Money’s the root of much technology
Who better to talk to us about electronic payments, cards, cash, cryptocurrency and cash-on-delivery than Ben Gilbey from Mastercard?
Show Notes for Series 02 Episode 05
The recent months of lockdown and the reliance on the internet for some of life’s basics has shone the spotlight firmly onto online payments. The methods of digital interchange of money began back with the humble COBOL routines of early banking mainframes, have moved through plastic cards, and now onto the mobile phone. With Ben Gilbey of Mastercard, we talk about trends in money, and the geographic differences between attitudes to digital, contactless and cash-on-delivery.
With nearly twenty years experience with the likes of Mastercard and PayPal, Ben answers some questions about where payments systems are going, why the Germans and Japanese still prefer cash, and how some areas in Asia skipped the whole credit card “thing” and moved straight to smartphone app payments, contactless and WeChat.
We also discuss why cryptocurrency payments didn’t really take off last year, and Ben tells us about how Mastercard is behind tech like Apple Pay and paying with NFC chips embedded in your sunglasses. Now even mom-n-pop stores are taking contactless, we talk about how small businesses can use the surge in interest in virtual payments to get down and digital.Who better to talk to us about electronic payments, cards, cash, cryptocurrency and cash-on-delivery than Ben Gilbey from Mastercard?
Mastercard’s Singapore-resident Ben on LinkedIn:
Mine host, Joe Green on LinkedIn:
Full transcript available.
Joe Green (Host): Hello there, welcome to the Tech Means Business podcast. This podcast concerns itself with the technology that underpins all aspects of business today. In it, I talk to people whose role or company’s making a difference to the way organizations work; people whose experience and foresight offers us something we can learn from.
Today we’re concerned with something that concerns us all: money. obviously, as a fabulously wealthy individual with significant private means, money as of little concern. Oh, hang on, hang on. As someone whose life is dominated by as Douglas Adams had it, the movement of small pieces of green paper, I was keen to talk to today’s guest. He’s Ben Gilbey from Mastercard. He’s senior vice president in Asia Pacific for digital payments, and so who better to speak to to talk about electronic payments, currency exchange, cryptocurrency, the future of cash, assuming there is a future of cash, Of course. Ben, please tell us a little bit about yourself, just to get us kicked off.
Ben Gilbey (Guest): Absolutely. And thank you for having me on your show.
So the name is Ben Gilbey. I’ve been a long time resident of Asia Pacific, and indeed 19 years now in Singapore. So I understand the dynamics of the market pretty well. And in the payment space, I’ve been active for about the last 15 years in various forms of payments, whether that be mobile payments, whether that be wallet payments, when I was at PayPal, and now what we would call scheme payments, Mastercard. So a storied and quite varied background in the payments industry.
Joe Green (Host): You’ve been very much involved in the digital exchange of monies. And to a certain extent, I guess year on year, there’s less and less use of cash, and are clearly some geographies, China springs to mind, obviously, more than others, that’s more open to being cashless than, for instance, more traditional areas. Is there a different reception for digital payments in different geographies in your experience?
Ben Gilbey (Guest): Yeah, undoubtedly. I mean, at Mastercard, we’ve been pushing the war on cash agenda for quite some time now. And we see that in all forms of digital payments, particularly in contactless payments or point of sale, which have seen a huge acceleration as a result of COVID-19.
And also of course with with electronic commerce payments, we’ve seen a significant shift towards those but obviously, different countries are at different stages in this war on cash. You mentioned China. They’re probably one of the more evolved arm in terms of the move from cash to digital payments.
Globally, about 60 percent of consumers say that they’re likely to make this move that they’ve made recently to digital payments, a permanent fixture of their lives. And in Asia Pacific, about half of consumers say, yeah, this move towards digital is a permanent shift.
But obviously, as you said, it’s different among different markets. Japan, that number is around four in ten consumers who say that they will be using digital payments going forward. In high tech, Japan, cash is still king. Around 80 percent of transactions are still cash based. India is another market that we regularly speak of where cash is still king. But about half of consumers in India have reported to us in our surveys, that they intend to embrace and adopt aggressively mobile payments, particularly contactless payments. And again in Australia, half of them are saying, yep, mobile digital payments is here to stay.
