Disruption across the financial services industry has led to an increased focus on creating a secure and seamless experience for customers. The Experian 2018 Global Fraud and Identity Report identifies online shopping and personal banking as the top two activities performed by consumers on mobile devices in their online interactions with businesses.
That’s why traditional methods for customer authentication such as passwords, PINs and tokens are obsolete; they are easy to forge and do not protect information from being stolen or compromised. Meanwhile, biometric-based security systems make forging difficult and are more accurate, cost-effective and scalable than traditional methods of authentication. New regulations made by the European Banking Authority recommended strong customer authentication (SCA) that uses strong multi-factor authentication (MFA) for certain payments, which will come into effect in September 2019.
Multiple options to strengthen authentication
Daon (Ireland) and its IdentityX platform enables an omni-channel approach to biometric authentication. Users can opt for a variety of combinations including traditional security measures such as passwords along with biometric parameters such as voice or facial recognition or fingerprint ID.
Over the years, a range of biometric authentication options have been launched, with banks typically using more than one method to deliver comprehensive security. These include:
- Smartphone companies introduced fingerprint authentication to secure devices and the financial services industry has used this to its advantage, enabling consumers to log into their banking app or confirm payments through Apple Pay or Google Pay using an individual fingerprint instead of a PIN code. TouchTech Payments’ (Ireland) first product was a MasterCard and Visa certified fingerprint-based payment system for 3D Secure authentication.
- Voice recognition allows users to create voiceprints by repeating a short phrase. Nuance Communication (United States), a voice biometrics technology provider, cross-checks against more than 100 unique identifiers that include behavioural and physical aspects. PayPal plans to let Siri users conduct peer-to-peer (P2P) transactions with a voice command. The increase of voice-based virtual assistants can provide impetus to this trend.
- Facial recognition uses the in-built camera on a device to capture the image of a customer’s face for verification purposes. ID-Pal (Ireland) uses facial recognition to enable an end-to-end customer onboarding solution for Know Your Customer (KYC) and anti-money laundering (AML) requirements.
- Behavioural biometrics captures user characteristics such as hand-eye coordination, keystrokes, scrolling, and other device-based inputs such as geo-location to create a unique user profile. Gemalto (Netherlands) utilizes data that includes user and device identity, behavioral biometrics and user banking profile to power Gemalto Assurance Hub, an authentication solution.
Other innovative authentication methods include iris recognition and vein and heartbeat biometrics. Industry interest is evident with growing adoption and investment. Each of these solutions relies on the uniqueness of the associated features for individuals.
Towards a seamless and secure banking future
According to Frost & Sullivan research titled Biometrics in Financial Services, Forecast to 2022, security protocols impact customer trust. A focus on retaining goodwill and brand image are significant drivers to the adoption of biometrics solutions. Banks are introducing a variety of methods for consumer authentication to avoid hefty penalties in case a breach occurs. Additionally, with customer engagement becoming a cornerstone of good business practice, 75% of businesses surveyed in the Experian’s global fraud and identity report said they were open to adoption of advanced authentication and security measures if such solutions would not impact the digital experience of customers.
The move away from cash-based payments, coupled with biometrics such as thumbprints, and use of advanced technologies such as machine learning (ML) and artificial intelligence (AI), can yield a more secure and easy-to-use payment service. Research by the Oxford University and Mastercard suggests that 92% of banking professionals and 93% of consumers favour adoption of biometric solutions. Most biometric solutions are designed to meet regulatory and compliance requirements. This makes it easier for companies to adopt, while application programming interfaces (APIs) make implementation relatively straightforward.
Although biometrics-based authentication solutions are finding favour across financial services industry stakeholders, experts caution against complete reliance, citing a hybrid approach that uses MFA as more secure. Instances of fraud with just one level of authentication prove that financial services solutions continue to be targeted by scammers, meaning that security measures must evolve.
For now, the use of biometrics will enhance authentication and customer experience, while solutions will improve as they are fed with additional data on individuals and their transactions. Combined with other game-changing trends – such as smartphones enabled with fingerprint authentication and facial recognition – the industry can move towards more secure and frictionless payments.
The deeper you dive, the murkier the water gets. For even seasoned divers, it can be hard to see what is going on, much less understand why.
There are similarities between the ocean world and today’s machine world, in which autonomous, artificially-intelligent software programmes operate deep below the surface and process billions of instructions per second. These machines make many decisions that float to the surface with a ripple effect on customer experience, transaction performance, and other critical business operations.
When something goes wrong, it’s difficult to discern what is happening in the depths of the network where data streaks by at speeds of light over fibre optic cable. When things are going right, it’s difficult to understand how to further optimize and differentiate competitively. You need an expert to point, guide, and explain.
For financial markets companies, Corvil is that definitive knowledge source. The Dublin-headquartered analytics firm is now the global industry leader for capturing valuable intelligence from the endless flow of network data, allowing companies to improve the transparency, performance and business outcomes of trading infrastructure, algorithmic trading strategies, and counterparty interactions.
“The majority of all trading activity today is not just electronic, but autonomously executed by algorithms,” says David Murray, Corvil’s Chief Marketing and Business Development Officer. “Completing those transactions successfully relies on the underlying technology applications and infrastructure, which are intrinsically intertwined with the business. To assure and optimize trading performance, it is necessary to understand how those systems are performing in support of the business.
