ABA Banking Journal - July/August 2015 - (Page 44)

> PAYMENTS The Fundamentals of mobile and digital payments for Bankers BY NICoLE CARRoLL W ITH consumer enthusiasm for mobile and digital payments on the rise, usage will continue to grow past the early adopter phase as the likes of Apple Pay and Samsung enter the market. From a consumer behavioral perspective based on mobile payments usage, what the industry is seeing now is much different compared to years past. More people are trying digital wallets, using payment apps, and experimenting with making payments using nearfield communication (NFC) equipped mobile devices. According to a recent Federal Reserve survey, "mobile phones are also changing the way consumers make payments. Twenty-two percent of all mobile phone owners reported having made a mobile payment in the 12 months prior the [March 2015] survey, up from 17 percent in 2013, and 15 percent in 2012." As the pieces come together, it's important for banks to examine and ABA endorses Discover Debit as a better choice for signature debit. Learn more at aba.com/DiscoverDebit. 44 ABA BANKING JOURNAL | JULY/AUGUST 2015 understand the most important elements of mobile and digital payments. In particular, focusing on key security elements needed to protect consumers' information during transactions, such as Tokenization, Host Card Emulation, and 3D-Secure. Not only does implementing these technologies within mobile payments help keep data protected, they also help to establish trust in mobile payments among consumers. of our lives, and smart devices are becoming ubiquitous-crossing social and economic chasms in a way that only television has done in the past. As best practices continue to form, banks can either adapt their own internal systems to support multiple wallets and the facilitation of tokenized transactions, or partner with organizations that can expertly provide these services. For instance, Discover will soon launch Discover Digital Exchange (DDX), a platform for Discover Debit and other Discover card issuers, designed to simplify management of digital payments and accelerate time to market. Pieces are in Place for Broad Adoption Meanwhile, Walker Sands' 2015 "Future of Retail" study illustrates how those mobile phone devices are becoming an optional payment vehicle. Forty percent of respondents said they used a mobile payment application in the past year-a five-fold increase from the previous year. Market research from PricewaterhouseCoopers predicts that by 2019, U.S. mobile payments will hit $142 billion, not including payments made on tablets or card payments made at the mobile POS or with a mobile card reader. Anyone who has seen a family at a restaurant staring at their respective smartphones understands the behaviors driving change. Consumers are deeply connected to their devices and apps. These electronic security blankets help navigate and enhance many aspects Drilling down further, the base of NFC-equipped devices is approaching 650 million and Deloitte predicts that 32.5 million of these devices will be used at least once a month to make contactless in-store payments by the end of 2015. The Fed survey found the connectivity is reaching deeper than ever. Eighty-seven percent of Americans now have mobile phones and nearly three quarters of those devices are Internet-enabled, up from 61 percent just a year earlier. http://www.aba.com/Products/Endorsed/Pages/DiscoverDebit.aspx

Table of Contents for the Digital Edition of ABA Banking Journal - July/August 2015

CHAIRMAN'S VIEW
UPFRONT
OPERATIONS
ECONOMIC OUTLOOK
PICTURE THIS
BANKING’S APPALLING REGULATORY STRUCTURE
HOW BANK CULTURE DRIVES SUCCESS
KEY CONSIDERATIONS FOR CREATING SUCCESSFUL BOARDS
VENDOR RISK MANAGEMENT
FIVE RISKS THAT WILL SHAPE BANKING’S FUTURE
CEO SYMPOSIUM
MOBILE BANKING
PAYMENTS
ABA COMPLIANCE CENTER INBOX
INVESTOR PERSPECTIVE
COMMUNICATIONS
REAL ESTATE LENDING
LEGAL BRIEFS
FROM THE STATES
BANKER RECOMMENDED READING
INNOVATIONS IN SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS

ABA Banking Journal - July/August 2015

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