Travel Payment Summit - 3/4 December 2008

Frankfurt/Bad Homburg, Germany

The world-wide economic downturn is forcing the travel-related companies to re-examine each and every cost! This focus on cost reduction is shedding new light on what has traditionally been accepted as part of doing business in international travel- the cost of accepting payments. Driven by increasing e-commerce and direct distribution strategies, the Travel Payment Summit will discuss how how travel companies can obtain the maximum from their sales through cost-effective payment strategies.

Breaking tradition
Credit cards are an attractive form of payment for many travelers, particularly when purchasing travel online, as well as for business travelers for expense reporting. Many travel companies have therefore considered credit card merchant fees as a worthwhile cost of business, but now many companies in the industry are encouraging their customers to use new lower cost payment methods, such as Bill Me Later, Google Checkout, PayPal, UATP and Western Union. The paradox of this drive to low-cost forms of payment is that the industry also earns Billions of Dollars in revenues annually from its own co-branded credit cards, which offer travelers loyalty points or miles for purchases. Travel Payment Summit will therefore examine how travel suppliers can find the correct balance of reducing payment costs and increasing co-brand payment revenues.

Mitigating fraud and cost liabilities
Having been paid cost-effectively, travel suppliers must then make sure that the transaction isn’t fraudulent. The glamour of travel spurs fraud rates not found in most industries! But, while fraud costs are high, the cost of fighting fraud may be even higher. So how do travel companies fight the fraudsters and at what cost?

Reducing payment costs through Alternate forms of payment and fraud prevention will top the agenda of Travel Payment Summit, which will also look at all travel-related payment issues from the Single European Payment Area and its effect on the industry to mobile payments and dynamic currency conversion, and much more! At our first payment event in Toronto in April 2008, over 200 industry professionals discussed and debated the latest payment issues. This conference will carry on that tradition as a way of helping you increase sales and develop cost-effective payment strategies.

SkyEurope Airlines, the leading low-cost airline in Central Europe, has introduced a new revolutionary payment channel for its guests. Starting from the August 1, 2008 SkyEurope’s flights can also be purchased via cash pre-paid paysafecard, which represents an easy and safe way of online payment with no need of bank account or entering a guests’ debit or credit card number.

The pre-paid paysafecard with a wide range of credit values can be purchased through more than hundred thousand distributors Europe-wide. paysafecard can be used for payments for any of SkyEurope’s services and products throughout the airline’s network and opens another dimension of on-line shopping to many new guests.

“Our goal is to offer variety of fast and safe payment channels to our clients,” says Steven Greenway, Chief Commercial Office of SkyEurope Airlines and adds: “Some passengers do not have access to debit or credit cards that can be used for electronic payments or they simply do not want to send their card number over the internet. We believe that by introducing the possibility to pay through paysafecard we will provide access to a greater spectrum of customer segments and provide more choice by providing a payment method that avoids paying additional credit card fees.

paysafecard pre-paid card system is currently being used in 10 European countries. paysafecard cards are equipped with printed PIN code to be used instead of credit or debit card number during the on-line payment. paysafecard cards are available through 105.000 distributors and can be used for payments in more than 2.500 internet stores in Europe with no transaction fees or risk of any personal or sensitive data misuse.

“We are excited to announce our first co-operation with an airline company. SkyEurope is once more a true pioneer, when it comes to best-in-class customer service and safe e-commerce,” adds Michael Müller, CEO of paysafecard.

On a practical level, SEPA means that you will be able to make fast and secure transfers between bank accounts anywhere in the euro area, while if you are shopping abroad you will be able to use your bank debit card to make a payment in euro, just like at home.

SEPA will also help to improve all payments, whether they are domestic payments or cross-border payments between two euro area countries. All consumers will benefit from new rules ensuring transparent pricing and prompt transfer.

Banks have been able to make the first SEPA products available since 1 January 2008, and are aiming to make SEPA a reality for everyone by the end of 2010.

Find out more about SEPA and about the European Commission's involvement in this crucial project on the following pages: Click here

September 2008 - The Euro Banking Association (EBA) has issued an overview paper entitled Banks Preparing for PSD: A Guide for Bankers on the Payment Services Directive. This new EBA guide has been compiled by the EBA Working Group on SEPA and PSD Compliance and outlines the complex issues that banks need to carefully study and address in order to achieve PSD compliance.