“As systems become more complex, problems tend to be more severe and impact business functions and customers more quickly,” he says. “This can pose significant issues and expose organizations to major regulatory, investment, franchise, and operational risks.”
Corvil gives customers a clear picture of what is happening in the depths of their electronic financial markets businesses
To help customers gain the transparency and intelligence needed to assure and optimize electronic trading businesses, Corvil offers a technology that connects to a company network through which data flows. Corvil’s streaming analytics platform captures, precision timestamps (to nanoseconds), decodes, and learns from network data on the fly, transforming it into insight that gives the customer a clear picture of what is happening, and what to do about it.
“Broadly, there are three views our customers are looking to examine,” says Murray. “The customer experience, the business transaction performance, and the underlying technology performance. We can correlate those three dimensions and give our customers business-aligned insight that they can then use to improve their trading execution for their clients or stakeholders.”
The financial services sector is Corvil’s sweet spot. “Today, the world’s largest banks, trading firms and financial exchanges are our customers. This is an extremely dynamic community navigating a complex, competitive and evolving landscape with new technologies, regulations, volatility and risks,” says Murray.
“We enable these customers to watch over their transactions and understand where there is degradation and where there is opportunity in terms of both performance and outcome,” he says. “Electronic trading or other financial transactions are initiated by algorithms, where the software decides whether to buy or sell, at what point to make the transaction, and with whom to make that transaction.
“This all happens in small fractions of a second; with potentially millions of decisions every second,” he continues. “So, when something is not performing the way it should or the way it can, it has a big impact. Think of an autonomous car and the number of decisions it has to make every fraction of a second to evaluate how it is functioning, its surroundings, and how they may affect its operation.”
With a foundational background in mathematics, science and engineering, Corvil places a strong emphasis on precision. “The analysis has to be incredibly precise,” agrees Murray. “Our customers may have to go before a regulator and prove, not only that something happened, but how and in what sequence it happened, so if we say something is so, then it absolutely must be so.
“I would say our USP is the depth, quality, and immediacy of the intelligence we provide, which enables firms to optimize their trading systems, transaction execution, and customer interactions compared to the marketplace,” he continues. “This is ‘systems alpha’, whereby trading systems are delivering alpha back to the business because they are delivering a better quality of execution, better trading performance and better return on investment.”
Which goes a long way towards explaining Corvil’s rapid growth and remarkable hit rate. Today, the firm monitors 90 percent of the world’s trades on public exchanges – $1 trillion worth of transactions each day – and is trusted by a who’s-who of financial names including Morgan Stanley, NASDAQ, NYSE, the Japan Exchange Group, BT, and the German Commerzbank.
The Irish firm, which has offices in New York, London, Tokyo, Hong Kong and elsewhere, has reached truly global status, with more than half of its business now generated in the Americas, and the remainder across the rest of the world. It has also collected a host of accolades, and last year was awarded #1 Network Monitoring Product by Info-Tech Research Group’s Software Reviews; 2019 RegTech 100 by FinTech Global; Best Trading Infrastructure Monitoring Platform by A-Team Group and Best Predictive Analytics Platform and Innovation Award for Analytics by FinTech Breakthrough.
“The companies with which we work tend to be under pressure to innovate and advance while complying with a strict and evolving regulatory framework,” says David Murray. “They are also under pressure from smaller ‘upstart’ competitors – who are also our customers – so performance improvement is very important.
“In terms of how the customer partnership works, we’re very clear that it’s their data – it belongs to them and it’s sensitive, so while we provide and install a product, they remain in control over that information,” he goes on. “While we integrate quickly into our customers’ environments, we also place a heavy emphasis on customer stewardship and partnership, with regular interaction to ensure they are getting the best possible value out of their investment in Corvil.”
This ability to work as the closest and most intelligent of partners allows Corvil to consistently illuminate insights that deliver a clear performance advantage to growing numbers of customers around the world.
The financial services sector, led until recently by traditional banks, is undergoing a period of unprecedented change and disruption. Technology, as well as consumer demand for innovative services, are driving fintech startups, while regulators are proactively participating to create a level playing field. One such move is the introduction of the revised Payment Services Directive (PSD2), which came into effect in January 2018 and recognises new and emerging payment providers by creating a secure and competitive environment in which they can compete with the industry behemoths.
According to the 2018 World Payments Report, an executive survey by Capgemini and BNP Paribas, 21.4% of respondents indicated complete PSD2 compliance, while 18% are in an implementation stage. PSD2 has extended the scope of payment providers by enabling new companies to participate, improving transparency of payment fees and curbing transaction costs.
Changing the Rules of the Game for PSPs
The focus of PSD2 on open banking and application programming interfaces (APIs) is ultimately driving innovation for the benefit of consumers. It allows third-party providers (TPPs) – upon customer approval – to access their bank account data and offer value-added payment services, which in turn will accelerate industry disruption. New interaction models now meet customer demands for real-time, customised and seamless payment experiences.
PSD2 requires banks to open their payment infrastructure and customer data to TPPs, thus taking away their privilege over direct customer engagement. The subsequent shift in competition manifests itself with the growing presence of fintechs, technology firms, retailers and telecommunications providers in the payment ecosystem. Incumbents are evolving with new business models, innovations and collaborations to sustain relevance. For example, UniCredit (Italy) launched Buddybank, a mobile-only ‘conversational banking’ model, with claims that 75% of its customers are new to the group. UniCredit plans to use customer feedback and information to improve other parts of the business. Similarly, credit card companies Visa and Mastercard are actively seeking collaborations to develop new services and identify other revenue sources.
