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Lisa Hronek Archive for 2012
Make Way for the Smart Chip
The U.S. payments industry is probably the most advanced on the planet when you consider the size of the market, card penetration, the extent of innovation and many other factors. Yet, one development where the U.S. has been seemingly lagging is in the technology required to authenticate credit and debit card transactions. In an effort to reduce card fraud, more than 50 countries have now migrated to EMV enabled cards (named after the developers Europay, MasterCard and Visa) incorporating smart chip technology. In comparison, the U.S. payments industry still relies on the magnetic stripe, invented by IBM back in 1960, to authenticate payments.
The reality is that EMV didn’t catch on in the U.S. because there wasn’t the same need to address fraud as there was in other countries. Factor in the huge cost of changing card terminals at millions of merchants and there has been little justification to make the switch. However, recently, both Visa and MasterCard have outlined their plans to implement EMV enabled terminals by April, 2013. The initiative is being motivated by a desire to usher in the age of mobile payments by equipping merchants with terminals that can accommodate both EMV and NFC (Near Field Communications). NFC facilitates payment at the point-of-sale with a smartphone and is the platform used by two of the leading innovators in mobile payments – Google Wallet and Isis.
One of the first countries to adopt EMV was the United Kingdom – my homeland – which embraced a system branded as “Chip and PIN” back in 2004. As a frequent visitor to the U.K., I have experienced firsthand the blank stares of waiters and sales assistants as I have handed over my U.S. credit card and explained that “I need to swipe” backed up with “I don’t have a PIN” (the machines that accept chip cards can also accept a mag stripe). Usually we get through it, eventually, although occasionally a similarly bemused manager has to be called and the additional delay and uncertainty can be frustrating. The issue will only get worse for travelers given that, in just 4 years, anyone in the U.K. below the age of 30 is unlikely to have any concept of signing a credit card receipt unless they have been specifically trained in how to handle visitors from America.
Recently there has been some movement toward EMV here in the U.S. specifically for cards targeted at international travelers. A handful of issuers now offer EMV enabled cards including Chase and U.S. Bank. As an existing Chase British Airways Visa Signature cardholder I recently received my replacement card with “smart chip technology.” A customer communication followed, encouraging me to “shop like a local everywhere” and explaining that the chip will “avoid inconveniences at the point of purchase when traveling abroad.” To add a little urgency to the situation the communication provided an interesting fact posed as a question: “Did you know that chip cards are required at unattended kiosks on the London Underground?” Next to this question a phone number was provided in case I wanted them to “rush” one to me “for no additional charge.”
U.S. Bank has been communicating to its FlexPerks Travel Rewards Visa Signature cardholders promoting the card as “one of the first ‘smart cards’ in the U.S. that features a traditional magnetic stripe and EMV technology.” The communication highlighted the fact that Forbes recently named the card to its list of “10 Financial Innovations That Make Your Life Easier in 2012” siting “smarter travel-friendly spending.” (Source: Comperemedia)
U.S. card issuers can learn from the experience of their neighbors north of the border when it comes to EMV cardholder communications. Canada began migrating to EMV in 2008 and there is still work to do. Canadian banks continue to educate their customers through statement inserts and other cardholder communications suggesting that it is an on-going effort. RBC mailed customers in May setting expectations that “for several years to come you will experience two types of transactions” and to reassure them that transactions are “just as secure as ever.” The bank also provided a step-by-step guide to using the card. (Source: Comperemedia)
It seems that cards with smart chips are finally on their way to the U.S. International travelers will understand the benefits, but the bulk of consumers will need to be convinced through on-going communication. The U.S. payments industry is gearing up to accommodate multiple transaction methods as it begins the migration towards mobile payments.
Nextpedition: American Express Brings Together Social Media and Adventure Travel
Feeling adventurous? Then you should check out Nextpedition, a new take on travel, introduced by American Express. Through American Express’ Nextpedition website, you can build a custom-made trip based on your personal preferences, but the destination and itinerary will remain a mystery until the day you depart. To start, consumers take an online quiz to determine their travel profile, which includes questions about hobbies, interests and even social media activity. Consumers will find out what kind of traveler they are, defined by a “travel sign.” Examples of these signs include “Poshaholic,” “Hiplomat,” “Nature Junky” and more – talk about marketing segmentation, right?
To complete the entire process, travelers must also consult with a specially trained American Express Nextpedition Specialist who helps to create the mystery itinerary. Once everything is booked, travelers will receive a pre-programmed travel console/smart phone, which will communicate the itinerary to them day-by-day, and allow travelers to share their experiences on Facebook. Nextpedition trips are available for individual travelers or groups, they vary in price point starting at $1,000 for domestic and $2,500 for international, and there is a seven-day minimum duration.