And then contactless has been a huge beneficiary of COVID because it’s safer, it’s secure, and it’s just much more convenient. And people are clearly using less cash: ATM withdrawals, we’re seeing a being at an all time low. And this is not going to change once COVID passes. COVID number one looks like it’s going to take some time to pass.
So this is going to help entrench these changes in behavior that we’re seeing amongst consumers.
Joe Green (Host): I wonder how COVID will have an effect or an impact on the way that monetary interchange takes place in the future. In some areas, I know that cash on delivery is very much the favored way of kind of finishing off an e commerce transaction. You know, it’s cash being handed over as the delivery driver hands over the packet. And what’s your take on the COVID effect, if you like, on transactions on and offline?
Ben Gilbey (Guest): You know, we’ve been at the forefront of developing solutions for some of these use cases that you’re talking about. So for cash on delivery, for example, we are piloting and commercially rolling out later this year. In several markets, what we’re calling tap on a phone or soft POS are alternative names for the same program. You know, Point of Sale terminals have tended to be expensive, clunky and not particularly mobile. But now with Android devices where they support an NFC chip sets inside the device, there is no reason why these cannot be turned into contactless terminals, where I can simply tap my card, or indeed my own mobile device against the mobile device that the delivery driver holds. And lo and behold, I’ve made a contactless payment for my products.
You know, the reason that cash is still preferable in some of these use cases is that people want to actually touch and feel those goods that they’ve ordered on their doorstep before they hand over their hard earned cash. This solution or similar solutions, allow them to have that level of control, the touch, the feel, and the knowledge that they’ve received their package safe and sound before they make their payments. I see similar cultural shifts and other aspects as well. So, I mean, one of the first big cultural shifts that was influenced by digital payments was was in fact, in China: “red packets”. One of the successes great early successes of WeChat was actually to convert the physical red packet payment at Chinese New Year into a digital angle.
You know, this was about 10 years ago. And that was a huge success. And we’ve seen that replicated in many places. And that was, you know, taking a traditional cultural exchange of cash into the digital world. And Chinese consumers adopted that wholeheartedly.
So that has become pretty much the default. I think another interesting cultural phenomenon we’re going to see changed by COVID is probably dining out. Certainly in Singapore, we’ve seen the adoption of digital menus, digital payment.
In eateries, whether it’s a high end restaurant or whether it’s a hawker stall, and I think we’re going to see an explosion of that as well, as people want more control, they perhaps don’t want to touch a menu. They certainly want contactless payments or digital payments. And in fact, they may not want to eat in the restaurant. But as we’ve seen, you know, food delivery at home has become an explosive business. And I think we’re going to see that trend continue as well.
Joe Green (Host): Now, depending on where you go, there’s a certain degree I think of mistrust over electronic payments. There are limits of course, in many places with contactless payments, albeit higher limits, they’ve been bumped up recently because of COVID. And where are those limits set by the way? By banks or by payment providers, consumer groups, who’s in charge of those limits?
Ben Gilbey (Guest): So the limits are generally set by either an association of banks or by the banking regulator; that varies by market. What we have seen, as you noted, in the UK, we’ve seen in the UK it’s the Association of Banks in the UK who set that limit. They agreed very rapidly that in this period of COVID, and we don’t see that changing afterwards that they would bump up the contactless limit. I think it was originally around 20 pounds. I think that’s now gone up to about 50 pounds sterling.
And we’ve seen markets across Europe, across Asia Pacific. In fact, everywhere in the world have follow a similar approach. They bumped up contactless limits. Now, you know, even where contactless exists when you go above that limit, it’s usually a case of tap and sign or tap and PIN because consumers generally and banks want that security of a second factor of authentication right?
That it’s not just tapping their card and go, that they’re tapping their card and in the case of UK, it is a PIN. Again, that mechanism varies by market. Some markets are tap and PIN. Some markets are tap and sign, but we are seeing now with new technologies, not so new actually. But things like Apple Pay, Google Pay, Samsung Pay, that the consumer can actually give that second factor of authentication through their device through the Touch ID or the face ID equivalents. That basically gives the bank the reassurance that this person is the person who is authenticating this payment and we can be sure that the person who is paying is in fact the owner of this payment instrument. So we do see that these limits, these hard limits on contactless, are going to get relaxed even further as we move into the future.