While new industry participants innovate based on their newfound access to customer data, consumers are increasingly using online and mobile banking and payments. The natural progression is visible with the adoption of advanced features such as personal finance management, instant and peer-to-peer (P2P) payments. Fire (Ireland) is a Payment Initiation Service Provider (PISP) that provides business and personal customers with digital accounts and debit cards and enables users to easily pay funds directly to another
Fire (Ireland) is a Payment Initiation Service Provider (PISP) that provides business and personal customers with digital accounts and debit cards and enables users to easily pay funds directly to another person or business in the Eurozone or UK without sharing any account or card details. For instance, utility billers can add a ‘pay from your account’ link to emails, enabling people to click and pay from their accounts without using a card.
A Radically Different Payments Industry
PSD2 goes beyond enabling Access to Account (XS2A) for third-party payment providers; the guidelines focus on many other aspects to ensure customer protection. Some of the other influences are:
- Catalyst to change – PSD2 encourages open banking, which in turn impacts business models and service innovation. Customer experience can be enhanced across the payment value chain with multiple payment initiation options, apps to integrate and monitor financial information, geo-location-based coupons, instant and P2P payments. Ulster Bank announced Ireland’s first banking open API for seamless and secure linking of customer accounts to TPPs.
- Impact across stakeholders – Lower entry barriers enable PISPs, PSPs and account information service providers (AISPs) to enhance their services based on their ability to harness customer data and integrate it into other networks and apps. The impact of Google and Amazon will be compounded with innovation and demand evolution. According to the 2018 World Payments Report, e-wallets and payment apps offered by large tech firms contributed 71% of non-cash transactions globally during 2016.
- Pace of innovation – Beyond viewing PSD2 as a compliance requirement, or adopting a ‘wait and watch’ approach, many companies identify it as a stimulator for competition. Investments in start-ups focus on collaboration and phenomenal growth of some of the start-ups in the payments industry are a testimony to the immense potential. Stripe, a San Francisco-based digital payments platform, plans to capitalise on open banking by offering its infrastructure to any new or emerging fintechs looking to enter the sector without the hassle of being regulated.
APIs are effective, standardised and easy-to-use interfaces. TPPs offer their core capabilities via APIs and benefit from access to data to further improve solutions. Companies that integrate APIs benefit from easy implementation, testing and lower innovation cost. N26 (Germany) is a mobile-only, pan-European bank that provides consumers with a single digital platform for all banking needs. It integrates APIs from many partners and customers can access new services without any fees. APIs help to scale and add value as well as fit well in companies’ compliance and strategic plans.
With game-changing technologies and business models, the linear model of the payments industry that customers and banks once operated in has ceased to exist. Today, the industry is a complex web with multiple industry participants, many associated and complementary services, and a focus on creating a seamless and personalised payments experience for the user.
Eliminating PCI DSS non-compliance in the paytech market.
Founded in 1989 as an IT services company, Dublin-based Sysnet Global Solutions has evolved over 30 years to meet new challenges and client demands, and today has carved out an enviably successful niche in the cybersecurity and compliance space.
Gabriel Moynagh, Sysnet’s CEO, joined his father’s company in 2004 and remembers coming across the new Payment Card Industry Data Security Standard (PCI DSS) regulation, which helps businesses to protect their customers’ payment information, and seeing an opportunity to provide clients with compliance auditing.
“At that time, we were one of only a few companies in Europe, and the first in Ireland, that had the right credentials from Visa and Mastercard to be able to audit big companies that were storing or transmitting credit card data. So as well as doing their information security we could audit companies against PCI DSS,” says Moynagh.
Sysnet responds to the compliance challenge
Since then, as the volume of credit card transactions globally has increased, so too has the focus on cybersecurity and the pressure on businesses, even the smallest, to ensure compliance with the PCI DSS.
“For small businesses, reporting PCI DSS compliance can be confusing and time-consuming and many default to paying monthly fines imposed by their banks rather than tackle the technical detail,” explains Moynagh. “At the same time it’s a logistical nightmare for the acquiring organisations to ensure that all their merchants are compliant; moreover, the revenue they accrue from fines sits badly with them.”
It was a problem that prompted Sysnet to create its hugely successful Sysnet.air portal, supported by a best-in–class contact centre, which enables acquiring organisations to manage the security and compliance of their self-assessed merchants against the PCI DSS. It’s the most advanced solution in the industry, offering both self serve and managed service options. The latter, called Proactive Data Security (PDS), is now driving the company’s rapid growth.
“PDS is a white-label service that reaches out to small businesses that have been fined for PCI DSS non-compliance,” says Moynagh. “Our security agents call the merchant, profile the business, complete their PCI assessment and discuss their data security. We then provide cybersecurity tools to the business, and all for less cost than the monthly fines.”
Representing the brands of some of the world’s top banks is something Sysnet has embraced wholeheartedly.
“We work hard in terms of how we speak to the merchants, and the look and feel of the portal interface, so that the merchant’s perception is that they are getting this experience from their bank. They get a great product and service from us and the bank gets the credit for it. That’s what we want,” adds Moynagh.
