens, authentication, and cloud — and share our overall taxonomy of the space.
  • Tokenization Fundamentals – You can’t understand digital payments if you don’t understand tokenization. It’s as simple as that. We’ll start with the key tokenization concepts and take a look at the two leading approaches –– security tokens and EMVCo payment tokens. We’ll explore the models, look at the flows, and describe the roles and the data elements. We will also share current thinking on how tokenization concepts might be applied in non-card payment systems.
  • POS Mobile Wallets – POS Mobile Wallets are the first major deployment of EMVCo payment tokens. We will do a complete tear down on Apple Pay and then use that as a point of comparison against Android Pay, Samsung Pay, and Chase Pay to illustrate similarities and differences. Given the recent announcements at Money 20/20, we’ll also be exploring CurrentC (MCX) and the rise of NFC-enabled banking apps.
  • Checkout Wallets – Checkout Wallets are the second shoe dropping in the shift to digital payments. We’ll take a look at Visa Checkout and its underlying security model, as well as MasterCard MasterPass and Amex Express Checkout. We’ll share how they work, how they differ, and their likely evolution. Checkout Wallets are distinctly different than the old digital wallets as alternative forms of payment –– so you may be surprised.
  • Digital Payments Enablers – For online merchants, the rise of digital payments enablers has represented a sea change in the approach to online payment acceptance. Here we’ll compare Braintree, Stripe, and WePay and take a look at what they do, where they fit, and why they represent the next wave in payment acceptance. Our exploration will include a special emphasis on how these providers address the needs of ‘Marketplace’ providers.
  • P2P Mobile Apps – The shift to digital payments can also be seen in P2P Mobile Apps. This module will look at the general model and economics found in these types of systems. We’ll compare the underlying transaction model of Venmo, Square Cash, and Facebook Messenger––and share our perspective on P2P Mobile Apps in the developing world. This will include a case study on the evolution of the M-Pesa system in Kenya.
  • What Comes Next – The day will finish with a look at In-App payments and Buy Buttons, both important new developments that play right to the shift to digital payments. As part of What Comes Next, we will also share our thesis in how digital payments fit against the emerging Internet of Things.

We’ve put together a great agenda and I am looking forward to sharing our thinking at Glenbrook’s next Payments Insight Workshop: Digital Payments.

The next session is December 3rd, 2015 in Palo Alto, California as a standalone workshop or as a companion day to our next Payments Boot Camp on December 1st and 2nd. Please join us if you can.

For more information and to register:

Questions? Contact


Post image for Merchant App Stores Today

In what seems quite a number of years ago, back in 2012, Merchant Warehouse (now Cayan), announced what I think was the first “Merchant App Store”, marketed as the Genius Customer Engagement Platform. Running on a somewhat traditional Verifone MX915 terminal, it was an early forerunner to the current iOS and Android-powered tablet-based offerings. I loved the idea back in 2012, (and have been a cloud-based POS fan for years), but it’s been awhile since I’ve checked in to see where the industry is, particularly from the developer perspective.

As in the consumer-centric Apple App Store and Google Play, the potential benefits to developers are enormous, especially wide distribution at a reasonable price. I can’t even count the number of great ideas that have come through Glenbrook’s conference room that have ultimately failed since they just couldn’t get to market cost-effectively. This is particularly true for those trying to serve small and medium-sized businesses (SMBs).

I’ve checked in now with a number of developers as well as with platform providers (e.g., the tablet-based or purpose-built POS providers). A few things are clear:

  • It’s early in the game
  • It’s more complicated than throwing an “Angry Birds” game on Google Play
  • There’s a lot of thoughtful effort and meaningful resources going into this space by some (but not all) POS providers
  • The potential benefits to the POS providers, acquirers, and developers are meaningful but still elusive
  • Despite a few “hairballs”, it’s not that hard for a decent developer to get their apps onto multiple POS platforms

It’s Early in the Game – Even in the most popular merchant app stores, there are just over 200 apps available right now. But the potential is enormous – time and attendance, enhanced inventory and sales analytics, sales tax services, etc. It’s clear to me that, just like the Apple App Store and Google Play, POS platform providers such as FDC’s Clover and Poynt understand that there’s an economy-of-scale race going on. As they get more apps, it becomes more appealing to merchants, and the more merchants a platform gets, the more attractive they are to developers.

But it’s still Early Days. The small merchant is a busy person who doesn’t have time to experiment with dozens of third party apps in order to find the handful that could revolutionize their business. One participant in this ecosystem reported that these merchants generally install just two third party apps. Even if that’s low, it suggest how different merchants are from consumers using an app store.

Merchant Apps vs. Consumer-Centric Apps – paraphrasing an executive at a big-name acquirer, putting a merchant service in the POS app store isn’t like throwing another Angry Birds in front of consumers. Unlike consumer-centric apps, even paid ones, merchant apps must be held to a higher standard as it pertains to performance, value, and safety. Merchants expect that from their payment processors, and naturally expect the apps they use and buy from their providers to be of the utmost quality and value. In short, acquirers face a lot of reputation risk from the apps they offer to their merchants.