Click here to download the guide

An Examination of Mobile Banking and Mobile Payments:

Building Adoption as Experience Goods?
Julia S. Cheney*
June 2008

Summary: This paper examines consumer adoption of mobile banking and mobile payments using the experience goods and learning by doing constructs as a framework to better understand adoption patterns in the United States and how these may differ in other world markets.

Consumer experience and familiarity with mobile devices is considered along with three relatively new communication technologies – SMS text messaging, wireless Internet access, and near field communication (NFC) – that are making important contributions to mobile financial services. Online banking and contactless payments — and consumers’ experience with them — are also studied as “building blocks” to mobile financial services. Furthermore, this analysis considers other factors that are affecting adoption patterns, including financial inclusion opportunities, data security problems, and coordination issues. Together, the building blocks and these other factors will influence how markets for mobile financial services develop.

Click here to access full document

* Payment Cards Center, Federal Reserve Bank of Philadelphia, Ten Independence Mall, Philadelphia, PA 19106. E-mail: julia.cheney@phil.frb.org. The author wishes to thank Robert M. Hunt for helpful comments and suggestions. The views expressed here are not necessarily those of this Reserve Bank or of the Federal Reserve System.

Ecommerce Checkout: A Quantitative Look at the
Tactics of the Top 100 Online Retailers

Once shoppers enter the checkout line in a physical store, they are almost certain to buy. Why isn’t that true online? We studied the checkout processes of 100 major retailers, in four major categories, to see how their use of 23 different checkout tactics related to their success, as measured by conversion rates and growth rates. We were hoping to better understand:

Which online checkout practices are used (or avoided) by the largest online retailers?

For major categories of online retailers, which checkout tactics are used by the firms with high growth and conversion rates?

This study kicks off a process of discovery that we will be working through with online firms, analysts, and industry pundits.

We’d like you to be a part of it. The process will look something like this:

1. Publish an initial descriptive study (this paper)
2. Obtain feedback via a public webinar in May 2007, as well as ad hoc feedback
3. Design and complete the next level of investigation
4. Publish a prescriptive study with specific recommendations for improving conversion rates via optimal checkout tactics for your segment

Some of the findings in this report are what you’d intuitively expect (e.g. a simpler checkout process that provides credible security assurances is associated with higher conversion rates). But as always, the devil (and the value) is in the details.

For example, we found that a shorter checkout process seems to help far more for lower ticket items than big ticket ones. For time-starved ecommerce staffers, we believe the value of this series will be in selecting the highest impact tactics and prioritizing your testing
efforts.

The increased sophistication and confidence of online buyers also has ramifications for how the checkout process should work. That shows up here in the form of findings that run counter to conventional wisdom. For example, traditional “peace of mind” features like emphasizing the return
policy, providing a final order confirmation screen, and providing last-minute chances to change orders, may actually reduce conversion rates for many types of purchases.

Whether this report surprises you or supports what you already felt, we hope you will enjoy it and participate in the webinar and other follow-up work.

Click here to access full report  

Airline Payments.com

Where Payments and Strategy Take Off

Launched in Toronto, Canada in April 2008, the web site www.airlinepayments.com provides information on all the issues that pertain to strategy and payments in the airline business.

Developed by Realex Payments, the site promotes the concept of a “Holistic” approach to the development of payment strategy for the airline business. The airlinepayments.com site demonstrates this leadership by providing insightful strategic thinking in the airline payments industry.

Website Overview Document, Table of Contents:

Why Develop A Payment Strategy?