Joe Green (Host): Contactless is clearly the way things are going. But in our experience, at Hybrid News, we found a big difference in geographies. A bit of background, Hybrid News runs two technology websites, there’s Tech HQ, which covers Europe and North America in general. And then there’s Tech Wire Asia, which, as its name suggests, serves Asia and Australasia and the APAC. Now, we find very different attitudes to cash and cards, digital and analog all over the world, therefore. And you mentioned Japan as a country that still uses a lot of cash. It’s a very technologically advanced country, of course, neighbours to South Korea, and also technologically advanced as is much of the rest of Asia, on the whole.
Whereas you know, parts of Europe for instance, Germany, the engineering and tech powerhouse that is Germany is still very cash heavy. In the US, of course, if you stray far from the larger urban areas on the coasts for instance, you’ll struggle to pay in person electronically – I mean Apple Pay, despite Apple being an American company is fairly little known really as a method of payment in most of the hinterland, anyway, of America. Is that a problem, do you think of acceptance or lack of technology spreading to these areas or is there a distrust of electronic payments or what’s going on?
Ben Gilbey (Guest): Well, I think in the US, card and credit card usage, debit card usage is highly prevalent. So that is not a particularly cash society. The delays really in the adoption of mobile payments Apple Pay, Google Pay, Samsung Pay, have really been the result of the slow adoption of contactless terminals by merchants. We’ve been a huge advocates of contactless for many years now. And we’re really seeing that, that relentless focus on driving contactless acceptance is starting to pay off in North America, where certainly again, with COVID being a bit of a rocket fuel behind it, we’ve really started to see a big bump in the adoption of contactless payments in North America.
But you’re right, Germany and Japan, both highly, highly engineering and technology focused, certainly from an engineering technology perspective, but have been fairly slow to adopt more digital ways of life, whether that comes from payments, whether that’s in the fields of things like streaming and entertainment services across the board. I think these two are bastions. We’ve seen markets like China, for example, increasingly in Asia Pacific markets like Indonesia, India and Vietnam start to really leapfrog. They’re not going… if we look at payments, they’re not going down the road, the routes of plastic. They’re going mobile first, or indeed mobile only in many respects.
So just as we saw the mobile phone leapfrog fixed line infrastructure, just as we saw mobile broadband start to leapfrog fixed line broadband. Indeed, we’re seeing mobile payments, leapfrog traditional payments through bits of plastic. It’s all going the way of bits and not atoms!
Host (Joe Green): Yeah, I agree that I mean, there’s no set chronology to progress for sure. Nor does any company dictate how things change although it has to be said, of course, that if anyone can influence payments, it’s probably the likes of Mastercard. But startups spring up from the likes of I don’t know Tallinn in Estonia, the UK, even from the likes of Google in the US. How is Mastercard pivoting to compete against these, these young whippersnappers, these disruptive young startups?
Ben Gilbey (Guest): I would say that, you know, generally, we are very enthusiastic supporters of the startups. And we are actively partnering with them. I mean, look, consumers in Asia Pacific as always, with perhaps the exception of Japan, which we spoke about at length, being very keen early adopters of technology.
And so, at Mastercard, we’re not just looking to support our physical cards with digital experiences, we’re actually designing digital experiences from the ground up. A great example of that is when we partnered with Apple, in fact, to launch Apple Pay and design the technology around Apple Pay to make it one of the safest, simplest and most secure way for consumers to pay at points of sale.
And we do this adoption of new technologies as we did with Apple as we’re doing with many other startups and FinTech, financial technology companies. We do this through collaborations, partnership and education.
Here in Singapore, we have Mastercard labs, which is our research and development arm, where we have various projects underway on digital payments, which includes everything from robotics, machine learning, on attended retail, contactless technology, wearables. biometric authentication.
You know, just to give you a couple of examples of what’s coming out of that, like last year, we announced a partnership with Tapi, one of the world leaders in wearable contactless technologies. They produce, now, watch straps that you can put on any watch that have a contactless chip embedded, which means I don’t need to just have an Apple Watch, I can take my regular analog watch, replace the strap, and tap and pay. They’ve embedded the technology within sunglasses. So if I don’t like wearing a watch, but I like wearing sunglasses in Ibiza, I can take my sunglasses and tap and pay with them. They’ve even introduced things like coffee cups, where I can take my reusable coffee cups in my Starbucks and pay for my grand a latte at Starbucks.
