My thoughts on the MPE conference just finished in Berlin!

Billed as the ‘first and the last payment conference you will need in 2014” certainly my expectations were high and on many levels the Merchant Payments Ecosystem conference did deliver… however there were a few omissions that could have improved it further.

The topics and seminars revolved around merchant payments, multichannel retailing, customer experience, mobile innovation, business models, loyalty, big data and technology.  Some strong themes emerged and some of my highlights and important nuggets included:

-Listening to the various talks, it’s clear to see that the acquiring market is getting very fragmented across Europe.  Also there was little talk of enhancing core profitability in acquiring ... perhaps this is not deemed sexy enough?

-With too many offerings to choose from, mobile POS is still very confusing, particularly for merchants.  It’s simply not clear yet what will work and where.

-I really think that the regulators of interchange are living in a different universe!  Completely out of touch with the reality out there.

-In general, Bitcoin got a poor reception - there’s very few believers out there. As I said before, time will tell on this one.

-Security solutions getting ever more complex as criminals get more sophisticated.

-Emerging schemes are getting traction but will be slow to deliver major changes internationally … if ever

-World Pay are very clear on their global strategy and plans for further acquisition. Ron Kalifa gave a very interesting talk.

-Private Equity and Venture Capital firms very interested but how could they make sense of this landscape -it's hard enough for industry players

It was interesting that issuers were not well represented at the acquiring conference – I wonder do they not talk to each other?! There could have been more input across the issuer / acquirer divide.

Overall it was a great networking opportunity and gave me a chance to take some time out and hear all about the many diverse aspects of the payments market.  However there are so many different types of companies working here - I wonder have we made the payments value chain too complex?

I was surprised that the Twitter conversations were not more active. Good to get to meet some of the tweeters over coffee too as well as online.

On a personal level, I was disappointed that there was no mention of Dynamic Currency Conversion, perhaps it’s considered too niche?  (This is a topic of interest to my business so please do get in touch to discuss further). Yet the specialist DCC operators were working the audience during breaks etc.

I also felt there was a lack of merchants on the podium –it would be good to hear more about what they actually want rather than the myriad of solutions which we think they might want.  It would have been very interesting to hear their views on payment costs, on all the activity in mobile POS and on the drive for contactless. 

Overall it was well worth attending in terms of learning about new developments, getting a greater understanding of the market challenges and networking with fellow industry colleagues.  

For me there are three Ps I’ll be watching with interest in the future: the product –Zapp; the person- Rob Fernandez (great presentation) and the market place -Turkey!

SEPA Extension: Use this additional time wisely to get your business ready!

Following delays in some EU member states, the European Commission has extended the SEPA deadline by six months to the 1st August.  This means that Irish businesses now have more time to get organized and ready for this payments changeover. It’s a valuable time for those who still have work to do to make their payment systems compliant.

Although SEPA has formally come into existence from the 1st February, payments made in other formats will be accepted for another six months but it’s worth using this time wisely.

Firstly, it’s worth auditing your current systems to understand the overall impact for your business.  If resources allow, it’s a good idea to nominate somebody within your company who is responsible for SEPA so that there is a constant internal focus on the strategic options and implications.

Under SEPA, banks are now required to apply stricter data quality and data completeness checks in processing existing payment files so keeping on top of compliance is essential.

There are a few key elements to look at to get this process started

• Companies will now need to familiarize themselves with the BIC and IBAN’s of their own business and that of their suppliers. Equally, when making electronic payments from the business you will need to use your suppliers BIC and IBAN.
• This has ramifications in a few different ways, for example, for electronic payments coming in to your business, suppliers will need to know the BIC & IBAN of business accounts. (Basically SEPA will affect how people pay you or how you get paid).
• Likewise the branch number and account number data on internal systems and spreadsheets has to be upgraded to BIC and IBAN.  This will therefore affect processes like your invoice systems, payroll, and direct debit arrangements.  Failure to comply with this may result in items being returned unpaid.
• However the BIC/IBAN conversion may not be straightforward as some branch numbers are actually ‘redirected’ branch numbers and so they don’t have a direct conversion. For your business, this means a thorough validation of the existing database.

Furthermore, the whole area of direct debits requires particular attention.  SEPA Direct Debit brings with it a number of important business changes: new file submission time frames, new customer file formats and new automated process for rejected/returned transactions.  SEPA Direct Debit now allows you to collect payments in euro from domestic and cross-border debtors throughout SEPA.