Sysnet now employs over 400 staff and has customers in 60 countries. In the last 10 years, it has cornered the market in the UK and now works with all major acquiring banks there. It also has a fast-growing market in Germany, where it is working with market leader Concardis, and First Data, for which it also provides a service in the Netherlands.
“The US is our fastest-growing market. Three of the top US banks work with us and we’re optimistic about securing the others. We’re definitely the leader in this space and are planning to have around 200 staff there by the end of next year. We’re also doing well in Canada and have leads in Australia and Asia,” says Moynagh.
US company Elavon, one of the top five global payment providers, is one of Sysnet’s satisfied customers. Appreciating Sysnet’s focus on helping smaller businesses get secure and compliant, in 2017 it migrated its entire PCI level 4 customer base to Sysnet.air.
Wally Mlynarski, Elavon’s Chief Product Officer says: “We wanted to offer more value to our customers, giving them more choice when it came to PCI compliance and cybersecurity. Our smaller customers needed the option of a managed service with security tools that are easy to purchase and deploy. We’re extremely happy with the service provided by Sysnet.”
A collaboration with Lloyds Bank Cardnet won Sysnet a PCI Excellence 2019 award for reducing the number of small businesses incurring non-compliance fines. Additionally, Lloyds Bank Cardnet was also shortlisted alongside another client, Barclaycard Payment Solutions, in this year’s Cards and Payments Awards.
Moynagh’s expertise has also won him a seat at the prestigious PCI SSC’s Global Executive Assessor Roundtable, a regulatory body comprised of the world’s five biggest card payment providers. “To be chosen from the thousands of companies in the paytech sector is a real privilege,” he admits.
Sysnet has benefitted from Enterprise Ireland’s R&D grants for developing PDS, and Moynagh also took part in the agency’s Leadership for Growth programme. “I really think that a large part of our growth over the last few years has been down to what I learnt on that course,” says Moynagh.
As the first company in the world to offer small businesses a managed security and compliance service at a low price point, Sysnet has effectively created a new market.
“When we work with small businesses we really want to help them get into better shape in terms of cyber security,” says Moynagh. “Looking ahead, we’d love all our existing customers to be using PDS so that we can help eliminate non-compliance in the market.”
Building platforms that adhere to European regulations gave fintech company Worldnet Payments an edge in the US frictionless payment and EMV (Europay, MasterCard, Visa) marketplace, one that is set to flourish over the coming months.
Europe is reasonably advanced in terms of flexible payment options compared with the US, yet this is set to change in the near future, with EMV, or “chip and pin”, payments becoming commonplace, and newer technologies gaining traction.
Already providing an advanced range of own-brand EMV-enabled products and services across multiple payment channels, including e-commerce, mobile, POS (point-of-sale) and iPOS (intelligent POS) in the US, Worldnet Payments is strategically placed to service the increased need for enterprise-grade omnichannel solutions that incorporate EMV technology.
Worldnet Payments CEO Will Byrne explains: “The US has lagged behind Europe in terms of payment solutions – chip and pin has been here for 15-20 years, contactless has been in Europe for over 10 years, yet in the US, contactless is less than 1% of all transactions. That’s going to change hugely with the proposed issue of more than 50 million chip cards with contactless capability in the US this year. That’s a huge number – and we’re at the forefront of this technology.”
Established in 2007, Worldnet Payments first started by developing a payment gateway that enabled e-commerce “cardholder not present” transactions, before moving into the emerging world of mobile payments. But it was their reaction to a mandate by Visa that changed the vision of the company – and set in motion its future role at the forefront of the US payments industry.
“Unfortunately for us, at the time, Visa made a decision that all mobile transactions in Europe must be EMV compliant – chip and pin enabled,” explains Will.
“We didn’t have chip and pin on the platform, so we made the strategic decision – a difficult one as it absorbed a large amount of our resources and time – to enable EMV on the platform. However, this proved to be a great move because it allowed us move into the mobile market, and not only could we pitch our product in the Europe, we could also license a version of the platform for large-scale enterprise players, which took us into the US market – a pivot step for us.”
Since then, the company has grown its presence in the US significantly. “We launched our first platform deal in the US market around 2009/2010, and that move changed the business in terms of scale and ambition. We’ve had four of those type of gateway license deals in the intervening years and that has driven the profitability of the company.”
Another decision by Visa then set in motion the future of the business, as Will explains. “At the back end of 2015, Visa intervened yet again, this time in our favour, and mandated chip in the US market – up to then, the US was a swipe and sign (magnetic stripe) market. We had an advantage then because we already had chip capability on our platform and were able to bring the technology to the US market. Most of our competitors in the US market were domestic players who were limited to mag-stripe processing capabilities, and so having chip technology already gave us an edge. At this point, over 80% of our business comes from the North American market and the figure will be closer to 90% plus by the end of 2019.”
How Worldnet Payments delivers frictionless payments
One of the ways in which Worldnet Payments is leading the way is in ‘intelligent retail’ and frictionless payments. “The space where we’re gaining most traction, in terms of disrupting the marketplace, is in intelligent retail, frictionless payments, or the uberisation of payments in the retail sector,” says Will.
“They call it “uberisation” because one of the major attractions of the Uber taxi experience is that at the end of the journey, you just get out of the car, with no interaction, knowing the transaction has been paid securely.