Wooing the Developer – based on conversations with developers and some platform providers, there’s a significant amount of time, expertise, and resources going into making these app stores both feature-rich and easy for developers to create their apps. Extensive code libraries for a variety of payment functions, RESTful APIs, SDKs, and developer support are a pre-requisite for attracting developers (OK, a large base of merchants also helps, but you get the idea).

Conversations with developers, for example, indicate that it’s easy to connect to multiple acquirers (as applicable), fetch POS data from the cloud, test their apps, redirect to the developer’s enrollment pages, etc. In addition, some are even providing marketing support to their developers to help spur sales.

Largely driven by these developer-friendly investments by the POS platform providers, as well as the use of the ubiquitous iOS and Android OS derivatives operating systems, developers can generally port over their apps from one OS to another in just a few weeks. In addition to the tools provided by the platforms themselves, there appears to be a wide and growing support base of developers more than willing to help out others.

One technical area we’re watching is the split between device and cloud-based applications and the ease of integration. Cloud-based services just need to present a standard API to all comers. Device-specific code can call on those web-based services. Some developers will have to carefully evaluate where to spend their efforts: on a broad-based cloud service or on app store-specific code. Obviously, there are functions that only an app can perform but in this age of omnichannel payments and commerce cloud-based services can touch activity at the POS and online.

Potential Benefits are Enormous – The payoff for acquirers is enormous, particularly regarding reducing merchant attrition. While the large, Tier 1 and Tier 2 merchants don’t change acquirers frequently, merchant turnover for smaller merchants is a decades old problem. It is not uncommon for acquirers to see 20% – 25% (or more) annual turnover of their small merchants. The nice way of saying this is that the average merchants stays with their acquirer for 4-5 years. But in reality, the average acquirer has to bring on 25% more merchants each year just to break even.

It’s quite reasonable to believe that these new POS/business management systems not only bring new revenues in a cutthroat pricing marketplace, but perhaps more importantly, keep those merchants longer. From a merchant retention standpoint, this may really be a “game changer”

Hairballs and Speed Bumps Could Slow Down the Serious Developers – Some notable systems are based on iOS or Android derivatives (e.g., Clover and Poynt are built on their own customized versions of Android). As such, developers may not have access to some functionality such as Google Maps, and iOS developers may have to deal with multiple users/profiles on iPads, but most seem to be able to work around that with other solutions.

But uptake is rarely about technology alone. Human nature and existing business models may slow the success of these merchant app stores. The major acquirers providing or offering these new platforms rely on their existing in-house and/or ISO sales organization to distribute these cool new tools. But that’s the same sales channel that’s been selling merchant services and countertop terminals for decades. Getting a new, more expensive cloud-based system onto a merchant’s counter may be a stretch. Getting that merchant to install a third party data analytics app, for example, could stretch the skills of that sales rep even further.

Some developers, of course, have taken the direct sales route. While that adds cost back into the business plan, that’s certainly worked for Square.

In short, I remain quite enthusiastic about these new POS systems in general, and love the idea and the progress, albeit a bit slow, of the merchant app stores.

I’d love to hear your thoughts!

This Payments Views post was written by Glenbrook’s Allen Weinberg.


Post image for Who Are You, Really? – FIDO’s Biometric Authentication

Since the first promise to pay was made, knowing who you’re dealing with has been a requirement. Authenticating the identity of a trading partner – a customer, an accountholder, a business or even a computer – is a burden that falls on the one extending trust because the giver takes on the transaction risk. In online and mobile transactions, the job of authentication has fallen on the password’s sagging shoulders in combination with other credentials such as a payment card or drivers license.

The smartphone has brought, to this world of stolen passwords, social security numbers, and other bits of personal information, the fingerprint and other biometric techniques. Authentication and convenience are no longer at odds. While Apple’s TouchID is at the heart of Apple Pay, the Android side is made up of a broad assembly of technology providers and users called the Fast Identity Online Alliance or FIDO Alliance. Take a listen to this discussion between FIDO board member Philip Andreae and Glenbrook’s George Peabody on how FIDO works and the growing role of biometrics in authentication.

Transcript below the break.

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Post image for It’s About the Blockchain

We’ve been working with bitcoin at Glenbrook for a few years now, teaching about it in our boot camps, and holding one-day workshops on math-based currencies and blockchain technology.

I have one conclusion. The focus of the evolution of digital money is shifting. Where that evolution will take us is still unknown.

To borrow a term from biology, the digital money ecosystem is beginning a period of adaptive radiation, a process that takes place when a founding entity morphs into multiple types, as each adapts to fill an unoccupied transaction niche or, usually later, to displace the incumbent. Bitcoin is, of course, the founder entity. Now, both entrepreneurs and big enterprise players are driving that evolution.

We Started with Currency

In the Digital Currencies, Bitcoin and the Blockchain workshop, we examine bitcoin against its multiple roles of currency, commodity, and payment rails. Today, the interest is squarely focused on blockchain as asset register. It’s been an instructive transition.

A couple of years ago, I wished for a quiet, even boring year for the Bitcoin ecosystem. I knew there’d always be the next bitcoin-soaked Silk Road story but calm in the exchange business and a measure of USD price stability for the currency were what I wanted to see.

Sometimes wishes are granted.

