YOUR GATEWAY TO THE WORLD OF PAYMENTS

PCM

The immersive experience of Virtual Reality in Payments

Vol 2. Issue 7 July 2016

Welcome to Vol.2 - issue 7

Virtual Reality is an intriguing topic, especially when it comes to payments world. Some people speculate whether it will be a passing wave or a rising tide. In the 7th issue of the Payments & Cards Network digital Magazine we focus on VR in payments – is it possible and if so, how? In light of this we invite you for a Q&A session with Jason D. Rowley, a young but very technology savvy entrepreneur, tech blogger and crypto currency analyst.

Continuing with the technology issue, we feature Brett King, Amazon best-selling author and a well-known industry commentator, who predicts some of the most rowdy technologies in 2025.

In the Thought Leaders Corner you will find Daniel Kornitzer, CPO of Paysafe, who elaborates on the embracing disruption in digital payments. Moreover, Daniel talks about the future of digital payments and opportunities in delivering services that make life simpler for consumers and merchants.

For the Startup Spotlight we have invited Valentin Stalf, founder and CEO of Number26, the rising star of the banking market. What is Number26 and what makes them stand out of the crowd? Check out the interview.

Furthermore, we present you to the job opportunities. Looking to change a position or environment? Have a look by simply clicking on the particular job.

Lastly, we have gathered the most interesting payments-related events worldwide. Check out what is worth to see and book your ticket now with our special discount codes.

For any questions, suggestions, or concerns, please address them to the editors:

Amir Abdin - amir@paymentsandcardsnetwork.com Duc Dang - duc@paymentsandcardsnetwork.com Joanna Bak - joanna@paymentsandcardsnetwork.com

The Payments & Cards Network team wishes you good reading!

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spotlight

Contents

Authentic - Transaction processing for a changing worldJose Gonzalez-Alonso elaborates on the changes within the Payments and

points out the necessity to adapt to those changes.

Spotlight: Number26We speak to Number26, a German startup taking banking to the next level.

Hot JobsHottest jobs in the industry! Get in touch directly to get more insight.

EventsHere we showcase the most exciting upcoming events related to FinTech, Payments and Cards throughout the world!

Embracing Disruption in Digital PaymentsDaniel Kornitzer gives insights on the digital payments world and mentions the advantages of using Paysafe, both for merchants and customers.

4 of the most disruptive Technologies in 2025We have chosen the top 4 of the Brett King’s 25 most disruptive technologies.

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Virtual Reality. Already a reality?An extended Q&A session with Jason D. Rowley about the current state of VR and it’s perspective for the future.

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Thought Leaders Cornerby Jose Gonzalez-Alonso

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Payments are constantly changing. Retail banks, merchants and processors have to respond to new technologies, new trends and demands from regulators.

One place we’re seeing this is in the contactless space. Around the world, the volumes of contactless payments are increasing significantly. The uptake of EMV globally, supplemented by the arrival of Apple Pay, has transformed the profile of contactless or tap-and-go payments. In the UK, contactless currently accounts for one in ten card transactions, and countries around the world from Australia to Poland are also experiencing soaring use.

Faster Payments systems are changing the speed at which transactions need to be processed in many countries around the world. Some, like the UK, have been delivering near-real-time person to person transactions for a number of years now, while others such as the US and the Netherlands are in a consultation phase deciding how best to deliver these systems. Alongside Faster Payments are the many different person-to-person payment methods in use, from the mobile-based transactions in parts of the developing world, to Paym in the UK which rides the Faster Payments ‘rails’.

In addition to contactless and faster payments, we’ve seen massive update in mobile banking and payments, the use of APIs, new authentication methods using biometrics, mandate updates, changing messaging standards - the list of influencers is long and they are transforming the way payments are handled.

Alongside all these changes, competition is increasing from new players in the market and profits are being squeezed at every opportunity.

Fear of change

However, despite the many advances that have been made in the financial sector in recent years, and the fact that payments are changing every day, many financial institutions still remain inherently conservative when it comes to the foundations of how they process these transactions.

In many ways, this is understandable. For a large number of financial institutions, there’s a fear of change – they feel that their existing legacy systems have held up well for many years, so there is no real reason for them to ‘rock the boat’.

However, this attitude is just leaving them vulnerable. Payments in the future are vastly different from those in the past, and the way they are handled and the speed at which they are processed is changing. The current transformation in the industry is a huge disruptor and is shaking up many established ways of doing business. Therefore, if banks are to equip themselves for the future, it may be time for them to shake off this complacency and take the plunge on a system that will be more fit for purpose in the years to come.

Breaking away from their incumbent solutions is a significant decision for any organisation, and all too often it is a decision that is delayed and delayed because people fear actually going ahead with the project. However, while it may be easier to do nothing in the short term, if they fail to act now, financial institutions could end up facing a crisis point at a later date.

