For the best part of three decades, CARTES has been a staple of the payments industry calendar, and over the years has extended its reach beyond Europe to Asia and North America. Although the theme this year was ‘Users on the move’, security was the hot topic among many of the speakers and delegates who converged on Paris this week. The digital transformation is posing as many questions for the payments and mobility industry as it is providing answers for consumers, and these issues seemed to weigh heavily on the minds of the assembled payments pros.
It is perhaps testimony to the exponential rate of technological change in the digital era, and the difficult challenges that this presents to those whose business it is trying to both shape and keep up with it, that the same concerns that dominated CARTES 2013 were still being ventilated 12 months later (see last year’s Mondato Insight covering CARTES 2013 for a point of comparison). Things in the payments industry have moved on considerably over the past year, however, and it appears that many are waiting for the dust to settle. On one issue, however, a degree of consensus appears to have emerged: one of the staple questions at CARTES for many years has been the question, ‘Will next year be the year of NFC?’ For 2015, finally, the answer would seem to be yes, a point emphasized by Oberthur Technologies’ Eric Dufrost (though the provider of the answer was, as ever, visible only through the Apple-shaped hole that marked its absence).
It wasn’t just Apple that was notable by its absence from this year’s event: Visa, MasterCard and Amex had no visible presence at this year’s proceedings, and of the big SIM manufacturers, only Oberthur had a stand, while Gemalto only had a meeting room, (nonetheless that still set them apart from their main competitors). Gone were the swish exhibitor stands of the main silicon manufacturers, equipped with cappuccino lounges and wine bars. The emergence of a tentative consensus on NFC also meant that gone too were the provocative, and sometimes tense, debates between the CEOs of industry titans at the opening key note session. Something major has happened, but nobody quite knows what it all means.
This is an industry in flux, and at the moment making connections is perhaps a wiser strategy than making a pitch to be the ‘next big thing’. There was a sense among delegates, however, that the play in payments made by Apple was significant in that it appears to have set a standard that other players in the ecosystem can now work with and towards. Those who want to compete with Apple also now know what it is they have to best. The vexing question that remained unanswered, then, was who is going to set the standard for security and authentication.
Several participants suggested that standardization via regulation, particularly in the European context, would be a desirable solution. Cyril Dougier, Head of Business Development for MyBank, however, pointed out that the mobile channel allows for real-time bank credit transfer, and may be an effective means of payment, especially for cross-border transactions. The Single Euro Payments Area (SEPA) has facilitated transactions within the Eurozone, and offerings, such as MyBank’s, hold the potential to leverage this pan-European standard using a secure system that the consumer already trusts: their online banking portal. The digital transformation of banking opens the prospect of payment cards being removed completely from online commerce.
CARTES last year added the strapline ‘Secure Connexions’. While the base numbers for cards look good, (Eurosmart Chairman Oliver Rastad told the conference that this year for the first time there were 2 billion Chip-and-PIN cards shipped, and over 5 billion SIM cards issued), the future appears somewhat less certain than the numbers may suggest. In an environment where even the head of Visa Europe admits that the days of the little plastic card are numbered, and where even the future of the SIM card appears to be in question, it may not be long before ‘secure connections’ are the main driver of interest, and cards are a thing of the past.
©Mondato 2014. Mondato is a boutique management consultancy specializing in strategic, commercial and operational support for the Mobile Financial Services (MFS) industry. With an unparalleled team of dedicated MFS professionals and a global network of industry contacts, Mondato has the depth of experience to provide high-impact, hands-on support for clients across the MFS ecosystem, including service providers, banks, telcos, technology firms, merchants and investors. Our weekly newsletters are the go-to source of news and analysis in the MFS industry.
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