The bitcoin currency has stabilized. The winnowing of faulty exchange businesses has tossed out the scary incompetents and left well funded, better run firms who believe in the niceties of regulatory compliance, business insurance (things go wrong even in well run firms), and customer service. In percentage terms, the price volatility of bitcoin is not much different than that of the euro and the dollar over the past 18 months. So, the frothy “gotta get in” investment rush is over and a more mature market has emerged.

Bitcoin as Commodity

There is good evidence that bitcoin behaves today a lot more like a commodity. When many producers are present, commodity costs tend to be tightly coupled to the cost of production. Think wheat, corn, and iron ore. Yes, there are external market forces that push the cost around but when production costs exceed market price commodity producers either look to lower production costs further, horde their product, or get out altogether.

With bitcoin, that production cost is heavily influenced by the cost of power. Miners all over the world search high and low for the best energy deals, even into the mountains of Tibet.

Another feature of commodity prices is their relative stability when production and demand are in balance. We’re seeing that now. However, expect a price jump when the current cost/reward equation is changed next year and the bitcoin reward per block found is halved.

All About the Blockchain

2015’s story is the interest of fintech vendors, financial institutions, start-ups, and other enterprises in what blockchain ledgers have to offer. We’re seeing experimentation built on the bitcoin blockchain itself. We’re also seeing collaborative efforts among small groups of businesses (like Chain) evaluating the utility of private blockchains for the management of assets such as private company stock. The possibilities are almost endless — we discuss dozens in our upcoming workshop. With multiple proof of work and consensus-based ledger models to choose from, entrepreneurs and incumbents have non-trivial decisions to make.

No doubt, some of the announcements of pilot tests are just PR link bait because, while having your name associated with “bitcoin” was a toxic linkage, the word “blockchain” is cool.

Build It and Will They Come?

In the workshop, we also examine the transaction niches where blockchain tools could be of use including those not reliant on bitcoin itself.

We will see an evolution in incentives as well.

  • Bitcoin Miners Do It for the Bitcoin. Satoshi programmed, into the heart of bitcoin software, the reward of bitcoins to the miner that solves for the next valid block in the chain as the incentive for transaction processing and the creation of new bitcoins.
  • Want Some of My Currentcy? Other incentive models exist. Ripple has reserved a portion of the currency it relies upon for its own benefit.
  • For What’s Next. The operators of private blockchains may have no expectation of a reward at all. Stellar, a Ripple derivative, expects others to run its servers not in anticipation of a reward for work performed (a.k.a. mining) but simply as a platform service required by the value-added services built on top. Like basic internet services – DHCP, DNS, and HTTP servers come to mind – the value will emerge from what they enable.

Déjà Vu All Over Again

The coming period of experimentation reminds me of the internet’s first commercial flowering. Enterprises of all types examined how to use internet protocol technologies for their own purposes through intranets, extranets, and virtual private networks. Ever since, we’ve been building on that experience, producing no end of surprises.

For the early internet hippies, today’s “Net” doesn’t look like their original vision. The free exchange of ideas, not advertising, was supposed to be the lifeblood of the “Net.” The eventual internet dominance of firms like Facebook, Google, Amazon, and the other firms making up today’s online elite were not in that plan.

I suspect the bitcoin hippies will be just as disappointed in their baby’s next growth spurt as large financial institutions, internet players large and small, insurance companies, and perhaps even local and national governments adapt blockchain technology to their purposes. And just as with prior cycles, incumbents have no guarantee of success. While they may have reputation and regulation in their favor, neither is a certain barrier to competition.

Glenbrook’s next Virtual Currencies, Bitcoin, and the Blockchain Insight Workshop is coming up October 22 in New York City. It’s a great opportunity to work through these, and many more, issues. Eric McCune and I hope to see you there.

This post was written by Glenbrook’s George Peabody.



Post image for My Half Life in Payments

Earlier this year, I was invited to keynote a conference in Sydney – something I always enjoy doing.  The conference sponsor wanted me to talk about disruptions, about how successful innovations in payments come into the world, and to provide a look inside Silicon Valley’s innovation culture.  I took the opportunity to do all of that – but preparing for this keynote also provided me an opportunity to reflect back – as it dawned on me that 2015 was my 30th anniversary year in the payments industry.

Thirty years ago this year – in 1985 – I left my “first career” in big mainframe computer systems, after almost twenty years at IBM, to join a small “fintech” (no, we didn’t call it that then!) company based up on the hill in San Mateo, California.  That company was Visa International – with a few hundred employees at that time.

Visa certainly wasn’t a true startup as we know startups today – in terms of raising venture financing, identifying a minimum viable product, etc. – but it was very much a startup in other dimensions.  Visa was innovating with corporate structure, organizational roles, information systems, and key technologies to enable new forms of convenient consumer payments.

The year before I arrived, the original “founder” of Visa – Dee Hock – had moved on to “emeritus” status.  Many important innovations in consumer payments were introduced during Dee’s tenure. Indeed, much of the framework of today’s consumer card payments systems were based on important principles orchestrated by Dee and the early Visa team.