Making the move

Once a financial institution has decided that they do, definitely and at last, need to change their

Authentic - Transaction processing for a changing world

About NCRNCR Corporation (NYSE: NCR) is the global leader in consumer transaction technologies, turning everyday interactions with businesses into exceptional experiences. With its software, hardware, and portfolio of services, NCR enables more than 550 million transactions daily across retail, financial, travel, hospitality, telecom and technology, and small business. NCR solutions run the everyday transactions that make your life easier.

transaction processing engine, they need to ensure they select the right replacement that truly will give them a system for the future.

For many organisations the list of requirements is headed up by reliability, cost effectiveness, f lexibility, configuration, the ability to handle all their channels today, and to add new channels or payment types in the future. They want a system that can respond to the changing payments environment, scale with them as the business grows, and empower them to remain competitive and cost effective.

A solution for today and tomorrow

Authentic is NCR’s intelligent transaction-processing software platform. It is designed to keep customers in control of their payments environments, while giving them functionally rich, secure, resilient and scalable performance across all payment channels.

Authentic can accept any type of transaction from any device, source or system, authorize and authenticate it, and route it to any destination. Authentic enables users to operate a multi-faceted payments business from a single platform. It offers multi-institution, multi-currency, multi-language and multi-channel support, and enables compliance with current and future EMV standards as well as contactless and mobile payment types.Authentic also supports a full range of payment applications. It can be used as a payment gateway, to power consumer payment service hubs or omni-channel systems, and to drive all major ATM and POS devices and can scale from supporting small gateway systems to global networks. It delivers conventional card-switching services as well as supporting digital banking and eCommerce. Authentic also incorporates issuer authorization and stand-in functionality.

The power of flexibility and freedom

However, flexibility is where Authentic really stands out from the crowd. From its very first release, flexibility and agility have formed the backbone of Authentic. It is platform independent, and its design means users can easily configure

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Thought Leaders Cornerthe system to meet the specific requirements

of their business.

Unlike other solutions on the market, Authentic is designed to give the user complete freedom over how it is managed. The business model, similar to open source in many ways, gives customers the ability to customize and manage it themselves with as much or as little support from NCR as they choose – so they retain total strategic control of their system.

This is a significant change for organisations that are migrating to Authentic from other large industry players. Instead of ‘change requests’ which can take many months to be delivered by the vendor – not to mention the often significant costs involved, Authentic customers have the option to make those changes themselves. They don’t have to of course – there is an extensive professional services team at NCR who will make changes if

needed, or work alongside the customers’ team to do it together – but the customer can choose the right course of action for their individual circumstances.

The way that Authentic has been built means that it can be easily integrated with any core banking, fraud detection or other internal or external systems. It also offers out-of-the-box, real-time, in-flight integration with the Fractals fraud detection and prevention solution from NCR. Thanks to its Message Mapper component, Authentic enables rapid configuration of interfaces between systems – usually without programming or re-coding the systems involved. By importing web-service definitions into Message Mapper, new web-service connections can be rapidly created.

Authentic truly is a platform for the future. It is designed for continuous availability and 24×365 operations, and its in-built flexibility of being able to handle any transaction, on any channel, whilst being fully customizable reassures our customers that they have a system that can meet their needs today and tomorrow, however those needs change.

Daniel KornitzerEVP - Chief Product OfficerDaniel Kornitzer serves as EVP and Chief Product Officer of Paysafe Group PLC. Prior to re-joining the Group in 2014, he was CEO and Board Member of SiteSell.com. In his 20+ years in technology management, Daniel has pioneered groundbreaking initiatives, from one of the world’s first over-the-phone speech recognition systems and the ISO/ITU standards for video coding in use today, to FirePay’s digital wallet and industry-leading risk management processes, which resulted in his subsequent appointment as a member of the NACHA Risk Management Task Force. Daniel holds a B.Eng in electrical engineering from Ecole Polytechnique of Montreal, M. Eng from McGill University and a diploma in network engineering from University of Toronto.

Embracing Disruption in Digital Payments

I sometimes feel like a mountain climber who has gone one-third up and imagines, with anticipation, the spectacular views to be seen from the peak. Certainly, a lot has been accomplished since the onset of the Internet and search engines that “freed” information, bringing incredible disruption to news, directory, travel and many other industries.

Then came the beginnings of ecommerce, with the huge latent demand of merchants wanting to sell online, and even consumers wanting to auction their garage junk and find easy ways to collect from buyers, all on the web. Next, in what used to be called web 2.0, came the revolution of user generated content … from rating hotels and doctors, to posting blogs and comments and displaying our personal and professional lives in the social media explosion. Add the layer of mobility and connected devices and we now have seven billion mobile phones, five billion of which are network enabled.