So this means the following considerations for your business:

• Customers now have additional rights and revised timeframes to return DD’s – there is a no quibble return available to them.
• In future, the company will also need to hold mandates so it’s key to properly verify these when taken.
• The notion of foreign bank accounts may be rendered unnecessary in the future as with SEPA payments can now be made from and to anywhere in the Eurozone.  (SEPA will cover the 28 EU member states plus Iceland, Liechtenstein, Monaco, Norway and Switzerland when fully operational.)

This next deadline will be the final one – governments and regulators are closing in on this and pressing ahead so get yourself up to speed and ensure you are ready when 1^st August rolls around.

We’re currently working with many brands to prepare them for this changeover.  For more information on SEPA, how it affects your business and how best to prepare and align your payment processes, get in touch with us here at Colthurst Card & Payment Solutions - contact Kevin@colthurst.ie or johngavin@colthurst.ie

Bitcoin: Bubble or Brainwave? I just can't decide.

Bitcoin is a new kind of currency denoted by virtual or digital tokens rather than physical coins/notes.   Its value is determined by how much people are willing to exchange for it.  Supported by peer-to-peer technology and cryptography, to process Bitcoin transactions, a procedure called "mining" must take place, which involves a computer solving an algorithm. 

There are essentially four parties involved in the Bitcoin economy:

-Consumers who are paying with Bitcoin

-‘Miners’ who process and validate Bitcoin transactions via computers

-Merchants who accept Bitcoin

-Entrepreneurs/developers building new products and services with Bitcoin.

I found a really good (short) video explanation here: https://www.youtube.com/watch?v=Um63OQz3bjo

Every day more and more people are agreeing to accept Bitcoin in transactions.  In fact, there are currently about 11 million Bitcoins in existence.

There are very divided views out there with the promoters saying that Bitcoin will revolutionise the world of payments in much the same way as the internet has fundamentally changed how consumers, and people, operate.  Marc Andreessen, who’s venture capital firm, Andreessen Horowitz, has invested just under $50 million in Bitcoin-related start-ups is massively excited about the potential of this digital currency.  In a recent NY Times piece he wrote: “Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer.”

Meanwhile in Cyprus, in the University of Nicosia (UNic), you can now pay for university tuition in Bitcoins! According to the university, those who wish to pay tuition fees in Bitcoins will be able to use an online merchant processing service or pay directly to the finance office.

Social Gaming company Zynga has also announced it’s going to test Bitcoin payments for its in-game purchases with popular games like Farmville 2, CastleVille and CityVille.

Merchants and manufacturers are also embracing this new currency.  According to Reuters, the Bitcoin ATM manufacturer Lamassu is reportedly seeing an increase in orders for its service -it has sold 120 of its ATMs worldwide since it opened for business, shipping machines to Canada, Russia, and other countries.




Similarly a Bitcoin storage service has launched in London.  Insured against the loss and theft of the digital currency, Elliptic Vault uses "deep cold storage", where private encrypted keys to Bitcoins are stored on offline servers in a secure location. Unlike money stored in a bank, Bitcoins are not insured and there is no way of retrieving them once they are gone.

Much like the Internet, there is no one government, regulator or private entity behind Bitcoin and so governments across the world are now scrambling around deciding how to legislate for this new currency.

In some cases, there has been an outright ban, namely in China, where the largest online marketplace, Alibaba Group's Taobao, said it would ban virtual currencies.  In December, the country's central bank ordered financial institutions to halt Bitcoin-related services and products.

Singapore, on the other hand, has become one of the first countries to issue tax guidance for Bitcoin businesses.  It is also monitoring transactions to detect any illicit financing.

In the US, however, it has been received more positively with Overstock.com becoming one of the first major online retailers to accept Bitcoin.

There is a huge amount of hype about this new innovation, not all of it positive.  In particular questions focusing on transparency and control.  Who controls the flow of this new currency? Who is making money from the hype?   Is it a pyramid scheme?

Let’s face it; Bitcoin has absolutely no track record.  You certainly can’t buy your dinner with it!  The reason cash and cards work is because they work so well and are easy cash has been around for thousands of years and will last because it does a simple job simply.  It is trusted and easily transferable.  

As I write this I am coming to conclusion that I should not be taken in by the hype and take a jaundiced view of this now.  I think it will be a crash but I may well be so wrong! 

It’s hard to see what new value it is bringing or big problems it is solving ... or am I a dinosaur here?  Time will tell.

Sources: www.pymnts.com, www.bbc.co.uk, http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/