When I arrived in 1985, Visa was on the cusp of one of the first important technology transitions – migrating the card acceptance environment from paper sales drafts (think carbon paper and telephone authorizations!) to electronic draft capture terminals with their ability to quickly perform real-time authorizations and eliminate capture costs associated with paper sales drafts (think checks!).  This was the first of many such innovations in card-based payments.

I was very fortunate to work at Visa under the leadership of Roger Peirce.  Roger headed up Visa’s Delivery Systems organization, applying technology to yield new innovations in the payment card industry.  Roger’s ability to lift our sights – encouraging us to think ever bigger – was something very special. We led with our strong systems and technology capabilities into the world of debit cards and online ecommerce payments.

As we are approaching October 1st, 2015, we’re about to enter another phase as EMV in the US kicks off formally with the liability shift to merchants who fail to upgrade their POS systems. In the early 90’s at Visa, we were pursuing a number of chip card technology projects – Visa Super Smartcard being one of the better examples.  Eventually, we decided that it made no sense for the card networks to pursue proprietary chip card technologies and that the industry needed to work together to develop a common chip card standard – like the mag stripe had been – which would support a common chip card acceptance environment.

I’ve been very fortunate to have enjoyed a delightful thirty years in payments – what I think of as my “half life” in the payments industry.  I remember thinking when I left Visa in 1994 that we were done with the major innovations for card payments. We had credit and debit cards, electronic card authorization and draft capture, and more – “mission accomplished!”  Looking at the innovations in payments over the 20+ years since, how wrong I was!

From today’s vantage point in late 2015, we’re closer to 2030 now than to 2000.  Somehow 2000 seems very recent – and 2030 seems still far away – at least for folks of my generation.  But we often don’t correctly perceive the pace at which time is passing.  We can begin to see the shape of our payments future out there in 2030 – cards eventually going away, mobile and wearable companion devices with their apps replacing them, push-based electronic cash, etc.  Even payments getting increasingly “submerged” and moved into the background (think Uber) where we just don’t have to make a conscious choice about payment.

Sometimes I think about today and conclude, as I mistakenly did in 1994, that we shouldn’t expect that much more innovation in payments.  But I’m sure that’s wrong – we’ll all be delighted, I suspect, with what’s actually going to be our 2030 payments experience.  As for me, I’m looking forward to seeing – and enjoying – it!


The interdependence of eGovernment and government ePayments is yet another classic payment chicken and egg challenge. As we work with governments to build their electronic payment strategies we sometimes need to temper their expectations given this all-too-familiar challenge. There have to be enough digitally delivered government services to warrant digital payment infrastructure, but you also need scalable, robust digital payments to support digital delivery of government services. At Glenbrook we’ve started calling this the “eGovernment-ePayment Conundrum” – and only partly in jest.

As I explored in an earlier post, ePayments are often an afterthought when it comes to eGovernment initiatives. Yet ePayments are a critical enabler of eGovernment. There are only so many non-fee services that government agencies can offer to citizens that are also compelling enough to drive momentum for eGovernment participation. So, key questions include:

  1. How can you build government eServices momentum while simultaneously expanding robust digital payment infrastructure to collect the associated fees?
  2. What factors contribute to this dilemma?
  3. More importantly, how do we solve it?


Policy, Law & Regulatory Challenges

At the time they are enacted, laws and regulations hopefully reflect the best-available information and policy decisions. As technology changes, however, laws can become obsolete or, worse, become barriers. For instance, if cash is legal tender, does the government have the legal right to require electronic payments and not accept cash? Are required receipts and consumer disclosures permissible for delivery using the new channels and devices? Are laws and contracts clear on the liability and responsibilities of banks, and non-banks, handling ePayments?

Recognizing the importance of modernized regulations, the UK, under a provision titled “Action 12,” has required all national ministries and independent agencies to publically commit to revising pre-existing laws that impede the country’s “Digital by Default” initiative.

Technology Challenges in Developing Markets

In developing markets, government agencies may not have digitized records and sophisticated billing systems. ePayment ambitions may need to wait until ministries, departments, and agencies are sufficiently digital to gain critical mass. A productive possibility is to pilot ePayment approaches with a small number of enthusiastic government entities.

Similarly, citizens and businesses may remain stubbornly reliant on cash and manual processes. Efforts to digitize government must match the general pace of internet and communications infrastructure growth, computer knowledge, and access to digital financial services (more on financial inclusion and the key role government payment in an upcoming post).

Technology Challenges in Developed Markets

In developed markets, government agencies have another sort of technological challenge. They may be hampered by outdated legacy internal systems that are inflexible and difficult (read “expensive”) to connect to modern web interfaces. Some governments suffer from outdated Internet infrastructure. How many of us have visited a relatively old government or municipal website and paused before entering our payment information thinking “what year was this website developed? Is it even safe to enter my credit card number?”

Organizational Challenges

eGovernment organization, steering, and oversight structures typically align with program goals. For example, programs in countries that view eGovernment as a major technological initiative tend to report into information and communication technology (ICT) agencies, whereas programs with economic development missions generally report to the Executive or special purpose agencies.

The implementation of eGovernment services is an enormous undertaking, given the wide range of government entities with varying degrees of technological infrastructure, different (and possibly contradictory) policy ambitions, and to put it delicately, different levels of political influence. It is no wonder these initiatives last many years – even decades – and success is dependent on leadership’s organizational change skills as much as technological savvy.