The Nextpedition website intrigued me enough that I took the Travel Profiler myself. I went through 15 entertaining questions which were clearly aimed at differentiating the music-lovers from the sports fanatics and the foodies. Here are a couple sample questions:
The zombie apocalypse is real and they are attacking. What do you do?
a) Look up how vampires were dealt with in the middle ages
b) Search for an antidote, because there has to be a cure
c) Build a flamethrower out of an old grill and car parts
d) Grab a baseball bat and start swinging
e) Have a massive party, cause it’s all over anyway
While on your trip, a book will be written about you. What’s its title?
a) Eyes on Design
b) The Movable Feaster
c) The Architect of Sound
d) The Superfan
e) Off the Grid
At the end of the quiz I was deemed a “Gastronaut,” but I was also given runner-up options of “Blisstorian” and “Tasteblazer.” (I obviously fell into the foodie bucket.) Each runner-up travel sign came with a general description, and the ability to choose either if I thought it was a better fit for me. Once I had selected my preferred sign, I was given the option to post my travel sign to Facebook or start my Nextpedition planning. Interestingly, in order to start the Nextpedition, I was still required to sign into Facebook. Needless to say, this is a very social media-oriented program. Although I stopped the process at this point, I am pretty confident that it would have taken me all the way to a tasty new adventure.
Social Media Innovation for Airline Travel – “Meet and Seat”
Dutch airline KLM is currently developing an innovative tool that will allow passengers to choose who they sit next to on flights in 2012. The passengers will be able to do this by accessing other passengers’ profiles, who have opt-ed in for this service on Facebook or LinkedIn.
The service is aptly named “Meet and Seat”. It will allow passengers to pick whom they will seat next to on an airline flight based on interests, professions, or even looks. However, the program might not be all it’s cracked up to be. Imagine a fellow business traveler picks another business traveler thinking that they will have a quiet and peaceful flight, but it turns out the fellow business passenger gives them a non-stop sales pitch throughout the entire flight. Or for a single person looking to meet another single person, the situation could turn into an awkward experience that neither person can escape from for the rest of the flight. The question is will the service resonate and succeed with passengers?
AirTroductions, an online dating service for frequent fliers, offered a similar service to meet fellow travelers back in 2006. However, the service appeared to never really take off and they rebranded their name to TripLife. TripLife is the same concept, but they have now expanded the scope past just the airplane and the airport. TripLife members can meet someone at any point before and during travel, such as at a hotel bar or restaurant.
However, this is likely just the beginning for social media innovation in the blue skies. For example, Malaysia Airlines released a service on Facebook to see if friends are visiting a similar destination or if friends are taking the same flight at the same time. Some airlines, like Virgin America, even offer a seat-to-seat text chat service through their in-flight entertainment system.
Will any of these services take off and will customers want to use the service? One never knows. However, other companies, like airline Virgin Atlantic, have expressed interest in the idea. One could easily envision a Virgin Atlantic flyer meeting another passenger at the bar in-flight on the plane. As social media continues to grow, I imagine that we will see more of this type of innovation and marketing from other travel companies. I believe this service will be a big hit with young, single people. Other travel industries, for example cruise ships, could also offer similar services. I know I will not be requesting to sit with another passenger anytime soon since the only person I want to request to sit next to is my wife.
A Smarter Credit Card Coming to Your Wallet Soon?
In a few months, a new and innovative credit card will likely be tested in the United Kingdom. This “smarter” credit card will allow customers to manage all of their accounts via one card, including personal and business credit accounts, as well as bank accounts. The card is the same size as a regular credit card, but it has buttons and a screen allowing customers to choose the credit account to charge against. Once the customer has selected the account, the process for charging is exactly the same. Dynamics Inc. manufactures the cards, which contain a miniature, flexible circuit board, a battery that lasts up to three years, and a programmable magnetic stripe – very much like a miniature computer. The technology from Dynamics is currently being utilized and tested by Citibank in the United States, but Dynamics appears to be in advanced talks with other United Kingdom banks regarding trials with this technology.
Dynamics currently manufactures several different innovative types of credit cards, such as a hidden card, a multi-account card, and a dynamic card. The hidden card hides account number information until the cardholders enters a PIN to reveal the full information necessary to complete a transaction. The multi-account card is fairly straight forward in that there are two accounts on the card and the user selects which account to utilize. In addition, the dynamic card helps to prevent fraud by automatically writing a new and unique security code onto its magnetic strip for every purchase, which could cause a problem for stored purchasing options, such as iTunes or a re-occurring Netflix subscription.
The company also manufactures a redemption card that allows the user to use points or credit at the point of sale by pressing the respective button. Comperemedia observed this card back in September 2011 from Citibank, called the Citi ThankYou Preferred 2G Card with Request Rewards (Media ID: 20110920-01191). Citibank employees started testing this card back in May 2011.
One of the most interesting things regarding all of the cards is that they all can utilize the existing magnetic strip technology and infrastructure already in use in the United States. Thus, merchants would not have to upgrade or change point-of-sale machines, as they would have to do so if chip and PIN technology or EMV (Euro MC/Visa) were implemented. However, Dynamics has developed versions of the card that utilize chip and PIN technology if we ever switch to this technology in the United States.
I have not seen any of these credit cards yet and there might be some kinks to work out prior to widespread usage, such as re-occurring purchases. However, anything that increases convenience and security is a plus in my book. The multi-card is an interesting product in that it would eliminate cards (and clutter) within my wallet. Likewise, it would be interesting to see if you could put accounts from different financial institutions on the same card – that would be cool. But let’s see how the trials go first in the UK.