Amazon Go is probably the biggest example of this; they have developed pilot stores where there are no staff involved in the payment process. Consumers access the stores using a whole series of identification methods, ranging from card insert or swipe, thumbprint recognition, and so on. This allows them to have stores that people can access 24/7, make frictionless payments in a secure manner without having to interact with any staff.”
One such partner is ViaTouch, whose end product is called VICKI. Will explains more: “VICKI is a standalone retail unit, which you could say is a very sophisticated vending machine for high-value goods. The units are about six foot by three foot and are used in-store in places like Macy’s, and in other locations like office blocks, college campus and hotels. The customer inserts their card, goes through the ID process and the machine reads it and identifies the customer. The customer can then buy what they want and pay securely. The transaction is totally frictionless, eg there’s no interaction with another person. You also have the option of registering your ID method, eg retina or thumbprint, with the machine after you’ve used it for the first time. We enable all of this at the back end enabling customer identification, authentication and secure payment.”
Other key partners include Swyft, a company at the forefront of automated retail and smart vending solutions in the US. “We’re also in the process of delivering an in-cab solution for a company called CMT,” says Will. “They’re the largest private cab fleet in New York and therefore have Uber as their competitor. We’re providing them with their own frictionless transaction processing solution across a variety of payment channels.”
With US consumers catching up quickly with their European neighbours in terms of flexible payment options, this market is set to expand rapidly over the coming months and years – and with Worldnet Payments at the forefront of this technology in the marketplace, expect to hear a lot more about this company in the near future.
Irish innovation is helping to reinvent payments around the world – here’s how.
The global payments industry is undergoing unprecedented transformation, driven by the twin engines of growing adoption of technology and changing consumer expectations.
Without doubt, the race is now on to launch innovative new payment products, services and business models.
As Paytech: Reinventing Transactions, a new eBook commissioned by Enterprise Ireland, demonstrates, traditional enterprises are being increasingly disrupted, as technology-enabled businesses carve out a completely different payments ecosystem.
The result is a proliferation of new opportunities, as banks, long the cornerstone of the payments sector, are both challenged by – and themselves embrace – new digital payment options.
Rapid growth of payments technology
It’s an opportunity that is gathering pace. The 2018 World Payments Report predicts a continuous increase in the volume of global non-cash transactions at a rate of 12.7% between 2016 and 2021.
But payments of all sorts are increasing. According to consulting firm McKinsey, global payment revenues grew 11% in 2017, to US $1.9 trillion, the highest rate of growth in five years. It even suggests the US $3 trillion payments threshold could be passed within just five years.
Driving transformation of payments
Ireland is perfectly positioned to play a driving role in this transformation.
The country is already an internationally acknowledged global fintech hub. The expertise it has developed is quickly enabling it to become a global paytech centre.
With a strong cluster of multinational and Irish-owned payments companies, Ireland is playing a driving role in the transformation of the global payments industry. World leaders in payments such as Elavon, First Data, Mastercard, Paypal and Citi all have substantial R&D and payment processing operations in Ireland. Stripe, the rapidly growing high profile global payments platform founded by two Irish brothers, John and Patrick Collison, plans to substantially grow its engineering operations from Ireland.
Irish paytech companies already have a strong track record of facilitating all kinds of payments, in all corners of the globe.
These include Realex Payments, founded by Irish entrepreneur Colm Lyon in the early noughties to provide the technology that allows online companies to accept payments from customers.
In 2015, it was acquired by US giant Global Payments in a deal worth €115 million. By that stage, the company was already processing almost €30 billion worth of transactions a year on behalf of its 12,500 clients around the world.
Lyon’s latest venture is business and consumer payments company Fire Financial Services. It helps businesses to manage payments with digital accounts, supporting a range of payment services that are accessible via a powerful API (application programming interface).
In 2018, Fire became the first Irish-based payments firm to be authorised as a Payment Initiation Service Provider (PISP). This means it is able to provide new services under the EU’s second payment services directive (PSD2) rules, which force banks to open up their technology platforms to third parties.
Irish capability in paytech
“The payments industry is a complex global ecosystem which seamlessly processes an immense volume of B2B, B2C, point of sale and e-commerce transactions across cash, card, contactless, online and mobile modes” says Brendan McCormack, senior fintech development advisor at Enterprise Ireland. “All of these transactions must be accurately and securely processed and recorded on an increasingly instant basis and all in line with complex financial regulations. Irish companies have developed particular strengths in card payments, cross-border payments, account-to-account payments, secure payment authentication, blockchain and open banking, and Ireland has emerged as a centre of innovation in this transformative paytech space”
For example, dynamic currency conversion (DCC), the user-friendly, point-of-purchase service, which allows international card users to choose to pay in their home currency rather than the currency of the country in which they are making their purchase, originated in Ireland.
Irish companies Fexco and Monex were early adopters of this paytech solution, and have become global leaders in the sector. These Irish companies continue to develop new innovative paytech projects around the world in this space.
WorldnetTPS helps EMV (Europay, MasterCard and Visa) companies around the world to ensure merchant terminals are compliant and up-to-date with both chip and pin and contactless payments.
Prepaid Financial Services (PFS) was founded by Irish innovator Noel Moran ten years ago from a base in London as a bank challenger, an alternative to traditional banks offering a range of prepaid payment cards. The company now employs over 160 people between its offices in Malta, the UK and its sister company eComm Merchant Solutions in Navan in Ireland. The award-winning company is currently one of the fastest growing financial services, technology companies and e-money payment institutions in Europe
Ireland has a number of paytech companies that are providing solutions in the international payments space. These include Currency Fair, an online peer-to-peer currency exchange marketplace, and TransferMate, a time- and cost-effective global B2B payments solution. The whole area of cross-border payments is undergoing significant global transformation and Irish companies such as these are providing market leading solutions in the area.