Knowledge and Skill Challenges

To build and maintain citizen trust, payments require specialized knowledge, have specific data security needs, and must be processed quickly and reliably. No government official wants to be responsible for loss of taxpayer funds, or for compromising citizen payment credentials. For these reasons, the Central Bank or Department of Treasury is often charged with delivering ePayment regardless of where the overarching eGovernment program resides.

Examples of ePayment-eGovernment Production Systems

What can be done to overcome the ePayment-eGovernment Conundrum? Consider three examples where government entities share payment infrastructure:

  • The government of Singapore came up with an enterprise architecture that links business functions, relevant data standards, common systems and services, and technologies. The architecture works across agencies in order to achieve integrated, government-wide goals. As each agency contemplates new eGovernment capabilities, it can draw upon a database of reusable services, each described in a standardized way, each “owned” by the agency that developed it.
  • Fatourati in Morocco is an example of a multichannel bill-payment system, used by government entities as well as other billers. It is owned by eCommerce merchant aggregator Maroc Telecommerce, itself a subsidiary of card network operator CMI (Centre Monetique Interbancaire), founded by 9 Moroccan banks. The solution uses the proprietary “Transact” e-commerce product from Chicago-based Souverain Software and cash transactions are handled by third-party Wafacash network of 1000 cash in/cash out agents.
  • In the United States, government payments are often provided by a vendor specializing in bill payment. Individual government agencies work with the vendor of their choice. These solutions are increasingly multi-channel, supporting a range of payment methods—online at a bank website, at the government agency website, in person, or by phone.

Alternatively, some U.S. government entities elect to utilize the gov service offered by the Department of the Treasury. Over time, this service has created multiple processes that are used by hundreds of agencies to integrate with a centralized payment infrastructure. They include:

  1. Basic forms service – The entity electronifies simple online forms for individual agencies and facilitates payment collection
  2. Collections control panel – a virtual terminal that allows agency personnel to take payment over the phone, or in person
  3. E-Billing interface – an agency sends a data file to, which in turns sends an electronic bill to a consumer via email, with a link to pay
  4. Trusted Collections Service – facilitates large volume card and ACH transactions for higher volume agencies such as Customs and Border Protection. Card transactions can be real time or batch via ACH
  5. Open Collections – a legacy interface for bulk collections that is gradually being phased out in favor of #4
  6. Agency Adaptor – supports batch transactions for ACH. This is used for very high volume services such as student loan payments.

Glenbrook advises its clients to pursue a centralized payment infrastructure model, operated by the Treasury or Central Bank on behalf of various government entities. This approach most effectively supports a broader government transition toward modern eGovernment.

In the coming weeks, we will continue sharing lessons learned in building ePayment capacity. If you have a government success story to share, we want to hear it.

This post was written by Glenbrook’s Erin McCune.


Post image for What’s Next for EMV – Beyond the Liability Shift

With the EMV liability shift only days away, consumers and merchants are facing any number of changes in the point of sale experience. Unlike some other countries where the EMV change-over took place on a single day, the US EMV transition is going to be a long one, too. Not every issue is ironed out either. Join Glenbrook’s George Peabody and Philip Andreae, VP, Field Marketing North America at Oberthur Technologies in a discussion about EMV and debit, EMV transaction speed, and prospects for contactless, dual interface cards in the US.

Transcript below the player.



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Post image for Inside the Payments Boot Camp – Global Payments

Last year we expanded our Payments Boot Camp program to include a series of one-day workshops that give us an opportunity to dive a little deeper into a topic to share our experience and insights in a more interactive forum. And no topic has as much “real-world” demand as Global Payments. It’s a broad area to explore, and I wanted to share how we’ve structured the narrative.

The story starts at the beginning, as all good stories do, with a look at the global payment “building blocks”. We start with the country payment systems themselves. Global payments are about moving money between domestic payment systems, but the system of origin and destination are always a key component of the equation. We look at how different countries run their payment systems — and the commonalities and differences one finds on a country-to-country basis.

From there we move on to look at international wires and how money moves bank account to bank account across country borders. We lay out how correspondent banking works, introduce the SWIFT messaging system, and explore the ins-and-outs of foreign currency exchange. The irony here is that international wires don’t necessarily involve wires! We start at this level of abstraction because you can’t appreciate the value proposition of Western Union, PayPal, and the global card networks unless you understand international wires as a starting point.

In stark contrast to the complexity of international wires, we then shift the story to the power and flexibility of cross-border card processing. We’ll explore how the basic model works, the fundamentals of dynamic currency conversion, and multi-currency pricing. There are some real subtleties here, especially for global merchants attempting to eliminate currency conversion friction in cross-border purchases.

We finish our exploration of the “building blocks” with Global ACH, an under-appreciated way to link the major bank transfer systems around the world. Our partner Elizabeth McQuerry is the newly appointed CEO of the International Payment Framework Association (IPFA), which is the industry association chartered with improving cross-border payments exchange for ACH payments (and soon for exchanging instant payments between countries).