A Holistic Airline Payment Strategy & Its Elements

Revenue Source - Selling Flights & Ancillary Services
In A Multi Channel Environment

Payment Methods - From Local To Global

Controls - For Currency, Fraud & Revenue

Hygiene Factors - Compliance, Low Cost & Reliability

Click here to download a Detailed Overview of Payments.com

Optimizing Airline Profits:

Payment management strategies for airlines

by Dave Glaser VP Professional Services CyberSource Corporation

Overview Every airline I’ve worked with is trying to shift more customers to direct sales channels in an effort to lower their distribution costs and increase revenue. In doing so, more emphasis is being placed on payment management, particularly in four key areas:

1. Adding new payment types

2. Automating the booking review process (fraud management)

3. Simplifying reconciliation

4. Streamlining security compliance

However, making these improvements can initially seem quite daunting because of the operational complexity of the business, coupled with the limitations of existing legacy systems. The big questions become what to do business-wise, and how to marry new and existing technologies with the least amount of pain.

In my experience, you can achieve some early success by implementing a point solution to address a specific payment need (for instance, adding new payment types or improving the booking review process). But as direct channels become more sophisticated, the most successful airlines are moving to a more integrated, centralized approach to payment management that can scale to support current and future needs while leveraging existing technology.

In doing so, payment management goes from being a necessary cost of doing business to a competitive advantage that can enable airlines to adapt quickly to market shifts.

In this paper, I’ll discuss the tactics I’ve seen airlines adopting to improve profit via payment management, as well as the implementation approaches that I’ve seen work best.

Click here to access Full White Paper

The double-edged sword of m-payments

Mobile payments pose a dilemma for banks; opportunities exist to be exploited, but banks risk cannibalising their existing payment systems. Before banks can benefit from the mobile channel, however, issues such as consumer trust and infrastructure integrity need to be addressed.

Jane Cooper reports

Unlike developing markets, where mobile payments provide an alternative to cash for the unbanked, the benefits of introducing m-payments for banks in developed markets are not so obvious.

South Africa’s Wizzit, a division of The South African Bank of Athens, has been successful in signing customers up to managing their accounts from their mobile phones. Brian Richardson, Wizzit’s managing director, tells Lafferty Cards Insider that this form of payment is popular because of the lack of alternatives. “In the developing world, there has been only one channel: cash,” he says. The developed world will catch on to m-payments, but not with the same vigour due to the numerous payment alternatives already available, he adds.

M-payments are not restricted to one type of service, points out Howard Wilcox, a senior analyst at Juniper Research. Unlike Kenya’s M-PESA or South Africa’s Wizzit, which are mobile money transfer schemes, the current opportunities in developed markets are more varied. While m-payments in developing markets primarily have the potential to move towards banking and bill payments, the starting point for m-payments in developed markets is more complex.

Banks in established markets have the dilemma of whether or not to develop the technology for m-payments. Wilcox points out that there has been a lot of infrastructural change recently with the incorporation of chip and PIN for card payments in the UK. He adds that while there is the “double-edged sword” of developing mobile payments, banks have the chance to“embrace the opportunities”. Wilcox gives the example of Bank of Ireland, which successfully launched its SMS top-up programme with Vodafone to create another revenue stream for the bank. With this service, customers can top up the credit on their mobile phone with funds from their current account by sending an SMS text message. They can also add funds to a friend’s phone and the text message is validated by a service SMS that asks for two numbers from the PIN. A confirmation text is then sent with a reference number.

The many uses of the m-payment alternative

Mobile phones can also be used for transferring funds, paying bills, managing existing accounts, or paying for small purchases. “There is no limit to what m-payments will replace,” says Elton Birden, vice president of financial services in the UK for technology solutions provider Unisys.

Wilcox agrees and describes m-payments as a wallet replacement, offering alternatives for all the items that consumers typically carry in their wallets. “Not many people leave home without their mobile phone these days. So once people get over that psychological barrier – once they realize that they can use their phone for lots of other things – it has great potential.” It is not just banks that are looking at the payment options. Considering that 65 percent of mobile phone accounts in the UK are prepaid, or ‘Pay As You Go’ (PAYG), there is also the potential to combine prepaid cards or accounts with mobile phones. Since so many consumers are used to PAYG on their phone, there may not be much of a jump between using prepaid for payments and combining this with the function of their phone.

Market penetration

Many consumers in developed markets already have a debit and credit card, so do not have a need for a prepaid account. “The new method has to be a lot smarter,” says Stuart Butler, head of business development at Altair, which is developing products that combine mobile and prepaid functions.