Sysnet Global Solutions has a suite of cyber security and compliance solutions that help businesses to improve security in card payments and acquiring organisations to monitor exposure and reduce the risk of payment card details being stolen.
One of the key developments in the payments area arising from PSD2 is an increasing need to authenticate payment transactions. Solutions that use the biometric capabilities of the smartphone to confirm the identity of the purchaser and thereby process the transaction are due to become much more common.
Dublin-based TouchTech Payments specialises in online authentification for financial institutions. It provides compliant solutions that can be used to authenticate anything from online payments to loan agreements to banking logins. All of its products are certified to industry standards and meet all existing regulatory standards, including PSD2 and its recently published Regulatory Technical Standards.
Biometric Strong Customer Authentication solutions leverage smart phone technology to ensure bank customers can easily access all the features of their online banking without hard-to-remember usernames and codes, thus increasing access rates to the services offered by online banking and mobile payments.
Daon has developed technology that will ultimately replace usernames and passwords as a means to authenticate. Its universal platform allows users to authenticate themselves on any mobile device just by taking a selfie. It is adaptable to allow clients, and their customers, to pick and choose the biometric they’d like to use, including but not limited to facial recognition, voice recognition, and fingerprint ID. All of these factors can be used individually or fused together in a multi-factor approach, delivering the desired level of assurance based on the risk of individual transactions and facilitating rapid, safe and secure payment authentication.
Account To Account
Sentenial is a leading provider of European payment solutions, whose next generation cloud payments platform securely processes over €42 billion a year as an outsourced provider to many of the world’s leading banks.
One of its newest innovations, Nuapay, is a pioneer of open banking and the industry’s leading account to account payment environment, helping to reinvent what’s possible from a modern banking and payment solution.
Irish companies are also providing innovative payment solutions to the unbanked and underbanked. PiPiT Global has devised a secure and private online payment platform that helps customers spend cash digitally.
In particular, it allows migrants living and working around the world, who may not have full access to banking facilities, to send money and pay bills internationally, at low cost and in a secure way. It uses bar codes or QR codes that can be taken to collection networks such as post offices to connect the cash payment to the associated bill or account in their home country.
Irish company AID:Tech enables entitlements such as aid, welfare and donations to be digitised, delivered and tracked using blockchain technology, including the distribution of international aid to refugee camps. This solution enables, for the first time, the ability to track a payment from the donation to the recipient.
Right now the possibilities in paytech look limitless. The question is who will harness this potential first and how. Irish paytech companies are leading the way.
“These are just some of the Irish companies that have developed interesting paytech products, which they are already selling overseas around the world,” says McCormack.
“With 2019 set to become the year when the benefits of PSD2 become widespread and open banking commonplace, the paytech ecosystem is likely to see significant change. Evolving technologies such as blockchain and cryptocurrencies, as well as payment products from less traditional banking sector players may also disrupt the payment landscape. The potential to analyse the rich underlying customer spending data collected by payment processors has considerable appeal to many technology giants who may look to enter the paytech market in the coming years and Ireland’s paytech sector is already developing close links to these companies many of whom are already based here.”
It means that for anyone looking to navigate the world’s newly-disrupted payments ecosystem, there is no better guide than one of Ireland’s paytech innovators.
Irish company PiP iT is working to make it easier and cheaper for migrants to take care of bills in their home countries.
With many people choosing card payments over cash, apps and even cryptocurrency options, some might question if cash is still king. But when you remember that a third of the world’s population do not have a bank account, it becomes clear that cash remains crucial, although the ways it is used have changed.
While many fintechs focus on apps, Bitcoin and blockchain, PiP iT has launched in the cash market, with an important social mission of boosting financial inclusion throughout the world. Its aim is simple – to enable migrants to pay bills in their home countries easily and cheaply, without the large fees charged by money transfer companies, or the risk that money may be spent on something other than the bill to be paid.
PiP iT was formed about five years ago, as a solution that addressed growing concerns about internet security, as well as risks commonly associated with using credit cards online.
“Initially, it was a play around payments and internet security,” explains PiP iT CEO, Ollie Walsh.
“The first module we built was an e-commerce module – once you selected your product and PiP iT as your payment option on the e-commerce website, you receive a barcode to your phone, and you then go into one of our partners and pay it. Then once the barcode has been scanned, we send a message to the website to say that the goods have been paid for.”
PiP iT took the concept to the Web Summit, where it attracted a lot of attention and subsequent investment, but it was funding provided made by a UK social investor, The Key Fund, and participation in start-up accelerator Dotforge Impact that inspired a new use for the technology, Ollie explains.
“The accelerator meant I needed to move to Sheffield – and although I spoke the language, had a perfect right and need to be there, it took me months to open a personal bank account. We had a business account open within two days but to open a personal account in the same bank and same branch took seven months. That gave us the thought that perhaps there’s more use for our platform than just an e-commerce piece.”
How PiP iT helps migrants to save money
Ollie and his fellow PiP iT founders, COO Julian Callaghan and CTO Rory Ryan, took inspiration from the experience to offer migrants a better alternative to the traditional money transfer services that tend to be used instead of a bank account.
