ABA Banking Journal - August 2014 - (Page 20)

tech topics CARD TRENDS Game changer Why host card emulation could help banks reclaim lost ground in digital payments BY DAN M. FISHER, CONTRIBUTING EDITOR 20 | ABA BANKING JOURNAL | AUGUST 2014 card. The next step is for the consumer to preload a selected amount from an enrolled credit or debit card to her smartphone app. The amount downloaded is not on her phone, but on the retailer's system. Tim Horton's 2013 annual report states that the company had a $155 million (Canadian) balance in its reloadable Tim Card Program, which serves as the funding vehicle for the TimmyMe smartphone app. That's impressive, but Starbucks, by far, is the front runner in this space with seven million active cards. In its 2013 annual report, the company reported that over $4 billion had been loaded onto its cards and spent for the year. Further, one in three transactions at its stores were paid with the Starbucks app. Starbucks has connected with its customers in a very big way, averaging a monthly purchase volume of over $300 million per month. It's no surprise this trend has garnered the attention of MasterCard and Visa. Opportunity in HCE The technology behind these two programs is HCE, a means of accessing a payment card account at the point of sale (POS) without requiring use of the card. In the case of Tim Horton's or Starbucks, their apps contain a barcode that can be read at PHOTO: SHUTTERSTOCK.COM A ctually, the next generation debit card won't be a card at all. That's right. No card at all. It will be a "digital debit" card, and two retailers are leading the way with the concept of host card emulation (HCE). They are Tim Horton's, which is the Canadian donut chain, and Starbucks. To explain: A consumer can enroll by visiting the website for Tim Horton's or Starbucks. Once verified, the consumer can download an app, activate it, and begin to use it at the store or online. The system connects the retailer membership program, such as the Starbucks Card, to a debit or credit http://www.SHUTTERSTOCK.COM

Table of Contents for the Digital Edition of ABA Banking Journal - August 2014

Chairman's View
Editor's Column
The Economy
Bank Notes
Picture This
Community Banking
Why HCE could be a big payment plus for banks
Rethinking the branch experience
Social media success not all about "followers"
Compliance Clinic
Around the ABA
Legal Issues
First Person

ABA Banking Journal - August 2014

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