Consumer Tokens

Great article in Digital Transactions that I missed in February

PAR – Consumer Tokens, February 2016

Quote “When a transaction is initiated with an EMV payment token, the functionality of these applications can be impacted since the full PAN may not be available to merchants, acquirers, and payment processors,” a recent EMVCo document says. Continue reading “Consumer Tokens”

Payments – Civil War?

Before the blog, I wanted to provide my friends a quick update on Commerce Signals. We are thrilled to have Dekkers Davidson (former CEO of MCX) join our board of directors this week. Our objective at CS is to enable first party data, collaboration, trust and value beyond the transaction for retailers, mobile operators and consumer banks. Continue reading “Payments – Civil War?”

The EMV of Payment Terminals – SHA-1

9 Mar

Never one to shy away from even the MOST ARCANE areas of payments… There is a firestorm in payments encryption right now.. SHA-1 is a hashing function (securing data for a counterparty without the use of public/private keys) that has long since been sunsetted by Microsoft, Google and others as “too weak” and “easily cracked”. Continue reading “The EMV of Payment Terminals – SHA-1”

P2P Payments Update + MA/Vocalink

9Mar 2016

Short blog. I can’t believe it has been 5 years since I wrote Real Time Money Transfer in US. This week we see rumor that Mastercard is looking to make 1B GBP bid to buy Vocalink. Per my Apple and P2P blog there are 4 primary options for “real time P2P” in US:

  • FIS/Vocalink/Paynet
  • Mastercard
  • Visa
  • ClearxChange/Early Warning
  • (FUTURE) Real Time Payments with TCH

Continue reading “P2P Payments Update + MA/Vocalink”

Card Holder Present Update

Presented yesterday at KBW’s annual Payment Conference.. have a few updates in the rumor mill..

I predicted September of this year for CHP in in previous blog Card Holder Present last month. Issuers don’t like this one bit.. as there is no upside.. Merchants with large numbers of cards on file (Amazon, Google, Paypal, Walmart, …) will not tokenize until they obtain a risk based rate (Companies like Amazon manage fraud down to under 3bps).

Rumor is that one large issuer has been quite vocally against the new CHP rate coming into effect. My guess is that the issuers just funded $60M at The Clearing House (TCH) for them to create a new token utility based upon Bell ID…. and the banks want to use this beyond “faster payments”….

Continue reading “Card Holder Present Update”

Last Mile Redesign (Processor-Merchant)

21 Jan 2016

My favorite blog of the year was written by famed UK computer scientist Paul Graham – The Refragmentation. Paul’s blog aligns very well to the work of 2 Nobel prize winners in economics: Oliver Williamson (2009) and his mentor Ronald Coase (1991). Both were focused on the factors governing the “nature of a firm”. (particularly Transaction Cost Economics).  I covered how TCE relates to the sharing economy and the future of collaboration in my August blog Collaboration and the “Sharing Economy”.

If I were to pick the proof point for ‘refragmentation’ and TCE within the payments industry it would be processing. If payments is a network business.. processing is undergoing open access (think MCI/ATT), nodal redesign (think iPhone vs rotary), big data (democratized access), enterprise software (ERP/CRM), and direct sales (amazon) … ALL AT ONCE. Continue reading “Last Mile Redesign (Processor-Merchant)”

Cardholder Present – September 2016

Update 23Feb2016.. now see this being delayed until 2017. Top issuers threw a fit. I’m writing an new blog.. my guess is that issuers want to delay until they get their own token facility up and running at TCH (BellID).


As I outline 16 months ago in mCommerce/eCommerce Convergence, there is a new V/MA rate tier coming: Card Holder Present (CHP). CHP is coming by summer 2016 (70% probability), and can be thought of as a remake of what was VBV and MSC in 2006/7 using the new token utilities built for ApplePay. Continue reading “Cardholder Present – September 2016”

