The Year of Payments Chaos: Onsite Coverage
LAS VEGAS — On day two of the sprawling Money20/20 conference at the Aria Resort here, speakers waded into many of the era’s hot button topics including interchange to bank branch reinvention, tokenization and card not present fees.
Each consistently made one common point that now is the time.
“It’s definitely the time to be in payments. More has happened in the past year than in the prior 19,” said Mike Cook, a Wal-Mart SVP who has worked in payments for 20 years.
Dee O’Malley, senior director of payment acceptance at Best Buy, agreed.
“The theme of this conference is chaos and disruption. That’s the space we are living in.”
For instance, several of the conference’s speakers said Apple Pay may not represent a great leap forward technologically but it has nonetheless put mobile payments on page one and on the top of the consumer’s mind.
The long entrenched plastic card suddenly seems vulnerable, something few would have claimed even a year ago.
Then, too, Apple Pay may actually represent big progress in one regard.
“Tokenization is reinventing the account number,” Ryan McInerney, president of Visa, said in a keynote address Monday. “We hide it so no one can see it. Apple Pay is the first commercial instance of tokenization.”
This, he said, is a huge shift.
McInerney shared the hypothetical scenario of losing an Apple Pay-provisioned phone in a taxi. It is no big deal, he said. Get to a computer, deactivate the tokens, get a new phone and new tokens and the consumer is back in business.
“There is no need to reissue cards,” McInerney said.
Read more: Interchange needs to change ...
Cook, considered by many to be the godfather of the Merchant Customer Exchange (MCX), claimed by wags to stand for “the Mike Cook Exchange,” was on a panel Monday when he was asked what one thing he would change in payments. He did not hesitate to answer.
“I would change interchange. The fees are unreasonable,” Cook said. “Today, it’s just about moving bits and bytes.”
Cook also took the opportunity to make a clarification as rumors swirled.
“We did not disable NFC [at Wal-Mart]. We never had it in the first place.”
Troy Carrothers, a SVP at Kohl’s Department Stores, who sat on the same panel as Cook, had a related grumble. The one thing he would change is that retailers pay higher fees for card not present transactions, he said.
The online channel is increasingly important to retailers, but it also is fiercely competitive and margins are low, Carrothers said.
“Why am I paying a premium for card not present and if we are paying more, why are we required to take on additional liability,” he asked the conference’s attendees.
Some of the most provocative ideas came in a Monday keynote talk by Jane Fraser, CEO of U.S. consumer and commercial banking at Citi.
The bank is testing a new branch model, a decision that started with the realization that in many ways, branches are fundamentally unchanged from 100 years ago, Fraser said. Everything else has changed, especially the digitization of money, she added.
Fraser said branches that depend too much on technology are sterile and uninviting to consumers.
“The human element will remain, someone who can help you make important financial decisions,” she predicted.
As for the rest of the branch reinvention, Citi is implementing what it called a hub and spoke model, Fraser said. Some branches will be large and full service while others will be much smaller and more focused.
That mix will let consumers get the services they want, but it will also let Citi enjoy operational efficiencies, Fraser said.
Money20/20, considered to be the largest conference on payment innovation, attracted some 7,500 attendees to Las Vegas this year.
The conference will run through Wednesday.