“Migrants are using money transfer services to send cash home, which from the UK to any part of West Africa costs about 10%,” says Ollie. “This is a huge fee – the average transfer is £200, so 10% of that is £20 – £20 in Lagos goes very far. We’re about 80% cheaper than money transfer companies. We benchmark our payments against money transfer services, and with 100,000 Ghanians in the UK, we know we have saved them around £30,000 in fees in the last year.
“Our system is also a good deal more secure, because the recipients don’t have to collect cash in what could be an unsafe neighbourhood. Also, in the remittance industry, there’s something called “leakage” – that when money is sent home for a purpose, it gets spent on something else. With us, the bill is paid directly, so there’s no risk of leakage.”
PiP iT is currently operating in many countries throughout the world.
“There are two ends to our operation – one is where we need payment partners – this is where people are emigrating from,” says Ollie.
“These are countries like Ghana, Nigeria, Cameroon, Zimbabwe, Kenya. Coming up soon, we have India and Sri Lanka. And we have deals signed with companies in Vietnam, Laos, Thailand. The other end of our operations is where people are moving to – and this is where we are looking for places in which people can go to pay the money and have the barcode scanned. At the moment, we’re live in the UK, Canada, South Africa – and we’re in the integration process with a payments partner in UAE, which has a massive migrant population.”
The company has just closed an investment round of €1.25 million, funded by Enterprise Ireland and a number of angel investors, and has huge ambitions to grow over the next few years. “We’re a for-profit company but we’re also a social impact company – and the more transactions we do, the more money we’re saving migrants. For us, that’s a big win. We want to get as big as possible, so we can do as much good as possible.”
To do so, PiP iT is constantly looking at new markets and where people are moving from and to. “For instance, English-speaking West Africans go to the UK, while French-speaking West Africans go to France,” explains Ollie. “In Canada, it’s predominantly the Philippines and China, and for India, it’s the Middle East, simply because it’s closer with more opportunities. We’re in talks with potential partners in the US – which would be predominantly people from Mexico and Central/South America – the Mexico/US corridor is the biggest for remittance in the world. The bigger we get, the more money we can save people.”
Since its inception, the internet has disrupted business. The list of business models that have yielded to new technology in the past decade includes publishing, advertising, retail and entertainment, to name just a few.
Finding a way to conduct seamless, safe, secure monetary transactions in this new near-borderless landscape has become a priority. Today, it has become commonplace to make online payments – cardless transactions with funds moved between countries and regions through blockchain and e-wallet technology. From settling invoices to paying for streaming services or online gaming, fintech has moved to meet the needs of its users.
Download the free eBook: Paytech: Reinventing Transactions
In Ireland, already a leading player in the fintech space, a venture that had its origins in the online world of gaming and betting has not only transformed itself from a behind-the-scenes end-to-end fintech operation but is using its technology to unlock the lucrative markets of China and Africa.
MiFinity platform already connects to all major global banks
MiFinity, the fintech payment company with bases in Dublin and Belfast in Ireland and Malta, offers services related to the issuance of electronic money, covering 120 countries and 80 currencies.
Its platform, already connected to all major global banks, processors and card schemes, is designed to execute international transactions at a lower cost than competitors.
Since CEO Paul Kavanagh took over in 2017 through an MBO, the firm has placed itself at the forefront of the e-wallet and card payment market, creating product verticals in foreign exchange, insurance, travel and gaming.
Kavanagh’s vision is simple. He views the current digital payment landscape as a place for the nimble and intends to increase MiFinity’s value to €100 million within the next two years.
“Banks are going to be the dinosaurs in this digital age,” he says. The disruption to the global payments system is only just evolving, he adds.
MiFinity rebranded in 2016 as a back-end payments solutions provider to the gaming industry and now has strategic partnerships with major UK and global banks, TAS, SIA and Bitload4U, with a client list that includes household names such as Booking.com.
The firm clearly views international markets as its sales driver and is licensed to issue UnionPay cards, the sole payment card of choice for travellers going to and from China, as well as providing a remittance service for UnionPay MoneyExpress – a significant strategic move when it becomes clear there are more than 3.5 billion UnionPay cards issued internationally, and over 10 million overseas online merchants across 200 countries accepting UnionPay cards
“It’s a significant revenue opportunity for MiFinity. This license will open up new market segments whilst adding a new product vertical to the MiFinity payment platform,” says Kavanagh.
The global landscape of payments
Moving into the B2C space in overseas markets is clearly in keeping with Kavanagh’s own vision of a global borderless payments market.
He says: “We believe that the payments landscape is really global. When you look at the various countries that are stressing the movement to digital, India is one example. The government has taken a decision to be “e-commerce focused” for many reasons, ranging from safety to tax collection. Other countries, such as China and Africa, are looking at how to move to an e-commerce protocol from what historically been a cash driven economy.
“We see the Asian and African regions as the next opportunities for electronic payments, or what we refer to as “e-payments”, regardless of the banking platform. E-payments, being a more secure way to move funds and faster, as well to ensure that the consumer experience for e-payments becomes the preferred means for moving funds, locally and globally. We will be in the middle of this push to move to e-payments.”
Innovation is MiFinity’s competitive advantage
MiFinity is, of course, not the only player in this market, and some its rivals are also Irish, but Kavanagh believes they have the innovative know-how to keep pace.