But this is still pale in comparison to the tens of billions of network connected devices that the internet of things (IoT) will bring, creating a new level of closeness. For example, allowing us to order food and cleaning supplies by clicking

a standalone physical button or launching an app. Better yet, with intelligent contracts, consumers may enable IoT devices to place their own orders for milk or dishwashing liquid when supplies run low. Digital disruption by its very nature upended the status quo, creating opportunities for winners and disintermediation and pain for those caught in the flux. Many, particularly those at the bleeding edge of change on both sides, were caught off guard by just how much change could occur in such a short space of time.

At Paysafe, we embrace the future of digital payments and see a tremendous amount of opportunity in delivering services that make life simpler for consumers and merchants. It helps that most of the things we do in life involve a payment consideration, making payments one of the world’s largest industries. It also helps that digital payments play a central role in the business models of virtually all new-economy companies, like Uber and Airbnb, that are revolutionizing entire industries. Payments is like an onion, with “moving funds from A to B” at the core, and then surrounded by layer upon layer of added value …

Thought Leaders Corner

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IoT enables customer many new ways to pay

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convenience, safety, speed, global coverage, mobile enablement, risk management, analytics, compliance and, of course, all delivered in a cost-effective manner. To continue to enhance our technological and market leadership, these are some areas of focus: • Continuing to build out an

advanced data platform that provides insights/analytics on consumer behaviour, allowing merchants to achieve mass personalization of their services, providing relevant offers, loyalty rewards and making consumers feel appreciated and valued, basically using technology to recreate the feeling of customers being served in a differentiated fashion by the store owner. The data platform also powers real-time decisioning for risk management, reducing the incidence of fraud, as well as false positives that would otherwise result in a degraded customer experience and revenue loss for the merchants.

• Establishing an entire mobile

ecosystem that enables consumers to order with

maximum convenience from their phones for pick-up or delivery, and merchants to manage this channel, create segmented promotions and basically increase the number of orders and the average revenue per order, as well as increasing stickiness/loyalty.

• Continued globalization

of services, covering more countries and territories, currencies and languages, and supporting a growing number of in-market and in-industry alternative payment methods.

• Expanded P2P/remittances

corridors and options, so that sending money from NYC to Singapore (or from anywhere to anywhere) becomes as simple as sending an email.

• Increased consumer

alternatives, from e-cash vouchers to pay-after-deliver and online credit solutions, supplementing our digital wallets and straight payment processing solutions to give even more control to the end-user.

In fact, the common thread between all these areas is that they put the consumer in the driver’s seat. And consumers are at the heart of any value chain, which also makes merchants happy, thus achieving the proverbial win-win. These developments are also bringing digital payments within the reach of more people, driving financial inclusion in underserved communities, as highlighted in a recent G20 report.

I would like to conclude by a quote that I heard from Terry Jones, the founder of Travelocity, a few weeks back in NYC: “If you don’t like change, you’re going to like irrelevance even less.” To remain competitive, innovative and at the forefront of progress, players in the payments space must continue to embrace change and fulfill the promise and the potential of digital payments to simplify and enrich the consumer experience, in every market vertical served.

Paysafe

www.paysafe.com

Paysafe Group PLC is a technology company that provides online and mobile payment services. Paysafe delivers end-to-end payment solutions - from card issuing to acquiring; from payment gateways to merchant accounts; from fraud and risk management to reporting and analytics; from digital wallets and online invoicing to mobile.

Brett King is an Amazon best-selling author, a well-known industry commentator, a speaker, the host of the BREAKING BANK$ radio show on Voice America (an Internet talk-radio network with over nine million monthly listeners), and the founder of the revolutionary mobile-based banking service Moven. King was voted as American Banker’s Innovator of the Year in 2012, and was nominated by Bank Innovation as one of the Top 10 “coolest brands in banking”.

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Thought Leaders Corner

4 Of the most disruptive technologies in 2025The Internet and smartphone are just the latest in a 250 year long cycle of disruption that has continuously changed the way we live, the way we work and the way we interact. The coming Augmented Age, however, promises a level of disruption, behavioral shifts and changes that are unparalleled. While consumers today are camping outside of an Apple store waiting to be one of the first to score a new Apple Watch or iPhone, the next generation of wearable will be able to predict if we’re likely to have a heart attack and recommend a course of action. We watch news of Google’s self-driving cars, but don’t likely realize these means progressive cities will have to ban human drives in the next decade because us humans are too risky.

Following on from the Industrial or Machine Age, the Space Age and the Digital Age, the Augmented Age will be based on four key disruptive themes - Artificial Intelligence, Experience Design, Smart Infrastructure, and HealthTech. Historically the previous ‘ages’ brought significant disruption and changes, but on a net basis jobs were created, wealth was enhanced, and the health and security of society improved. What will the Augmented Age bring? Will robots take our jobs, and AI’s subsume us as inferior intelligences, or will this usher in a new age of abundance?

