The Rise of IoP and Connected Payments
Transcript of The Rise of IoP and Connected Payments
The Rise of IoP and
Connected Payments
April 26, 2017
JAVELIN
Today We Will Talk About…
IoP – The Internet of Payments
These are the digital payments being made in the cloud to conduct
commerce for companies, cities, governments and people (most are
real, a few are nefarious and soon, some will be robotic)
Connected Payments
These the payments being made by the devices we collectively
deploy which are connected to the cloud. They make purchases on
our behalf, either by direct instruction or on a pre-programmed basis
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But First, IoT Or Internet of Things Definition – From A Shampoo And Toothpaste Guy!
“If we had computers that knew everything there
was to know about things—using data they
gathered without any help from us -- we would be
able to track and count everything, and greatly
reduce waste, loss and cost. We would know
when things needed replacing, repairing or
recalling, and whether they were fresh or past their
best. We need to empower computers with their
own means of gathering information, so they can
see, hear and smell the world for themselves, in all
its random glory. RFID and sensor technology
enable computers to observe, identify and
understand the world—without the limitations of
human-entered data.”
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Kevin Ashton
@Kevin_Ashton
He first coined the phrase in 1999
while working at Procter &Gamble
Source: RFID Journal, Kevin Ashton
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What It Means To Consumers – More Order And More Chaos
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I need service –
let’s schedule
11am on 8/15
Cool the
house, we’re
on way home Accident ahead,
take the new
recommended route
I’ll start the wash
after house cools
and you are
home
License plate
recognized –
charge toll
Responsible driver - eligible
for safe driver discount
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What It Means To Businesses – Control And Predictability
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Barometric
readings so far let
us predict it will
be a hot Spring
Consumers are
cooling homes
down more
Shoppers are buying more
shorts and mini skirts.
Sweaters, jackets and long
pants are staying on shelves
Ship more warm
weather clothes
to stores
Scanners confirm
change request
compliance
Boatload of long pants and
sweaters ready to ship
STOP! Do not leave
port. Repack ship for
warm weather clothes!
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What It Means To Cities – Manageability, Finally!
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Barometric
readings so far let
us predict it will
be a hot Spring
London Toll
reports more cars
coming into city in
past few weeks
Institute surge pricing on city
entry tolls for next 30 days
Air quality sensor detect
continued elevated levels of
ozone and NOX
The smart grid
detects more power
usage earlier in day
Institute Plan B
power
management
policies
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So Who Plays In This Space – Just To Name A Few
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The More Detailed View…
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Why Is IoT Important – $11 Trillion Industry By 2025
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Source: Information Week June 29, 2015 Issue
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Venture Capital Is Funding Billions $ In IoT Startups
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Source: Pitchbook
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So What Is The Nexus Between IoT And Payments…
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+
… It’s That Our Connected Devices Can Buy Things On Our Behalf Using Our Payment Credentials!
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By 2020 There Will Be 50 billion Connected Devices – 6.6 Devices For Every Person On The Planet
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Billions o Devices
Billions o Peo le
ource Census, The Connectivist sing Cisco Data
More connected
devices than
people!
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The Types Of Payment Enabled (And Soon To Be) Connected Devices Is Diverse And Growing
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The Combination Of IoT And Payments Will Do Four Things In Commerce
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Captures events that will occur 100% of the time,
such as buying food and paying the electric utilities
Raises the conversion rate of things that may occur,
such as buying flowers and timely vehicle servicing
Creates new opportunities that do not yet exist –
such as watching a movie in a self-driving car
Brings in new customers and sales to ecommerce
that traditionally occur in physical stores, allowing
greater efficiency and upselling – such as seniors
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Demand For Convenience Is Creating Opportunities – Ecommerce Is Booming / Embedded Payments
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Average monthly number and size of mobile purchases (by age)
Today Gen Y Makes 3+ Mobile Purchases A Month – With IoP, That Will Change Everything
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$44.82
$33.27
$48.60
$59.87
$39.50$36.40
$25.45
2.8
3.1
3.4
2.8
2.21.9
1.2
0.0
1.0
2.0
3.0
4.0
5.0
$0.00
$25.00
$50.00
$75.00
$100.00
Allconsumers
18-24 25-34 35-44 45-54 55-64 65+
Purc
hasesD
olla
rs
Average dollar value of a single typical purchase Average number of purchases in a typical month
© GA Javelin LLC
*Does not include contactless transactions made on mobile devices
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IoT Will Enable A Generation Currently Disengaged – IoP Will Help Them Spend Money Digitally
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Seniors Are The Fastest Growing Segment Of Uber Riders – Imagine The Impact Of Self-Driving Cars
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IoP Is Happening Now: Visa – IBM Partnership Extending Payments To IoT
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• IBM will give its 6,000+ clients of its IoT platform,
supported by the Watson machine learning platform,
access to Visa through its Visa Token Service
Providers
• This will allow IBM IoT customers to embed
payment card tokens into their connected devices to
enable connected commerce from launch
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So Who Could Enter This Market With Little Or No Payments Experience Yet Have Consumer Trust? – And Many Already Have With Partners
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Why Are Perceived Market Entry Barriers So Low? – Consumers Are Demanding 24/7/365 Commerce
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Yesterday Today Tomorrow
On Their Terms On Our Terms Expectations
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Yet IoT And IoP Will Still Be Vulnerable to Security Breaches As Are Businesses of All Sizes; Payments Are Very Attractive Targets
In 2016 there were
4,149 disclosed breaches
Which represented
1 billion records at risk
According to Data Breach Quick/View Report January 25, 2017
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Government, Privacy Advocates, CFPB Are All Watchdogs + The “Cree y Factor”
Regulatory Scrutiny Of IoT And IoP Is Looming: Not A Matter o “IF” But When And How Much
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FIs, Payment Firms And Card Networks Will Continue To Be Relevant In The Age IoP Due To…
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Experience with KYC, Patriot Act, BSA, AML, OFAC, SDN
Existing C.A.R.L. Infrastructure*
Regulators want to work with companies they know and trust
Understand Payments, Fraud and Security
*C.A.R.L. stands for Compliance, Audit, Regulatory and Legal
…And Consumers Want To se Them!
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What Do Consumers Need From Their FIs In The Age of IoT and IoP
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Greater Controls
• Payment controls/alerts
• Device management
(via tokens)
• Conflict resolution
Cash Flow Management
• NOT PFM!
• Projected cash flows
• Products to bridge gaps
Enhanced Security
• Tokenization of
embedded payments
• Improved Fraud &
Security controls
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Partner – FIs need to work with payment networks and IoT
providers to offer tokenization for payment devices.
Products – Develop products that help consumers manage
their cash flow and bridge the gaps between paychecks.
C.A.R.L. – Be proactive in addressing the regulatory, privacy and fraud pitfalls.
Recommendations
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Engage – Empower the customer to manage their IoP and deputize them to combat fraud – In return or “To o Wallet ”
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Additional Information or Questions?
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Michael Moeser Director of Payments [email protected]
@michaelmoeser22