It is either the young or the wealthy who are the first to adopt new technology, Butler explains. While PAYG mobile phone accounts could be used for small purchases, telecommunications companies are not as likely to develop m-payments. If mobile operators are taking deposits that are spent elsewhere, they would then be subject to banking regulations.

“Banks are leading the innovation in m-payments at the moment,” says Butler. When pitching Altair’s products to banks, Butler has found that they already have an innovation schedule that is full up until 2011. He explains that m-payments would operate on the same ‘rails’ as the banks’ existing payments. “Wizzit and M-PESA had to create a different cash network, which was not on any existing rails of the payment network,” Butler adds.

Birden also points out the opportunities presented by the similarity of the back-end processing of both banks and m-payments. “There are often very similar payment systems at work, whether it is debit card, credit card or internet payment processing.” The challenge for the banks is ensuring that the back-end processes are secure, more so than focusing on the payment device itself.

A concern over security

“It is the back-office side where there is a lot of potential for fraud – that is where the fraudsters focus properly,” says Birden. The banks stand to gain the most from m-payments, he adds, because they already have the means to add and subtract funds from existing accounts.

Concerns about security are the major reason that m-payments have not sofar been adopted widely by consumers in developed markets. According to the Unisys Security Index, which was released in May, Britons remain apprehensive about the security of using mobile phones to pay for bills or to do their banking or shopping online. According to the study, of those surveyed, 80 percent were not keen on using their mobile for financial transactions. Only 5 percent of UK residents consider m-payments to be secure.

Birden explains that there is only an uptake in new forms of payment when it is convenient and straightforward, and when the consumer trusts the medium. With cheques and cards, for example, “the consumer trusts that they are not going to get ripped off or have their identity stolen”, he says.

Birden expects m-payments to follow a similar path to internet banking, which many consumers were very wary of at first, but then became increasingly comfortable with it. “The same will happen with m-payments,” he says. There are still consumers that will not use online banking, and likewise, m-payments will not completely replace existing payment methods.

The challenge is making the payments trustworthy with verification processes that are not cumbersome: “There is a constant need to strike a balance between making something easy and making something secure,” says Birden.

In terms of consumer uptake, “there have been a series of false dawns”, warns Butler. “Consumers are not ready to pay for things with their phones.” The technology is already well-developed, but consumer up-take is lacking: “There is a lot of clever stuff out there,” says Butler. This includes using a WAP browser, which simplifies the functions of an internet browser so that it can be used on a mobile, to buy small items such as ring tones.

Suitable for the travel segment?

Some segments, however, could adopt m-payments technology quicker than more general consumers. For example, Butler points to the potential of the remittance market. Migrants, who are typically the prime consumers of prepaid international calling cards and international SIM cards, are likely to be sending money home. Money transfer agencies like Western Union are developing prepaid cards as a means transferring money. If money is loaded onto a card in another country, the payment is quicker and the funds can be withdrawn from an ATM or spent on an open-loop payment network, such as Visa and MasterCard. A further development stage of this technology would be to develop mobile-to-mobile funds transfers.

This, however, is a niche market and similar technology could be used more widely. Butler says that a travel product will be introduced this year that combines a prepaid currency travel card with mobile functions. the prepaid card would replace the need for cash, travellers cheques and debit and credit cards. Consumers would be able to monitor the funds available on their prepaid card via sMs text message. they would also be able to block or top-up the account by SMS.

‘Banks are leading the innovation in m-payments
at the moment’
Stuart Butler, Altair

Mobile phones in developed markets are likely to be used to replace internet banking, whereby money is transferred between bank accounts. For example, parent-child transfers may be popular in moving money between accounts by text message.

Considering the rapid growth in the use of mobile phones in the last ten years, the opportunities for m-payments are vast. there is also potential with near-field communications (nFC) technology, which enables contactless payments of small amounts – typically under £15 ($30). the degree to which nFC m-payments will become widespread is as yet unknown, but the industry is eagerly awaiting the results of the O2 Wallet trial– the m-payment trial which includes Oyster card functionality for london’s transport network. Passengers tap their mobile phone against the contactless reader in the same way as an Oyster card to pay for each journey.