The world will change more in the next 20 years than it has in the last 250 years. Are you ready to adapt? Because if history proves anything, you don’t have much of a choice.My new book Augmented: Life in the Smart Lane

has just been released on Amazon - please check it out!

1) Artificial Intelligence

Artificial Intelligence that disrupts the nature of advice, that is better at everyday tasks like driving, health care and basic services than humans will be commonplace by 2025. While many fear the possibility that hyper intelligent robots or minds will take over the world, for the next 30 years, it is far more likely that these AIs will be specialised and purpose built, and not necessarily human equivalent intelligence. The most common form of AI that you’ll be exposed to will be an assistant in your phone, car and home.

2) Wearable and Ingestible sensors

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Wearable and ingestible sensors will monitor our heart health, sugar levels, and allow us to hack our body by adjusting our gut microbes, kick-starting ketosis and other ways of extending our life and improving our health.

3) Augmented Reality & Vision

Augmented and Virtual Reality will change education, healthcare, entertainment, and many areas of life. By 2025 many of us will be wearing personal head up displays built into AR glasses. This won’t be Google Glass 2.0 - this will

be cinematic reality in our field of view, optimized around our lifestyle and personality. Check out Magic Leap and Meta to see early versions of this technology

4) Virtual Reality

By 2025 we can expect that VR titles will regularly outperform Hollywood Blockbuster movies. Who want to sit and watch a movie when you can be a part of a virtual world and story?

Read about more disruptive technologies of 2025 here.

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expert interview

Jason D. Rowley is an independent researcher and consultant specializing in data-driven coverage and analysis of the venture capital industry and emerging technology trends such as Bitcoin, virtual reality, automation and big data. His work has been published in Techli, TechCrunch, Mattermark, and in his weekly newsletter.

Follow Jason on Twitter @Jason_Rowley.

Jason D. RowleyIndependent Reseacher & Consultant

PCN: There seems to be a lot of interest in virtual reality these days. How long has the technology been around, and why is there so much interest now?

I definitely agree with the statement that VR is being a big trend right now. There are a lot of really interesting technical developments that helped to facilitate this current wave of VR interest, but it’s important to remember that VR is not a brand new idea.

Take, for example, the head-mounted display which modifies the image that’s projected into your eyes based on where your head is in space. That technology has been around in some form or another since at least the early 1960s. Controllers that fit your hand like a glove have been around for a similarly long time, but a lot of these early experiments were confined to academic research and some corporate research and development labs.

In the 1980s and 1990s there were several attempts made to commercialize VR technology, primarily by the video game industry, but it’s my understanding that those first attempts were fairly crude: lots of blocky, pixelated graphics and some signif icant lag in head tracking, which made users nauseous. All of this took away from the immersive experience that VR enthusiasts sought. The history of VR hardware is really interesting, but that’s kind of outside the scope of this conversation.

Today, though, both hardware and software have gotten to the point where that kind of immersive experience is achievable. The high end PC gaming industry really drove a lot of technical progress in graphics processing chips. Both computer and mobile phone producers have developed and adopted displays with extraordinarily fine resolution, so whatever is being displayed looks very smooth.

And, we could probably thank the smartphone industry for the huge variety of inexpensive gyroscopes, sensors and other components that allow for head tracking, tilt detection and other features. All these components

have been appropriated and remixed by the VR industry today.

This is a long-winded way of saying that VR is the convergence of a lot of technical progress that’s come down to a price point that’s accessible to a lot of people now.

PCN: How does VR make user experience better? Is there anything that’s bad or lacking in the VR experience?

Obviously, one of the main ideas in VR is “immersion.” Regardless of where you are, truly great VR designers and content producers are trying to basically trick your brain into believing that it’s actually in the environment that’s being displayed to it through the headset and headphones. When done well, you really do feel like you’re in the experience, and that is really cool.

There are things that can be improved on, at least in my experience. For one, most of the times I’ve experienced VR have been fairly passive and consumption-oriented. For instance, watching videos in VR is fun. It’s neat that I can look around a room, or some outdoor setting, while the relevant

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Virtual reality. Already a reality?

action is happening in front of me. The times were I have been able to interact with my environment in a video game scenario were great too, but the immersive quality of those experiences were hampered by the fact that I was still using a video game controller. That’s not going to be the case going forward, because VR hardware makers are coming out with new controllers that allow for free use of one’s hands that are more fluid and natural than using a video game controller. So, for example, if I wanted to shoot a slingshot in VR I’d hold my left arm out straight, grab the “sling” with my right, pull back and release. I myself haven’t experienced that kind of immersion personally, yet, but I’ve heard reviews — specifically of the Oculus Touch controllers — and that’s the kind of experience that’s now possible.