Quick Blog on Apple, P2P and Clusters

12 Nov 2015


  • Most of you have seen today’s WSJ today on Apple P2P. 
  • Apple has 4 options here: FIS/Vocalink/Paynet, Mastercard, Visa, ClearxChange/Early Warning. News here is that Apple asked the BANKS for help. Banks responded that they would like for Apple to be first non-bank customer for ClearXChange (the 4 yr old bank owned P2P utility formed initially between BAC and WFC with ownership now spanning all top 6 banks). ClearX has a new owner as of Money2020: Early Warning Services, the #1 bank risk and fraud utility in the world. It is not often I compliment everyone.. but this makes sense.. for Apple, For Banks, for Consumers. The same service I use at Bank of America online to pay anyone (ex email or phone number) would be within the Apple platform. The challenge of P2P is risk management. As one of the first customers of Cashedge pop money (2005), the advantage POP had in operating the service was ACH risk management. Now the banks have that in EWS… times 100!
  • P2P in general.. what an awful space… littered with the corpses of failures. It never makes sense as a standalone service. P2P can increase the value and stickiness of existing networks (ex Facebook/Whats App, Google, Apple, …) but it is a loss leader. Google has been doing free P2P for over a year.. my guess is less than $500M in volume (at a 25bps loss).  The ULTIMATE GOAL (of free P2P) is the data associated with connecting social networks, commerce and payment networks. Early days see spot successes for specific needs. For example Venmo is almost a “banking lite” for college campuses.. it has a critical mass there, but doesn’t do well in the ROW (rest of world).  Consumer behavior is VERY VERY sensitive to pricing on P2P.. even $0.10 will make consumers jump to something else. So why would the banks want this service? The ClearXchange model is probably the best answer. The big owning banks are at either the initiating (ODFI) or the receiving (RDFI) of 70%+ of all transactions. They created an “on we” utility where payments to each other would be free, and payments outside of this group would cost for either RDFI or ODFI.    So the small banks incur the costs of ClearX.. and the large owning banks make the money..
  • Apple is apparently quite upset with Visa/MA eliminating their 15bps (through VDEP/MDES) and may be hoping to eventually enable a new V/MA competitor. They have indeed said this. However P2P will not be the place to start here. Remember Banks make money in the V/MA networks. It is one of the few models where thousands of businesses invest billions of dollars to make work. Yes there are 100 other ways to do payments, but there is no other model that has proven effective in getting an industry to INVEST IN. For example, Bitcoin is better at P2P everything (anonymity, risk, authentication, validation/acceptance), but no one has developed a scale-able way to make money from managing bitcoin… or creating the acceptance infrastructure to support it. Given Apple’s market position and global presence wouldn’t that be cool..!? Governments would go absolutely nuts.. global bitcoin platform with no way to track interaction. I see this in 5 yrs…

Continue reading “Quick Blog on Apple, P2P and Clusters”

Money 2020 – Top 10 insights

From my Twitter Feed yesterday

#1  Year of Collaboration is happening. Examples: Uber and FD, MCX and Chase, Poynt

#2  and are still the best payment investments as network creation is hard

#3 MCX IS ALIVE (a 5yr+ project). Merchants are very well positioned to deliver value, and planning to disintermediate banks

#4 Innovation is in the Long Tail…. (small merchants) with non-banks. , , , , ,

#5 Mobile payments are myth in US and we are introducing more choices, products and chaos.. (MST, ChasePay, QR, EMV, PIN..)

#6 Specialized HW giving way to commodity hardware+SW (Apple Vitrual SIM, over Verifone, Token over SWP SIM)

#7 Customer Centered. Building technology around your current assets is not same as building experience around the consumer

#8 Banks working to create new networks… w/ no clear driver (EarlyWarning buys Clearx, ChasePay, TCH’s Token Authority, )

#9 Human Talent in payment is the top priority of every leader. Want to pick winners? Look at where talent is flowing to

#10 There is no better conference in payments than . Thanks to JW, AA and the whole M2020 team!

MCX is here.. and full of Good Stuff

Why all the negative press on MCX….? Getting 60 Retailers together across a network of 2 acquirers, 100s of POS/payment terminal configs, phones/OS versions, loyalty systems all moving takes time… currentc-retailers-logo640

Yes I would agree that MCX has not done a great job on PR, and sure its UI Design team may have come from North Korea… but there is MUCH behind the scenes here.

I just used CurrentC at Target and I am NOT IN COLUMBUS. The functional leader in the MCX consortium is Target. My personal view is that Target led the way over 5 years ago with the launch of the Target Red Card. It is the “baseline” for MCX product launch (see my 5 yr old Blog). The Target team is just out of this world..  not just for retailers.. it is one of the best payment teams in any company.

Target has done a FABULOUS JOB of Integrating VERY COMPLEX functionality into CurrentC. Did MCX do the work? Nope.. think of MCX as a dumb container for the Target Red Card, and Target’s Loyalty Program Cartwheel.

So what is NEW about MCX?

  1. First in the world integrated payment, loyalty with SKU level coupon redemption
  2. Integrated ACH Settlement (Redcard)
  3. Risk Management – POS – ACH settlement (FIS and First Data) Red Card
  4. Mobile Application Supporting multiple loyalty cards and programs with SKU Level Redemption
  5. POS Bar Code Scanning of Payment (.. starbucks like)
  6. Routing and Clearing of both ACH, Debit and Credit within Acquirers (FIS and First Data)
  7. Technology on-ramps and containers for both mobile wallet, POS/Point of Sale integration, and Clearing/Settlement
  8. Rules and pricing for all of this

This is a HUGE project…. I would say the UI needs MUCH work.. but don’t judge this network by the app!

See my short video below