Monday, September 12, 2016

Mobile Payments & Digital Receipts
By Mark Johnson, CEO of Receipt Reliance Pty Ltd @receiptreliance.

The overall feeling within the payments industry seems to be that the uptake of mobile payments has been slower than expected. There have been plenty of articles expressing that sentiment along with trying to shed some light on why this is the case. Many include the results of consumer surveys that ask questions about, among other things, digital receipts, and the findings seems to suggest that they would help boost adoption. But I'm not convinced the digital receipt questions put to consumers are entirely relevant.

To clarify, I'm talking about itemized merchant receipts, not payment receipts or payment notifications that are typically received as push notifications to your mobile immediately after a purchase. These notifications generally have minimal information such as a total amount, the merchant name and time of purchase, and function as a form of security more than anything else. 
Often the generic term 'digital receipt' can be a bit ambiguous and misleading.

So regarding merchant receipts, when surveys ask a question such as, "If digital receipts were provided, would you be more likely to use your phone to make mobile payments?” a few points come to mind straight away.

Firstly, and most importantly, should receipts be stored on our phones?

Secondly, there is an implication that wallet developers have a say over the method with which merchants issue receipts and that it's just a matter of coding this feature in.

Thirdly, the question, in a subtle kind of way, implies that using a mobile wallet to pay is the only way to get a digital receipt and that when you use a physical card you can't.

To the first point, the answer is no, receipts should not be stored on our phones. They should be able to be displayed, but not stored.

To illustrate why I think this, let me talk about Apple for a moment.

Apple has been very vocal about the privacy and security of our data and has demonstrated their commitment to those ideals on many occasions. With regard to Apple Pay, they have made it clear that they do not collect any user identifiable transaction information and that our device specific card details (Device Account Number (DAN) and other data - read more about this here), are encrypted and stored in the phone's Secure Element. So, what if our phone is lost, damaged or stolen? Well, that payment information can easily be set up again on another phone because it is supplied by the card issuing FI.

What I'm getting at here is that information stored only on our phone needs to be replaceable (or can be regenerated). Receipts are sensitive information, have value to us (returns, warranty and expense claims etc) and are not easily replaced. Some merchants may be in a position to reissue a receipt but that may require some time and effort to make happen, and what a chore even just figuring out what is missing.

You might ask "What about cloud backup?"  Well, there is always the risk that our data could be compromised, and the risks that we will not have a recent enough backup of our phone to ensure all receipts are saved. No doubt at one time or another we've all experienced the loss of some hard work by not backing up as we go; consumers can't always be relied upon!

If you have read any of my previous blogs, you will know that I'm promoting the concept of attaching receipts to their respective payment transactions, automatically via POS integration, and having them transferred and stored together at your bank (EFRTS™).  We trust banks with our money, why not with our receipts?  This is not to suggest that there is zero risk with banks, but they are regulated institutions that survive on their reputation for keeping our money and data safe, secure and private.

Using this method of managing digital receipts, we would be able to view them at anytime from anywhere. Banking apps on your phone can display them and if given consent, mobile payment wallet providers and/or financial transaction aggregators can also display them allowing you to consolidate your view of them whether payment was made via a mobile, physical card or a voice command. This may come in rather handy when searching for a particular receipt and you're not sure which card or payment method you used.

Speaking of voice, imagine getting your voice assistant, say Siri for instance, to order some groceries, arrange delivery and make a payment with your preferred debit or credit card account. How does Siri get the merchant receipt and where does Siri send it for storage, should we have to compromise our privacy and anonymity by supplying an email address or phone number? It would seem absurd, especially if the payment system has just used some form of tokenization so as not to have to give out our real card details. I would suggest that the POS system will produce the merchant receipt which is then sent to your issuing bank along with the payment transaction. Applying this process for plastic, mobile, wearables, voice and other payment mechanisms would lead to a global, ubiquitous, standard system.

Connecting the merchant receipt to the payment transaction has so many advantages not only for the consumer, but for the merchant and bank as well.  A previous blog Digital Receipts at Your Bank: WIIFM? outlines some of those advantages in more detail.

Regarding my second point, at the moment a wallet developer doesn't really have any control over how digital receipts are issued from a merchant and this will vary from one merchant to another. They are faced with the same dilemma consumers are experiencing right now when it comes to digital receipts. How many digital receipt systems do I have to or want to support? How will the receipt get into the wallet, will it rely on NFC, WiFi etc?

The number of different third party methods currently in use makes it a bit chaotic (see our previous blog The Chaos of Digital Receipts in 2016). Some merchants are also developing their own 'pays' and could capture their digital receipts, but the receipt feature may have limited use elsewhere.

One thing that can be relied upon that is consistent globally in the payment process is that a payment transaction is created and delivered to the card issuing FI. We need a similarly ubiquitous method for the transport and storage of the itemised merchant digital receipts.

To my third point, when survey respondents are asked if they would switch to mobile pay if digital receipts were on offer, it is promoting digital receipts as an added benefit to mobile use. But actually, many consumers are already receiving digital receipts using plastic! How are digital receipts going to be an incentive to change paying behaviour when many merchants provide them already to physical card users? (Albeit in no standard way).

Mobile payment adoption will continue to rise but it is going to take some time. Consumers are worried about the security of using their mobiles to pay but in fact those fears are for the most part misplaced. As outlined here,  ISACA Challenges Mobile Payment Security Perceptions , the use of tokenization, device specific cryptograms and two-factor authentication really make it difficult for fraudsters. This increased security also has benefits for the merchant. According to the ISACA guide A key benefit for merchants is that enhanced security should lower fraud and thereby lower costs,” More needs to be done to educate consumers on the safety of using their mobile phones to pay.

Loyalty integration will also help boost adoption. Consumers won't want to download a loyalty app for every merchant they frequent. The common factor across their shopping experience will be the payment mechanism so it makes sense for loyalty to be part of that.

Ensuring a seamless, consistent customer experience that 'works' every time will really drive further adoption. Here in Australia NFC is widely used and from the personal experience of  a colleague of mine who uses Apple Pay, merchants where Apple Pay doesn't work are the exception rather than the norm. Some other countries however, are still bogged down in older legacy POS systems so will no doubt take a bit longer to become commonplace. Typically merchants will want to get their money's worth out of the technology in which they’ve already invested.

With digital receipts the payment mechanism is, and should be, irrelevant. Having the ability to view your receipts on your mobile, tablet or desktop however is a must, whether via a banking app, a payment wallet or some sort of aggregation service. Whether or not mobile payment survey questions concerning digital receipts are valid or relevant in relation to the big picture of digital receipts may be a matter of opinion, but one thing is certain; the results give a strong indication that consumers are in favour of some form of digital receipt.

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