The last thing I’ll add as a limitation is probably something that VR hardware and software producers can’t control for. You can get dizzy and motion sick very easily, both in real life and VR. If you’re particularly sensitive to that sort of thing, it’s just something to be mindful of.

PCN: What are the current trends in virtual reality?

It is important to remember that VR is a platform, just like smartphones and personal computers before them. Just like there is no one use for a smartphone or PC, there’s no one use for VR. It is not easy to talk about “trends” in VR, because many different industries are using the technology in radically different ways. I know we’re going to be talking about VR as it relates to the shopping and payments space in a bit. However, very briefly, let’s review just some of the other applications of VR technology that I find most interesting.

On the consumer side, the applications that are getting the most attention are on the entertainment side. It’s primarily focused on video gaming and immersive video of all varieties. Certain genres of video games and video content are better suited to the VR experience, and producers are acting accordingly.

Fascinating issues are VR’s applications on the science, engineering and medical side. Industrial designers and engineers

could use VR to design and model their creations in three dimensions in a way that’s more engaging than sitting at a desk working CAD software. In that area alone, VR has the potential to radically transform the earlier stages of the hardware product development cycle, which may increase the pace of innovation. Forgive the pun, but surgery is on the bleeding edge of VR application development. Just a couple of months ago, in April 2016, the first surgery was broadcast in 360º video, so you could imagine a point in the future when a surgeon could get a second opinion in real time from their colleague on the other side of the planet. And, there’s this one company that takes high-fidelity medical imaging and models it in VR, so a surgeon can get a feel for where a tumor is relative to important nerves or blood vessels before even making the first incision.

There are possible applications in many other fields, ranging from education, historical preservation, military and police training, to business and finance. Like, what would a VR trading dashboard even look like? Visualizing a high frequency trading algorithm doing its work would be absolutely insane, and I really hope someone takes that idea and runs with it.

PCN: The Fintech startup environment has been very dynamic for some time now. Who is especially interested in this sector and why?

Firstly, we have to mention that there of course is a business incentive behind all of this innovation. At least for now, it costs something to transfer money electronically, and as long as that’s the case, any technology that makes interacting with that electronic system of value transfer easier to do more often for the end user will be pursued. Digital payment transaction volume generates the fees that allow the payments industry to run, so anything that can increase that transaction volume is worth pursuing from a business and investment standpoint.

At least on the side of the Fintech industry I interact with most as a user, which is point of sale and online payments processing, there’s this push toward accessibility and ease of use, and

startups are leading the way on a lot of this. A lot of these are names readers will probably recognize.

Accessibility comes in a couple of different flavors here. For a lot of small businesses, the prospect of maintaining a dedicated credit card terminal is either unappealing or unaffordable, so a company like Square really changed the game. Square now has a lot of competition from companies that also let small business owners take credit card payments through their phone, but that was a huge boon to business owners. On the other hand, it ’s my understanding that the technology side of the payments industry is difficult to access unless someone is already an expert. So making a standardized platform with a suite of easy-to-use APIs makes the payments industry accessible to software developers who want to receive and process digital payments. Paypal was the first company to do this at scale, but since then companies like Braintree and Stripe have made integrating payments into everything from mobile apps to marketplaces and traditional e-commerce stores a relatively easy thing to do.

On the investment side, I recently took a look through some venture capital deal data and was at first surprised at the amount of money that large financial institutions, credit card companies and retailers are investing in innovative Fintech startups. There are also, of course, the usual VC investors from Silicon Valley and other innovation hubs. I know that Silicon Valley VC’s interest in f inancial technology has grown considerably over the past few years.But back to the corporate venture side, I’m now not so surprised because, again fitting with what I said at the beginning of this answer, their incentives are aligned with funding the companies that make transactions easier and more frequent. Assuming those startup companies come through, these corporate incumbents stand to benefit from increased transaction or sales volume.As far as internal VR projects go, there is some experimentation from Visa and MasterCard in the VR space, but there’s not a lot of information out there right now.

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PCN: There are a lot of great ideas and things that will make life simpler in the payments industry. Is Virtual Reality one of them?

Yes and no. The conservative answer to the question is that it’s very difficult to tell right now because this new wave of VR commercialization is still very much in its infancy. Remember that most mass-market VR headsets have only been available to developers for a little over a year now, and the consumer versions are just barely starting to ship, mostly to people who pre-ordered a long time ago. Right now, Oculus, the company Facebook bought, is facing some delays with its Rift units and HTC’s Vive headset has been sold out for months now. There are some headsets that allow you to use your smartphone as a screen, but, again, those have only been available for a short time and are limited by the platform they run on, namely smartphones. Suffice it to say there are still a lot of unknowns.