After lunch we explore the four major cross-border use cases:

  1. Cross-border Supplier Payments
  2. Global eCommerce
  3. Global Payouts
  4. International Remittances

In the realm of cross-border supplier payments we’ll be examining how businesses pay suppliers across border, their requirements, and the challenges they face. We’ll also look at cross-currency and same-currency supplier payments, as well as the attitudes enterprises have towards both bank and non-bank solution providers.

For global merchants working online, we’ll look at the various PSP models, their value propositions, and their general approach to domestic payment methods. Understanding the variation in these models is a key consideration when evaluating domicility issues.

As we start to wrap up the workshop, we’ll examine the global payout alternatives for enterprises that need to pay employees, contractors, developers, and advertising affiliates in multiple markets. Special attention will be devoted to the problems associated with reaching developing countries. This is especially important for companies that want to think and act globally.

Our exploration of the four major use cases finishes with a look at international remittances, which is the cross-border transmission of funds between family members. We’ll look at the major corridors for workers remittances, and the differences between formal and informal remittance systems. We’ll finish with a special look at the emerging role that mobile wallets play in international remittances.

In describing our narrative it’s as important to mention what we left out, as it is to talk about what we included. We went back and forth about whether to directly address the challenges faced by global marketplace providers such as Airbnb, Uber, etc. In the end, we decided to leave it within the discussion of global funds-in (the global eCommerce use case) and global funds-out (the global payouts use case.) We’ll see how that works out and might adjust it going forward.

All in all, it’s a full day of interaction and I’m proud of the agenda we’ve been able to develop. If you are interested in global payments, I urge you to consider attending our Global Payments Insights Workshop. The next session is October 15th, 2015 in Palo Alto, California as a standalone workshop or as a companion day to our next Payments Boot Camp on October 13th and 14th.

For more information and to register, go to:

Questions? Contact

This post was written by Glenbrook’s Russ Jones.


Post image for India – A Good Approach for Financial Inclusion

You may have heard about the Reserve Bank of India’s decision to create a new category of “payments banks”. Recently, the Reserve Bank of India approved 11 applicant institutions (out of 41 who had applied) to start the process of becoming licensed. The group includes telcos, non-bank financial institutions, retailers, entrepreneurs and the Department of Posts.

Of course, many countries are moving to change regulatory structures and permissions in the interest of promoting financial inclusion. And that is entirely a good thing. But I am particularly interested in India’s approach, for two reasons:

  • First, in the “if it quacks like a duck” department, I like that they are calling these institutions “banks”. These banks can’t lend – but they can accept deposits and handle payments. After all, that’s what banking is really all about – anyone can lend money, but taking deposits has historically been limited to chartered financial institutions. In the United States (and in many other countries) this is addressed by having prepaid card “sponsors” accept deposits and then escrow them with “real” banks. This is confusing, and seems inferior to India’s more straightforward approach. Call them banks, regulate them appropriately, and then let people move from a “payments only” bank to a full service bank as their financial services needs increase.
  • Secondly, I have an ongoing fascination with India’s Aadhaar program and its connection to payments. Aadhaar is the ​federal government’s ​biometric identification system, which currently has 820 million residents registered – a phenomenal base – somewhere around 2/3 of the population. By all reports, the basic technologies, both the biometrics and the database, are well thought of and functioning well. Various industries – health, elections, etc. and not just finance – are attaching themselves to the database to take advantage of the proof of identity it provides.

For financial services, people are talking about the “JAM Trinity” – this refers to the bank account number (known as Jan Dhan Yojana), the Aadhaar number, and the mobile number. The idea is that linking these three together can provide a solid ​authentication of a consumer and a payments account​.

The National Payments Corporation of India (NPCI) will play a key role here, by enabling the faster payments infrastructure to allow payments to transfer among all banks. (The complexity of India’s banking structure is similar to ours in the U.S. – maybe we can learn from them!) Crucially, this can help to solve the horrendous problem of graft and diverted funds; a staggering amount of government and other aid programs never reach their intended recipients. But it also holds promise for having electronic payment accounts work with minimal fraud, something that will become increasingly important as the use of electronic payments increases.

My progressive friends in the U.S. are appalled by this central, government-controlled identity system. They see only threats to individual control over identity. I recognize this as a challenge, and I doubt that this type of system will find a home any time soon in the developed world.

But in the developing world, the overwhelming need to deliver on the objectives of financial inclusion – by enabling people to have and control a financial account, and to receive payments meant for them into that account – is more important, I think.

I look forward to hearing more about India’s progress in the years to come.

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


Post image for What’s Next for US Payments

We’ve spent so much time the past several years obsessing about how mobile proximity payments would be deployed in the U.S. and the rest of the developed world.

Now we know.

This week, Apple Pay celebrates the first anniversary of its launch, and a new generation of payment-enabled iPhones will be announced. Later this month, Samsung and the rest of the Android ecosystem will fully join the NFC party. The names of MNO joint ventures around the world, which were keynote-worthy during last year’s fall conference season, will be hard to recall by the time the leaves begin to change color next month.

So, with the dilemma of mobile proximity payments now looking like “settled science,” what is a poor payments consultant left to ponder? Well, mobility is the great sea change of our generation, and there are other payment infrastructure changes afoot that demonstrate some of the downstream impacts in our new mobile society.

