Nonbank players may be competing for the growing mobile payments business, but financial institutions have the advantage of being consumers' most trusted channel, according to the Ovum 2014 Consumer Insights Survey.

Financial institutions can leverage their trust advantage to gain market share by delivering a broad range of mobile payments capabilities beyond the point of sale. "Given what is going on in the market today with other choices for payments like PayPal, Venmo and Square, financial institutions need to provide consumers with compelling ways to move money to whomever they want, whenever they want, in a highly secure way," says Tom Allanson, division president of Electronic Payments at Fiserv.


Financial institutions can establish themselves as mobile payments providers of choice by providing mobile payments to self, other people and billers while mobile payments to merchants/retailers gain greater traction in the marketplace.

SELF Transferring funds and depositing checks via mobile devices are critical for consumers and small business customers. "Mobile deposit…offers a high degree of 'stickiness,' helping build customer loyalty and boost retention," according to Gary Brand, director of Source Capture Solutions at Fiserv, noting that unregulated third parties like PayPal are aggressively going after mobile deposits.

OTHER PEOPLE Traditional checks and cash still dominate payments to other people, but certain segments of consumers, primarily Millennials, are attracted to mobile P2P payments. Solutions like Popmoney® provide a complete P2P solution that is secure, convenient and available anywhere.

BILLERS Consumers pay bills via mobile when it is more convenient. According to the 2014 Fiserv Billing Household Survey, nearly one-third of U.S. online households have paid a bill using a mobile phone, citing ease of use, time savings and convenience as reasons.

MERCHANTS/RETAILERS A loyal customer base for payments for the above three categories of payees establishes a foundation that institutions can leverage for the next phase, which will include mobile proximity payments at point-of-sale and mobile wallets. This category of mobile payments is rapidly evolving as evidenced by the announcement of Apple PayTM.


Financial institutions can begin building out capabilities related to mobile POS payments, including mobile proximity payments. This includes offering capabilities such as tokenization which is required for cards to be used with services such as Apple Pay, as well as offering merchant-funded rewards, loyalty program functionality, payment-related alerts and the ability to activate card accounts during international travel. By doing so, financial institutions will be positioned to encourage mobile payments at the POS.

It is also important for financial institutions to consider and leverage the POS payments user experience in designing the mobile banking experience and other transaction types. This will increase the likelihood of customers seamlessly transitioning from mobile banking to mobile proximity payments. Mobile banking design elements may include adding card and payment information in the contacts and help sections, using card-aligned PINs for authentication and adding visual metaphors to the design, such as wallet and card icons.


Consumers' and small businesses' confidence in payments security is critical—financial institutions need to prove that they can support their systems, not only to their customers, but also to the regulators.

The complexity of mobile payments requires an integrated, end-to-end and multi-layered approach to crime prevention and detection. From a systems perspective, the challenge is to have knowledge-based authentication of device and the customer. "All these processes…the end-to-end systems, the know-your-customer rules, the knowledge-based authentication rules… are being built into a set of capabilities that are launching right now in the market," says Allanson.

Big data analytics can also combat fraud as real-time payments proliferate. "A blend of analytic behavioral profiling, real-time detection scenarios and predictive analytics provides the most accurate results," says Mike Urban, portfolio director for Financial Crime Risk Management at Fiserv.


High-profile data breaches at major retailers have accelerated financial institutions' migrations to chip-based cards using EMV® (Europay-MasterCard-Visa) specifications. EMV counters card-present fraud at the point of sale, yet fraudsters can shift to other channels, such as mobile, tablet and online. The increasing threat of card-not-present fraud requires new measures, such as tokenization.

Tokenization substitutes a unique digital string ("token") for the customer's account number, turning sensitive information into cryptograms that are only enabled when additional layers of security and authentication are provided. In case of a data breach, criminals only get useless information, and tokens can be easily turned off without canceling a card.

As noted earlier, tokenization is required for cards to be used through Apple Pay. With the potential of Apple Pay to drive a significant volume of mobile payments, financial institutions should ensure the ability to tokenize their card programs. Financial institutions that don't do so risk losing transactions and potentially customers.

Cardholder controls are also effective in the fight against fraud. "Financial institutions can engage customers in protecting their accounts by providing technology that enables cardholders to create rules and send notifications when suspect online transactions are initiated," says Patrick Davie, vice president of risk solutions for Card Services at Fiserv. This immediate awareness of transactions that fall outside customer-defined parameters can significantly reduce fraud.


Consumers expect mobile payments—transfers, deposits, payments and purchases—to be fast and secure. Financial institutions, consumers' first choice for payments, are positioned to command more mobile payments business by creating loyal users of mobile capabilities that enable consumers to securely pay themselves, others and billers, while positioning themselves to enable mobile payments to merchants and retailers at the point of sale.

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