Another example that we’re exploring as well is its facial payments. Arguably the ultimate in contactless and wearable payments, because I don’t think anybody’s ever left the house without their face! So if I can simply pay by looking at a camera at the 711, blinking my eyes to show that indeed I am alive. That is an extremely streamlined and frictionless experience.
Joe Green (Host): Now we’ve been talking about things like the Internet of Things,NFC chips in sunglasses, and it all sounds very, very cutting edge and quite buzzword heavy. Now I guess if we’re talking buzzwords, and we’re talking about digital exchange, now it’s less of an elephant in the room than it was, but I suppose cryptocurrency hoves into view at this point, doesn’t it? Now, about 18 months ago, maybe a year ago, there was the big cryptocurrency bubble, and it seemed to be really gaining some traction, but it didn’t really gallop away did it? It didn’t really end up as the accepted means of exchange. And why do you think that didn’t happen in your opinion?
Ben Gilbey (Guest): I think two problems. One is I don’t think cryptocurrency really solved, or brought anything new for consumers, that they couldn’t get using a fiat currency. So why would I use something like a Bitcoin or an Etherium? I can see that for certain, perhaps bad actors in the ecosystem, the anonymity of a crypto currency transaction might be appealing. But for your average everyday consumer, that is not anywhere near the top of their list of concerns when it comes to using digital payments, so it didn’t solve any pain points. Number one [that was].
Number two problem was the speed and complexity of transaction. Bitcoin was notoriously slow. People tried to accelerate that and build new, faster versions, but the underlying issue was because of the distributed ledger, you hit a road block on how fast you could actually process transactions. So there is no way that a crypto currency transaction based on a distributed ledger could approach anything like the speed of a speedy network transaction, particularly say a Mastercard transaction speed. So if that’s the case, who wants to be stood at a cash register for five minutes waiting for your cryptocurrency transaction to be approved? Well, while the distributed ledger is updated in real time and hundreds of thousands of locations across the world as it would have to do with a crypto transaction. There’s just a lot of complexity in terms of converting fiat currency to cryptocurrency. It was never an easy process. So I think multiple obstacles and yet not a clear value prop for the consumer.
Joe Green (Host): Yes, I agree with that, actually. I mean, one advantage is anonymity, which is either good or bad, depending on your interpretation. And the other, of course, is the is the removal of state banks from the equation and therefore the removal of tax. But because of bitcoins, speed of transactions, or rather lack of lack of speed, that was never really an issue. And also, of course, there wasn’t really that killer application was there using blockchain or cryptocurrencies, nor was there any really established infrastructure? That infrastructure is certainly something that the larger companies like Mastercard have, don’t they?
Ben Gilbey (Guest): Well, yeah, I mean, we’ve been around for 50 years, 50 plus years. But needless to say, the technology stack that we run on today is not the technology stack that was around 50 plus years ago. It’s in a continuous state of evolution.
As we’ve embraced new platforms, new capabilities, we very much an API forward company. These days, we’re embracing the cloud while still maintaining all our standards of safety and security, which are absolutely paramount. So now as we want to ensure that every one of our transactions is secure, and the key to that is our tokenization program.
So I’m sure many of your listeners on yourself, Joe have heard that, you know, you can go on the dark web, and you can purchase a whole list of 100s of cardholders’ information. So their 16 digit card numbers, their expiry dates, their names, their home addresses and transactions. And so what we’ve been doing at Mastercard, very successfully, I might add, is we’re replacing those 16 digits card numbers with a cryptographically encrypted token, which represents very hard to tokenize. In fact, only we at Mastercard can quickly and effectively tokenize that to get 16 digit pair.
And this, in fact, is the technology that is used to support Apple Pay [and] the rest of the “Pays”, like Samsung and Google. And increasingly now we’re working with merchants like PayPal and Amazon, so that they no longer have to hold those 10s or hundreds of millions of cards themselves. They simply hold a token. And then when they want to perform a transaction, they give us that token, and we’re then able to de-encrypt that token and process that transaction for them. This is much, much safer for these merchants to handle. Because they’re all worried about security risks. They’re worried about hacks quite rightly about compromises of their cardholders’ data. So this technology that we’re deploying is ensuring, again, that the ecosystem is safe and secure for all of our participants, merchants, banks and card holders.