Here are a few of the budding trends I’ll be watching over the coming months and years.

From Pull to Push

The vast majority of non-cash payments made by consumers have been debits or “pull” payments. The payer shares his account number with a receiver and grants the receiver permission to withdraw or “pull” funds from his account. This is true for checks, cards, and many ACH transactions but not all (there are a good number of push payments in the form of ACH credits and wires, typically initiated by enterprises acting as payers).

In the retail payments arena, this largely reflected the prevalent network arrangements where a business receiving payment was better positioned to be online to its bank and thus more able to initiate the transaction into an online payment system than the consumer / payer herself. That model began to be altered with online bill payment, perhaps the first use case where consumers initiated large numbers of push payments. Now, in a world where mobile data networks mean that almost everyone is online almost all the time, it’s more feasible for transactions to be initiated by payers. We are now seeing more payment systems accommodate this shift in direction.

The push model may be most apparent in peer-to-peer (P2P) payment services like Venmo, Popmoney and Square Cash to name just a few. While P2P may not be the largest or more lucrative area of payments, we have learned that, once established, payment systems tend to break out of their originally intended domains. Push payments take advantage of existing systems that allow a payer’s financial institution to rapidly validate his identity and check his available balance prior to pushing a payment in near real-time. There are many potential use cases for that capability.

The Federal Reserve has quite publicly championed the development of real-time payment systems and The Clearing House (a payment processor owned by the largest banks in the U.S.) is already at work on building such a system. It won’t happen immediately, but look for new push payment systems to sprout and compete for volume in use cases that are impeded by “pull” payment failures due to insufficient funds, payer authentication problems, or other issues.

Private Label Renaissance

A few years ago, you couldn’t give away a private label card portfolio. Not surprisingly, these cards exhibited poor credit performance during the credit crisis, and were viewed as a growth-challenged category given that our leather wallets were already bulging with network branded cards. But lost in the credit washout was the underlying role private label cards play for retailers: they are a kind of customer relationship management tool. Store cards and their co-branded cousins give merchants insights into the behavior of their most loyal customers and open a communications channel to them.

Now, thanks in large part to digitization and creative incentives, private label may be in the early stages of a comeback. Lost in the media tsunami over Target’s security breach was a very positive story about adoption of its private REDcards (particular the ACH-powered “debit” version), which offered 5% discounts in an effort persuade consumers to concentrate more of their everyday purchases with the retailer. These private label cards came to represent about 20% of tender at Target in 2013. The breach has reportedly constrained subsequent growth, but Target is taking the unusual step of upgrading these private label cards to EMV chip technology, which could help assuage the consumers’ lingering security concerns about the company.

Earlier this year, quietly added a private label card program alongside its popular co-branded Visa card. Amazon Prime members who qualify for the Amazon Store Card automatically receive a 5% discount on their purchases at While results for the card have not been disclosed, there was a notable increase in marketing of the card around Amazon’s Prime Day on July 15. No plastic card is sent to holders of the Amazon Store Card. It is installed within one’s account and accessed by the Amazon user’s login name and password. Digital-only products like this, along with the forthcoming ability to install private label cards in mobile wallets like Apple Passbook, should create space for these limited-used products that did not exist in those bulging leather wallets.

Do It in Installments

A somewhat overlooked feature of the Amazon Store Card is the consumer’s option to pay for larger purchases (those over $149) in installments over several months without interest charges. These sorts of custom credit arrangements for specific purchases could become another structural change in payments. There’s plenty of evidence. PayPal continues to market its PayPal Credit product with similar installment features and we are now watching the launch of Affirm (from PayPal co-founder Max Levchin) with similar features. Just last month we saw the U.S. introduction of Klarna, a Swedish company that successfully offers delayed payment and installment purchasing in Europe.

Installment payments sound to many people like an antiquated technique. While it is not a new idea, it is a fairly common feature in many markets—it’s a fairly standard option tied to credit card purchases in Brazil—and is increasingly common in the U.S. If you don’t believe U.S. consumers buy in installments, spend 15 minutes tonight watching QVC, Home Shopping Network or EVINE. Notice that prices are nearly always presented with a multi-payment option. Also, note that the personal loans originated on Lending Club and other fast-growing peer-to-peer lending sites are installment products (and ironically, are most frequently used to pay off revolving credit card debt).

* * *

Of course, there is a lot more underway in the payments space. Please share a comment and let us know what you’ll be watching this fall. I’ll be back on PaymentsViews in the months ahead to assess how these trends are—or aren’t—playing out.

This post was written by Glenbrook’s Bryan Derman.





Post image for The Global Struggle of Government Payments

Over the last year, I’ve been focused on government payments – a compelling mashup of traditional bill pay and multi-channel retail requirements against an intriguing backdrop of policy, economic, and political interactions. Although many countries have made solid progress implementing eGovernment initiatives (UN E-Government Survey 2014), the level and sophistication of ePayments implementation lags the private sector. There’s been progress in digitizing disbursements, the direct deposit of social benefits or distribution via prepaid cards, but government collections are surprisingly rudimentary.