But, in general, I would say there is a lot of extant and growing interest in VR on the commercial side of things. Although I’m not currently in the market for real estate, I’ve experienced this one demonstration of a VR application that allowed me to “walk” through a new condominium development that was still under construction. I was able to view the different countertop options, play around with paint colors, and switch out different styles of digital furniture to suit my preferences. The experience even featured a realistic rendering of the southward facing view out the main window, and allowed me to see how the light would fall in the room at different times of the day.

Although this is more of an Augmented Reality (AR) application, rather than VR, some home goods retailers let you overlay a picture of a piece of furniture or fixture over an image of your room through your phone’s camera.

One could imagine these demonstrations being used in all sorts of other scenarios besides real estate, car dealerships, and others. From your home or office, imagine shopping for a camping tent online and being able to sit “inside” it in a nice forest setting, complete with birds chirping and pine boughs rustling in the wind. To me, that is a much more

engaging experience than looking at pictures online or even going to a camping store to shop for tents.

I think that VR definitely has a very compelling use case for improving a sales and shopping experience, but it’s difficult to say whether for these brief experiential encounters with VR will be a venue for the payments industry to take hold.

I think a major influence on how this plays out is how people end up using VR. If it becomes the norm to go into VR for hours at a time, or there’s some kind of social interaction going on that might involve a transaction, then there is an opportunity there. But if people just dip in and out for mostly consumption-oriented experiences, like watching videos or movies, my bet is that any payment for those experiences would be mediated through one’s phone or computer. We’ll see how that plays out.

PCN: How does that look from the customer’s perspective? What are the challenges VR present to the payments space

In the payments industry it’s all a matter of reducing friction for the end user. Less friction equals a higher likelihood that the user will transact more regularly, because transaction is no longer a chore. In other words, technical progress has significantly lowered the hurdle between having the intent to transact, and completing the transaction.

It seems like this is achieved by abstracting away the physical relics of the past, and this succession has been going on for a long time. There were a lot of steps between bartering for goods with crops and livestock to the physical coinage, paper money, checkbooks and credit cards we have today. Trading a chicken for a bag of grain involves lots of friction. Comparatively speaking, swiping a debit card for some frozen peas at the grocery store is much easier. But taking your physical credit card out every time you want to buy something online is kind of a pain, right? So, again, another layer of abstraction is in order.

That’s where something like PayPal, Amazon or a cached credit card in my web browser come in. I can just

type in my username and password to authenticate myself, rather than go through the rigamarole of manually entering my credit card information. Then, with the press of my Enter key, I’ve paid and everything is on its way.

But now, this is the challenge posed by VR. Assuming we’re in a situation where we are to make a transaction of real or imaginary currency in VR, what does that transaction experience look like? What’s the right approach to abstracting away the computer keyboard from the payments experience in VR? How will these transactions be performed securely? What kinds of risk are opened up to the platform operator and payment processor? What does the check-out process look like? Do designers seek to mimic real-world transactions where you check out at the virtual equivalent of a cash register? Do they appropriate design patterns for online stores from the flat-screened past? If the user is buying a physical good, where and how do they disclose shipping information? These are still open questions.

The optimal user experience would not involve breaking immersion. We’re seeing some super early attempts at making that experience work, but again these are very early days.

PCN: Can you predict a couple of paths toward building a seamless payment experience in VR based on current hardware trends and industry forecasts?

I think there are a couple of basic paths forward here. In all scenarios, there is a tremendous economic incentive for producers of VR hardware to develop their own centralized marketplaces for VR content, in the same way that Apple and Google benefit by taking a fee from publishers for their music, video and app marketplace services. Although the hardware manufacturers own the gateway to the customer’s experience of VR, namely the hardware or whatever VR platform is running on a desktop or smartphone, I’m inclined to believe that there will be a lot of cross-platform content and experiences, much like mobile apps with both iOS and Android versions. VR hardware and software makers like

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Facebook, Google, Samsung, Valve and Apple — if they release their own VR platform — all have this marketplace opportunity in front of them in the VR space.

PCN: What does each scenario look like?

The first one is probably the least exciting. What if we just didn’t make payments in VR? This maintenance of the status quo certainly does not rule out the possibility that VR would be used in the sales process, but it might be the case that, in the future, VR content or goods the user previewed in VR are paid for the same way we pay for things today: by entering credit card details or through payment information stored on a user account.

The next path is the more exciting, in this scenario, we do start making payments in VR environments. I don’t think the innovation required to make this happen is going to come from third parties, because, again, owners of the VR hardware and software platforms have a huge incentive to develop proprietary payment methods. Just like with the rollout of ApplePay a couple of years ago, I think banks and credit card companies are going to have to strike deals individually with the different platform operators.