The NFC technology also includes the function of a Barclaycard credit card on the phone. It is anticipated that this will result in consumers using their mobile phones to tap for small purchases. NFC technology also allows users to pick up downloads such as ring tones and wallpapers by tapping their mobile against smart Posters – interactive advertising that contains a chip.

In the netherlands, supermarket chain C1000 trialled a similar payment scheme where customers could pay for goods using their mobile phones. the trial of 100 consumers was reported to be a success, with all age groups adopting the technology.

At present, only a small percentage of people are aware of the potential of contactless m-payments, says Wilcox.

The greatest challenges are the infrastructure for the payments and the availability of the NFC phones. Wilcox says that the industry consensus is that there will not be substantial numbers of nFC phones in the market until 2010 or 2011.

Regarding whether m-payments are an alternative payment or the way of the future, Wilcox says: “i think it will certainly start out as an alternative. Once consumers have overcome their initial concerns about security and have become used to the technology, there is a lot of potential.” For now the uptake is not widespread, but as consumers get over their fears, the potential could be realised. With the various applications of m-payments, it is likely that they will replace parts of all types of payments and will not necessarily cannibalise banks’ existing payment systems.

Click here to Request a free trial to Lafferty Cards Insider

Retail Decisions adds “PC Fingerprinting” to ReD Shields suite of Fraud Prevention tools

As part of ReD’s commitment to offer the most innovative fraud prevention technology to our clients, we now offer “PC Fingerprinting” as part of our customized fraud solution. This is the most recent development the Fraud Prevention industry has to offer, allowing yet further insight into potentially fraudulent transactions. This component of the fraud prevention service identifies devices that have been used fraudulently in the past and also exposes inter-related systems within a network and across the Internet. To see how “PC Fingerprinting” fits into your customized fraud solution, please contact your account manager or contact us at: support@redplc.com.

ReD extends its geographical footprint by taking its Fraud Prevention solution into Asia

China: We are pleased to announce the signing of a five-year reseller agreement with ChinaBank Payment, a leading electronic payment processor in China. ChinaBank Payment will be offering ReD Shield, ReD’s world-renowned Card-Not-Present (CNP) fraud prevention service. China`s e-payment market is growing fast and is expected to triple reaching 280 billion Yuan (US$36 billion) by 2010*. The biggest challenge facing e-commerce businesses, as they grow, is the increasing high levels of CNP card fraud losses and larger operating costs associated with managing fraud. ReD Shield protects e-commerce businesses against fraud by providing a real-time risk assessment recommendation designed to allow retailers to sell goods and services online safely, while maximizing good transactions.

India: ReD has signed a partnership agreement with Bird Consult, the consultancy wing of one of the country's largest and most diversified travel conglomerates, Bird Group. A market leader in India for almost four decades, the group has a turnover of over 100 million dollars a year, a workforce of nearly 3500 employees, 40 offices across the Indian subcontinent and an expanding network of services to over 500 top corporates, all of which can now have access to ReD's expertise in preventing and detecting e-payment fraud. The partnership reflects the rise of internet retail activity in Asia, with forecasters predicting that e-commerce there will grow by over 23% a year, to reach $168 billion by 2011. India is seeing the greatest growth - with the biggest rise in online usage in the world, increasing by 33% to 21 million users between 2006-7.

Latest Payments and Quality Enhancements: “We encourage innovation and change as the way to keep the organization fresh and ahead of the competition.”

PayPal Accreditation: ReD is in the process of certifying to the newest PayPal APIs in order to support PayPal Express Checkout. This new functionality will be available on the ReD1 Gateway/LiveProcessor from July, 2008.

Bill Me Later: As of April 2008 both the ReD1 Gateway and LiveProcessor now support Bill Me Later through ReD's Fifth Third Interface.

ISO 27001: Retail Decisions is proud to announce that it has once again earned the ISO Quality Management Systems-Requirements registration certification. Retail Decisions strives to serve its customers and will continually improve its processes by using ISO as one of the methodologies that facilitates delivering products and services to continue to make payments simple and secure.

ReD is delighted to welcome our newest Clients and Partners:

KLM

ChinaBank Payment

BSS MX

Talk Free

Emerge Telcom

Pacific Telcom

Bird Group

Tuxedo Money

The Park Group