Those who know me know I often claim that B2B payments are the biggest, untapped payments opportunity. I was wrong. This one is much, much larger.

eGovernment is not a new phenomenon. The earliest government digitization efforts started within individual agencies with efficiency, reduction of manual processing, and early information age Internet enthusiasm as the drivers. Over time eGovernment solutions gradually evolved from government-centered efforts, still driven by individual agencies, to integrated citizen and business-centered systems. Even today, however, most government digitization efforts address payments as an after thought.

The Holy Grail for government ePayments is integration across multiple agencies because that makes payments infrastructure more efficient for the government and more convenient for citizen and business users. In recent years, countries have started to rationalize payments, synchronizing efforts and enabling economies of scale. These efforts range from developed markets modernizing dated online payment systems (the United Kingdom) to developing markets starting from scratch with ambitious, holistic strategies (Ethiopia).


Yet, integration is not the norm. Most early adopters took a siloed approach to eGovernment and payments. Individual agencies made independent decisions. Thus, there is little consistency within countries (and even within some government agencies) as to payment methods, vendors, and whether or not to pass the payment cost on to consumer and business payors in the form of ‘convenience fees’.

In countries where Internet access is widespread and most consumers are banked, eGovernment payments are commonly made by bank transfer and card payments. Government entities rely on the dominant method of eCommerce payment in their jurisdiction, often relying on commercially available payment gateways. Many developed market municipal, state/province, and national government agencies are still using payment checkout flows and user-interfaces that date back to the early 2000s. These appear dated and unsophisticated from today’s perspective, often lack modern data security best practices, and are woefully under-resourced. The United States government is attempting to address its antiquated technology with a Silicon Valley SWAT team, although thus far payments have not been the focus (they know who to call when the time comes).

Other markets closely follow the local norms for bill payment. For citizens, that often means bringing a bill or invoice to the bank or post office to effect payment, either via a credit bank transfer or cash. It is surprising how many countries depend on cash collections for government payment, often requiring citizens to visit a government office to make payment, or perhaps use a network of bank agents.

For example, despite the phenomenal success of M-Pesa over 90% of collections in Kenya are still cash. In Jordan, the Central Bank has partnered with MadfooatCom and made tremendous progress by connecting most of the Jordanian banks and billers (both government and private). Still, 50% of transactions are cash so now the initiative is focused on connecting post offices and other cash agents.

As these governments know, cash creates opportunities for graft, siphoning precious funds that could be invested in infrastructure, services, and development. Moreover, digitized transactions shift activity from the informal to the formal economy, enabling higher tax collection rates. One Glenbrook client is anticipating increased government revenue of 20% as a result of eliminating cash collections at the ministries, departments and agencies of its national government.

I’m writing from Istanbul where I am attending the World Bank’s Financial Infrastructure Week 2015 and will follow up with a post summarizing the highlights.

Over the coming weeks, Glenbrook will publish a series of Payments Views posts on government payments, including vendor profiles, an exploration of the eGovernment vs. ePayment conundrum, the role of eReceipts, and the significant implications for financial inclusion. In the meantime, please reach out if you’d like to discuss government payments.

This post was written by Glenbrook’s Erin McCune.


Post image for EMV – Necessary, Insufficient, and our Lasting PR Risk

We are just a month away from the October EMV liability shift and the transition is, to no one’s surprise, mostly incomplete. EMV credit card issuance is expected to be at just 50% by the end of this year. Point of sale hardware upgrades at major retailers may be in place but the long tail of SMB merchants will lag for years.

We expect many of the largest retailers to turn on their EMV hardware by October. But likely not all. EMV is not trivial. And retailer wisdom, gained through long experience, advises against making POS changes when November nears. You don’t want to break your ability to get paid during the year’s busiest shopping season. (I’m going to be doing a lot of test shopping come October.)

The near-perfect EMV perimeter is six years (wild-eyed optimist) to a decade away (grumpy pessimist), leaving us with exposure at non-EMV terminals and, of course, at e-commerce and mobile channels.


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Post image for PoF 26 – Maybe It’s 3D Secure, After All

The 3D Secure protocols, one for each network, that connect ecommerce merchants to the cardholder’s issuer, has had a rough go. But after ten years, smarter application of the tool and, in particular, risk-based usage makes it more attractive to both issuers and merchants.

In this conversation with Mike Roche, VP of Consumer Authentication at Cardinal Commerce, we take a deep dive into these protocols, their implementation and continuing evolution, expectations of increased card not present fraud due to EMV’s US arrival, and the positive effect on merchant sales and issuer spend of using this approach.

Transcript below.

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Post image for PoF 25 – Directory Service for Virtual Currencies

The Internet’s designers quickly realized that no one’s very good at remembering IP address numbers. Unless you type the same number over and over again (and I did when I ran an ISP) a human readable version is a lot easier. That’s what the domain name system or DNS is all about, connecting human readable names to specific IP addresses.

You can imagine then that Bitcoin, with its long alphanumeric addresses, suffers from similar challenges. That insight is what this podcast is about and the reason Justin Newton and Dawn Newton formed Netki. Try it out by sending bitcoin to me at wallet.geopeabody.bit (kidding) or, better, take a listen as the Netki leaders discuss their directory service for virtual currency wallet addresses.

Transcript is below the fold.

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