I bring up ApplePay for a couple of reasons. It presents an interesting case study of a proprietary payments platform, yes, but it’s also a great example of how a hardware manufacturer used biometric data and simple, natural gestures to make the payments process smoother. Apple’s TouchID technology lets me bypass the interactional friction of keying in a passcode when I want to use my phone. In conjunction with the payment chip, TouchID makes the payment process easier. I avoid taking out my wallet, sliding my card into a chip reader, keying in my pin, and then putting everything away properly. And, I can leave my wallet at home, if I’m just stepping out to the corner store.

So in real life, I can pay for things with my fingerprint and my phone. In a VR environment, I’m not going to blindly fumble around for my phone while I have a headset on, especially if it’s my phone powering the headset, like in the case of Samsung Gear VR.

PCN: What is the solution here?

I contend that we’re literally staring at the solution. Irises and capillary patterns are as unique to everyone as fingerprints, so why can’t I use my payment information and user login information be digitally linked to my eyeball? I wouldn’t be surprised if in subsequent generations

of VR headsets, manufacturers included some kind of iris tracking and scanner technology. When exactly that will happen, if it happens at all, I don’t know.

There are some things that point in this direction, though. A company called FOVE is producing a VR headset with iris tracking, so it knows where you’re looking. In March of this year, FOVE closed an $11 million Series A round led by Colpl VR Fund, with participation from Chinese hardware manufacturing giant Foxconn and Samsung’s corporate venture capital fund. It’s a small and incremental step away from an iris scanner. And in June, 2016 Samsung filed a patent for an iris scanner that will likely be used in the Galaxy Note 7, the latest in the Galaxy class of phones that serve as Samsung Gear VR’s main hardware platform. That phone is rumored to be unveiled in August of this year, featuring what Samsung’s now trademarked “Galaxy Eyeprint” or “Galaxy Iris” security technology.

So I suppose that, in many ways, the future of VR payments is already here. And, as an extra bonus, you might be able to use it in real life as well.

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SpotlightYou think you have what it takes to start a business in a super-hot market?

PCM takes a close look at some of the most innovative and promising startup companies in the payment industry.

startup spotlight

Valentin Stalf, Founder & CEO , Number26

““WE TRULY BELIEVE THAT THE BANK OF THE FUTURE CAN SOLVE A LOT MORE PROBLEMS FOR CUSTOMERS”

In the past years numerous startups have emerged in the Fintech space. Some focus on specific profitable niches such as currency exchange or peer-2-peer payments and promise a more transparent alternative to traditional banks. We speak to one of the most promising German startups in the field. Number26 offers a completely free and mobile only banking account.

We hear a lot about “the new star in the industry, Number26”, what is Number26 exactly?

Number26 is the bank of tomorrow designed for your smartphone. You can open an account on the go, completely paperless within 6 minutes. We offer a fully-fledged bank account providing all functionalities expected from a bank, starting with standing orders to international transfers. Attached you receive a MasterCard and Maestro Card which is shipped to your address within 2-3 days. Furthermore, we are now building all the products around, starting with an overdraft (short term credit line) to saving, investment products as well as insurance products which will all be launched soon. We truly believe that the bank of the future can solve a lot more problems for customers than banks do today. Therefore, we believe in leveraging the innovation that is happening all around the world by bringing these companies together again. Most products you are accessing through your Number26 app are powered by partners - one good example is Transferwise. With this strategy we can guarantee to offer the best products for the best price.

How did the idea for such a bank originate?

It all began in 2013 when Maximilian Tayenthal and myself

decided to create something new, banking as we imagined it for ourselves. We started in Vienna, our hometown, out of our living rooms, invested some money and started to work on our vision to create the bank of tomorrow. Shortly after that we moved to Berlin. Three years later, Number26 became one of the dominant players in Mobile Banking with more than 200.000 customers in 8 markets. Our team consists of 140 bright minds and there is still much more to come. We are just in the beginning of our journey.

What’s your organization’s mission & vision?

A study quotes that 7 out of 10 millennials are more willing to go to the dentist than their local bank. We know something has been going fundamentally wrong in banking over the last years. True digitalization has not yet reached millions of banking customers. We absolutely believe that banking can be so much more and that we can change how people do banking every day. We simply make banking much easier and more transparent.

What distinguishes Number26 from other banks?

There are a hundred little things that sets us apart from other banks. Essentially, we tried to create an experience much more like Uber or Spotify than what you would expect to get from your bank. A few unique features include the paperless signup within 6 minutes, our automated statistics that learns and help to keep track of your spending. One can also send money via text message or email with a simple click and get real time notifications for any account movements or card payments. Furthermore, we created a FinTech platform where we offer the best products from all over the world at your fingertips.

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startup Spotlight

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Could you tell us more about using Siri for Payments that you are currently developing?