“I think when you look at the utility and versatility of our mobile application (eWallet), you can see some of our game changing expertise. Global control of your money right from the mobile device. We believe that banking will take on a new meaning over the next few years.
“Legacy banks will have to adjust to this new way of thinking, which is that clients are moving to their mobile phone as their payment platform. Banks will soon be virtual. Look at Revolut for example, a major success with technology and providing a mobile banking solution.
“We at MiFinity look at how we can provide the same virtual payment processing capability to the global community.”
In an age of continuous disruption, how will MiFinity remain on its growth curve? Continual self-evaluation, according to Kavanagh. “What gets measured gets done. And what gets measured gets better,” he adds.
The global fintech sector is growing rapidly, thanks to increasing consumer demand for alternatives to cash payments and the traditional bank. One of the leaders in the sector is Irish success story Prepaid Financial Services Ltd (PFS), whose award-winning solutions include e-wallets, physical and virtual prepaid cards, and IBAN accounts in the UK and across the Eurozone.
PFS was founded by Irish innovator Noel Moran ten years ago from a base in London as a bank challenger, an alternative to traditional banks. The company now employs over 162 people (“a significant milestone,” says Noel) between its offices in Malta, London and Wilmslow in the UK, and Navan in Ireland.
“We started off selling a corporate card to a target audience of small to medium-sized corporates, maybe companies that required a card for travelling or expenses, or for rewarding customers. We would effectively give them a prepaid Mastercard, which would work like all other debit and credit cards,” explains Noel, who is currently the company’s Chief Executive Officer.
“Since then, it’s evolved a lot. We’ve added a lot of functionality, and we now have about 20+ products – so we started out with corporate cards, but we now have travel cards, payroll cards, multicurrency cards, current accounts, we’re getting our own settlement accounts with Bank of England, we have a lending license – we’re really moving in the direction of becoming a true bank and being able to offer almost all the items that a bank can provide.”
The UK continues to be a very important market for PFS. “The regulator is very proactive in the UK, and this has opened up the market to hundreds of alternative financial providers to compete with the banks – that is certainly where a lot of the opportunity has come from.”
With opportunity comes competitors but PFS continues to lead the way.
“We’ve been around longer; a lot of these challenger banks really only began three or four years ago, and this is our 11th year. We’re also very profitable, and we have always made a profit, and that makes us very different. We’re probably the third-largest issuer for Mastercard in Europe, so we’re a significant player.”
PFS is a true European fintech leader
PFS is a fintech leader in Europe, with an eye on the future.
“We have a license that allows us to operate in 35 EU countries; we’re live in 24 of those today, and we’re probably the largest provider in about five or six of those countries – including France, Iceland, Spain and Slovenia. We also have the largest prepaid programme in Ireland with 3Money. At present, we’re working on going live in the 11 EU countries in which we’re not currently operating.”
One significant milestone for the company was securing the Spanish post office as a client, Correos, therefore servicing hundreds of thousands of Correos Prepaid Mastercard customers.
“Correos has the largest prepaid programme in Spain,” explains Noel. “We also do a lot with government in the UK; we service more than 120 local authorities, so we’d be by far the largest provider of government payouts in the UK. In France, we work the largest prepaid card programme, which runs under the brand name CreaCard. And we also work with a lot on the humanitarian side of things – UNHCR would be one of our clients, along with Red Cross, Save the Children and about 10-15 others. Then we work with a lot of banks in France, Spain and Slovenia; also some mobile providers, like Three in Ireland.”
Winning recognition as a fintech trailblazer
Not surprisingly, both Noel and PFS have been recognised for their significant achievements, and as trailblazers in the fintech industry.
“We managed to win a very significant award around innovation and technology in the European Business Awards, which was [in competition] against thousands of other companies. Off the back of that, I also received an award for European Entrepreneur of the Year.”
Noel was subsequently showcased to the attendees of Davos 2019, an exclusive invitation-only World Economic Forum meeting.
“We’ve also had some significant milestones as a company over the last year,” Noel continues. “We managed to process more than £2 billion sterling last year. It took us nine years to get to £1 billion and just 12 months to get to £2 billion – and this year we’ll do over £3 billion.”
Going global from Europe
While PFS is an established leader within Europe, the company has bigger ambitions globally.
“We are making applications for licenses in 10 or 12 other countries where the regulatory landscape is changing; many are following the UK example because they are so far ahead in terms of e-money. We currently have clients from Asia, but at present we can only operate [for them] within Europe. As a result, we are actively looking for licenses outside of Europe too. We are also seeking licenses in Ghana and Ivory Coast (which would also cover 7 other countries). We are actively working on applications in the US – it’s a very different regulatory environment there – and we have applications in Singapore, Malaysia and Thailand in Asia – and a couple of others that aren’t at as advanced a stage. With all of these, we either have made an application or will be submitting one within the next two months.”
Gaining licenses in new territories is a key component of PFS’s strategy for the year ahead. “For us as a company, we want to expand into different countries and different territories, plus launch new products and services – we will probably have two or three new products this year. One of our primary objectives this year is to get licenses in 8-10 new countries. We also completed two acquisitions the year before last – that is also a key part of our growth strategy. We are making a significant acquisition early in 2019, and we’ll hopefully do one or two more later in the year – and we’re looking at an IPO later in 2019, perhaps July or August.”