19 February 2018
Hari Subramanian

Payments changing lives

Hari Subramanian - Wipro

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A post relating to this item from Finextra:

Bendigo Bank unveils QR code-based mobile payments service

12 June 2014  |  6847 views  |  1
Australia's Bendigo Bank has teamed up with Samsung to launch a QR code-based instore mobile payments system that gives customers 'cred' that can be donated to charity every time they make a purchase.

Ready for the Payment Paradigm Shift in Shopping?

19 June 2014  |  3485 views  |  2

Historically, we have shopped with cash or cards. When we use cards (credit, debit, gift, prepaid, etc.) the focus has been on validating the originator. The merchant takes your details and goes to a network and says "X wants to pay me" and gets authorization that verifies the originator of the payment. This usually leads to a higher level of chargebacks and fraud as the authenticity of the payment originator is in question.

Future is likely to be more aobut verifying the recipient rather than the originator of a payment. Paying with QR codes where the consumer with a mobile phone scans the QR code displayed by a merchant is an example of this new era. Another example is when you pay your friend using their phone or email through your bank. In these new payment examples, the originator of the payment is clearly known and authenticated by the bank. Only the recipient needs to be validated for transaction integrity (recipient is indeed the one that was originally intended) and compliance (recipient is not fraudulent or prohibited).

What are the implications of this paradigm shift?

  • Such transactions that verify the recipient as opposed to the originator will increasingly be carried out through open directories (phone, email as opposed to proprietary directories such as BIN's and PAN's). Use of QR codes would be a simplification to the data entry required for phone numbers and email addresses.
  • They will bypass traditional proprietary networks (e.g., Visa, Mastercard, American Express) and conduct payment transactions over the Internet in a secure manner through SSL, tokenization, etc.
  • Consumers will start feeling the power of unified payments (seamless consumer experience on the mobile device between payments that verify originators through proprietary networks and payments that verify recipients through proprietary or open networks)

New entrants and innovators will keep challenging the incumbents using payments through open directories and secure Internet transactions leading to revenue loss for the incumbents. However, it will take them a long time to build formidable scale to threaten the incumbents. It is high time for incumbents to take note and start supporting the disruptive payment types, open directories and networks as this will help them retain the consumer.

There are a number of practical initiatives that the incumbents can take in this area to avoid revenue erosion and consumer loss. I will be glad to share them in detail.

Paradigm Shift in Payments during Shopping TagsPaymentsTransaction banking

Comments: (3)

A Finextra member
A Finextra member | 26 June, 2014, 10:03

Hi Hari,

Completely agree.  The defining characteristic is, as you say, the question of who authenticates whom.  I wrote about the debate here: http://insights-on-business.com/banking/who-will-decide-the-future-of-retail-payments/  but I now wish I'd been more precise on the definition :)



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Hari Subramanian
Hari Subramanian - Wipro - Greater New York City | 26 June, 2014, 11:40

Thanks Richard for your comments. I did read your article. No wonder they say that if you have an idea, chances are that many others are thinking about the same thing!

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John Candido
John Candido - Black Cabs - Melbourne | 26 June, 2014, 14:00

I have downloaded the Redy app as I live in Australia, and I am really looking forward to using Redy as soon as it arrives at some of my local shops. Lovely app. It has a section where all of your ereceipts are stored by month and year. It is easy to store one of your Visa or Mastercards, regardless of whether or not they are a credit card or a debit card.

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job title CxO Advisor - Banking and Payments
location Greater New York City
member since 2014
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Hari is a management consultant and industry advisor in banking and payments with over 20 years of global experience in Telecom and Banking and Financial Services. He has advised a number of the leade...

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