Joe Green (Host): Yes, the technology around protection and security, for online payments and electronic payments in general, is something I find absolutely fascinating. And hopefully, we’ll see eventually the end of those massive lists of hacked card details appearing for sale on the on the interwebs.
But for small businesses, for instance, why is it important for them to get on board with electronic payments; obviously they’re going to be very keen to protect what assets they have. And so why why jump ship you know, away from cash and why get on board with electronic exchange?
Ben Gilbey (Guest): So, you know, again COVID has just been a catalyst behind what has been a movement that has been gathering pace over time, and has now been given….you know, COVID has just thrown the fuel on the fire to get this moving along even faster.
You know, consumers are demanding the same kind of seamless, frictionless digital experiences they’re getting at large retailers, or they’re getting at large e commerce merchants. They’re expecting SMEs to also provide that same level of seamless, simple secure commerce. They want pay on demand, whether it’s food delivery groceries. You know, we’ve seen an explosion of these at home fitness courses, for example during COVID. Yeah, that’s here to stay.
Telemedicine, I think is another trend right? People don’t want to go to the doctors but they want to do a video consultation with a doctor. And then learning. We’re seeing an explosion in learning opportunities and entertainment streaming, Netflix, Spotify, etc. And these trends will continue long after COVID19 has gone.
So businesses, small businesses, are increasingly saying we need a strong digital presence if we’re to survive. If we’re a food and beverage company, we need to ensure that we have a digital storefront, we need to partner with the Deliveroos and the FoodPandas and the Uber Eats of the of the world. We need to embrace digital menuing systems and digital payments for that in-restaurant experience.
And if you’re a small to medium enterprise, in just about any sector, you’re wanting to move away from slower, more antiquated payment mechanisms usually very slow and very uncertain, particularly when you’re doing cross border payments.
If I’m paying you, Joe for services rendered, I can do a payment. But given the the fees that the different participants in that monetary flow charge, if I send you 100 pounds or 100 bucks, I’m not sure what you’re going to get when you get the the fees. And I’m not sure how long it’s going to take to get to. Is it a week? Is it three days, five days, 10 days? We don’t know. So what small companies and large companies are increasingly looking for is: they’re looking for certainty. In timing, they’re looking for certainty. If the amount if I send $100, the recipient receives $100. And ideally, they should get it instantly or at least within 30 minutes. So we’re using our technologies, our network to facilitate these electronic payments and connect these companies together, to make these small business payments easier, but of course, not only payments.
They need technology to manage their operations more effectively. They need to capitalize on data insights, and also have more opportunities to reach out to consumers and markets, their services and engender their consumers loyalty. So we’ve put $250 million behind this in terms of financial aid, technology products and data insights over the next five years. So we’re determined to help ensure that small businesses come through this crisis intact.
Joe Green (Host): When this podcast first started out, we were back, right at the beginning of the year. And so obviously, we were giving people an opportunity to promote any particular event or, or something like that, that was coming up in the future which people could flock to and, and learn more. But obviously that’s that’s not really an option at the moment. If you had to sad a call to action, if you like, for the people who are listening to this podcast, what would it be?
Ben Gilbey (Guest): I think especially given the audience for this podcast, Ireally want to emphasize that Mastercard is extremely active. As we said earlier in partnering with FinTech companies, and partnering with startups, we have a number of schemes and programs that we leverage, whether it’s stock path programs, whether it’s our labs, prime payment flows, design new technologies together and collaborate. So you know, if I would shout out that, if you’re in the FinTech business, if you’re a startup, you need a payments, partnership, Mastercard’s doors are always open, and particularly in this time, where we’re seeing this map acceleration in the adoption of digital payments, we would love to partner with you.
Joe Green (Host): Well as ever, I’m afraid we’ve run out of time there are thanks, obviously go out to Ben Gilbey of Mastercard. And thank you too. And thanks to everyone who’s been listening today. Apologies if there have been any strange bits of audio. We were having a few technical issues during the recording of this podcast but I’m glad you stayed with us to the end. I hope you can join us next time on the Tech Means Business podcast where we’ll be talking to more interesting folk from this area, where business and technology collide and come together. Many thanks again and I’ll speak to you soon.
29 April 2021
3 April 2021
19 March 2021