We are very proud, that Apple selected us to be one of the first companies to work on this features. We are leveraging Siri’s API to make that possible. With iOS 10 users will be able to simply transfer money to friends using their voice. We think that’s really cool.When will you be launching the service? Will it be only available to iPhone users or also other OS?

It will be available as soon as iOS 10 is out. We begin with iPhones, however, as soon as we have the other OS adopting and offering similar voice technology we can start working on extending this feature.

Mobile payments are often associated with lack of security; how do you ensure the protection of your customers’ information? Especially when launching the “send money by voice”?

It is important to know that we are not the first ones to use Siri iOS 10 capabilities. Other disruptive companies like Uber, Whatsapp or Pinterest will also use this option to order a cab, send sensitive information or photos. Besides that obviously banking needs a little more security. We are working on automated systems to prevent fraud using automated intelligence. Additionally, there will be simple measures in place like a transfer limit.

Where does Number26 stand now and what’s on the horizon for the company?

Today we are one of the fastest growing players in mobile banking in Europe just 1 ½ years after launching. We have the vision of bringing better mobile banking to millions of customers across Europe over the next years. This is still a long way and we are just in the beginning. Currently we are very focused on fueling our FinTech platform with more innovations and products. Besides, we are preparing a more aggressive international rollout. As we think banking can be much simpler, we also invest heavily in automated intelligence to help our users get the products they need at the right time with abridged complexity.

Number26

https://number26.eu

NUMBER26 offers Europe’s most modern bank account with a suite of intelligent services including real-time notifications and instant cash transfers to make your financial life more fun and functional. Founded in 2013 by Valentin Stalf and Maximilian Tayenthal, Number26 has become one of the dominating players in Mobile Banking with more than 200.000 customers in 8 markets.

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Join the event and connect with the technology, people and ideas driving every aspect of the evolving wireless ecosystem—all in one Smart City. Bringing together 30,000+ professionals from across the new mobile landscape, CTIA Super Mobility 2016 will feature exhibits, content, keynotes and interactive experiences in one smart, connected space for an inspiring look at how mobile innovation is redefining every part of daily life.

New York City, United States

Las Vegas, United States

Mondato Summit Europe is the mobile financial services and related commerce space, more succinctly termed Mobile Finance and Commerce (MFC), has witnessed the emergence of several inter- and intra-industry constellation service propositions, such as Apple Pay and CurrentC, which are shaking up the status quo.

London, United Kingdom

Barcelona, Spain

Events

Attend the 9th International SAP Conference for Treasury Management to find out how leading organizations are transforming their treasury function to meet current industry requirements. Gain an understanding of how these companies have used the suite of treasury applications from SAP to improve visibility and control across their enterprise.

On September 8 & 9, 2016, Finovate returns to New York with FinovateFall, a two-day showcase of the latest and greatest financial and banking technology innovations from leading established companies and hot young startups. FinovateFall 2016 will feature Finovate’s signature demo-only format with 70+ companies receiving just 7 minutes on stage to demo their latest innovations to the entire audience. That’s only the beginning!

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Money20/20 is the largest global event enabling payments and financial services innovation for connected commerce at the intersection of mobile, retail, marketing services, data and technology. Drawing 10,000+ attendees, including more than 1,000 CEOs, from over 3,000 companies and 75 countries, Money20/20 is critical to realizing the vision of disruptive ways in which consumers and businesses manage, spend and borrow money. The next Money20/20 will be held in Las Vegas, October 23-26, 2016, followed by Money20/20 Europe in June 2017.

Las Vegas, United States

The event will focus on the latest technology trends and advances within tourism and hospitality industries. Hearing the inspirational presentations, prepared by our expert-speakers, will offer participants new ideas for developing their products and fresh viewpoints on future projects. Besides the keynotes, networking and knowledge sharing will be an important part of the summit and it will be an ideal platform to assimilate new ideas on how to improve products and grow profitability.

Amsterdam, The Netherlands

Cairo, Egypt

Endorsed by the Egyptian Banking Institute, Banking Tech North Africa will feature industry experts from North Africa including The Egyptian Banking Institute, Ethiopia Commodity Exchange, Gulf Bank Algeria, Central Bank of Tunisia and more. They will also discuss different banking technology solutions, examine regional regulations, and explore the evolution of the North African banker in order to prepare for system implementation.

London, United KingdomKeeping up with technology is no longer good enough, you need to keep up with customer expectations. The customer wants to have a personal experience, so how can you make it happen? With a re-modelled agenda, guided by an expert advisory board, Europe’s Customer Festival will focus on every aspect of the customer journey from start to finish.

23 -26

20 -21

15 -16

13–14

TALK TO US

We value your feedback and ideas! If you’d like to discuss a specific topic, don’t hesitate to contact us. Get in touch today and maybe you will be featured in the next edition: Amsterdam OfficeHerengracht 5761017 CJAmsterdamThe Netherlands

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