Transcription:
CHANA SCHOENBERGER: When the pandemic started, payments were something that required taking out your wallet and removing a credit card, if you didn't want to pay with cash. Now, waving your smartwatch at a subway turnstile here in New York City is completely normal. From American Banker, I'm Chana Schoenberger, the editor-in-chief, and this is Bankshot, a podcast about banks, finance and the world we live in. Kate Fitzgerald, our senior editor for payments at American Banker, has been covering the payments industry for more than a decade. She tracked some of the most interesting developments across the multiple industries that payment companies touch, and talked to folks in the sector about the coolest things to expect next.
KATE FITZGERALD:
We all experienced an explosion of payment innovations around the beginning of the pandemic in 2020, when the urgency to minimize germ contact at the checkout drove a massive surge in contactless forms of payment. And in-app payments took off, with the almost overnight shift to online food ordering and grocery delivery during lockdowns. But these technologies didn't just suddenly appear. For years, card issuers and card networks had been building the infrastructure to support it all. Retailers were the last piece of the puzzle to fall into place, and the pressure from the pandemic finally made that happen.
Pretty rapidly now, the U.S. is catching up with a lot of the digital payment innovations already in wide use in Europe and Asia, and now we seem to be on the verge of another wave of major payments innovations. This next chapter will build on recent improvements in digital and contactless card infrastructure to further transform all kinds of businesses and industries, from public transit to trucking to sports and entertainment. On today's podcast, you're going to hear about some cool new payments experiences that are just beginning to take hold, with experts from each of these fields. Ben Jackson is chief operating officer at the Innovative Payments Association, a trade group based in Washington, D.C., that helps pave the way for fintechs and financial institutions creating new products.
BEN JACKSON:
The Innovative Payments Association's job is to try and create a regulatory and legislative environment that gives payments companies the room to create new products and services and to take advantage of some of the advances in technology.
FITZGERALD:
New digital capabilities are driving a lot of these breakthroughs, but the art of payments innovation is also about identifying the moment when consumers, banks, card networks, merchants and all the various security, hardware and software providers are ready to collaborate.
JACKSON:
So mobile technology has been around for a long time, but we're finding new ways to use it. Contactless technology's been around for a long time and we're finding new ways to use it. Managing data and machine learning has been around for a long time, but finding ways to sort of pair that with the needs of customers has led to some interesting developments in payments that will keep going as people begin to figure out how to use these tools in new ways.
FITZGERALD:
Payments are obviously built into everyday life, but in recent years the checkout point–online, in stores, in public transit and recreational settings–has become a critical focus for innovation and venture capital investment.
JACKSON:
Payments touch everything that we do every day. Right? And you sort of alluded to that in the ways in which everything that people have to do involves some kind of a payment and so what's amazing, I think, is that we are getting to the point now where we're recognizing that payment is sometimes a tool for making things happen and sometimes it's a friction point. And we are now getting to a place where we're trying to smooth out some of that friction and we're trying to use some of the technology to say, we can make people's lives easier and better by recognizing where we need some friction and make people think about the money that they're spending and think about their budgets and think about their financial lives and where we need to smooth things out and make it easier for people to do things like, Let's all pay for the bus. That's not going to make or break anybody– that individual payment isn't–but being able to make it smoother to ride the bus; being able to make it smoother to use things like public transportation can make an entire city operate better and make things work better.
FITZGERALD:
In most cases, payment innovations have the potential to positively impact the environment over the long run. But developing new payment methods can also require costly overhauls of existing systems and new electricity demands.
JACKSON:
It's a mixed bag, right? Because you look at something where people are trying to do payments with crypto where it involves a ton of computing power and there's this concern about the environment around it, right? But at the same time, there are things where we're not mailing around sacks of checks anymore, right? We don't have to fly a bag full of checks from Omaha to one of the Federal Reserves and you know, burn all of that fuel and that kind of thing. And so I think that there are ways in which it'll definitely be better and easier, and more sustainable to do some things electronically, to make some things even automatic. So if I'm able to set up a payment, or I have an AI tool that helps me manage my budget, and I don't even have to turn my computer on because it's all happening in the backend and if the budget is managed, then I just saved a lot of time and energy and made things move more simply through that tech.
FITZGERALD:
Let's jump into some of these interesting new payment innovations, starting with how payment technology is changing the experience of attending sporting events and concerts. Dan Bjerke is head of Clover at Fiserv, the bank technology firm. Fiserv occupies a central position helping banks and merchants manage transactions across a lot of sectors. Clover is Fiserv's point-of-sale system, and is used by hundreds of thousands of small and midsize businesses. In 2020 Fiserv, trying to expand its reach, bought a software firm called Bypass Mobile that specializes in streamlining payments at football stadiums and sports arenas. Bypass had already designed its software to work on the Clover platform. So now Clover is starting to power payments at more than 300 sports and entertainment venues in the U.S. including Citi Field, where the New York Mets play, Fiserv Forum, home of the Milwaukee Bucks, and the NFL's Cleveland Browns Stadium. There are some incredible changes coming to these places…little by little.
DAN BJERKE:
For many fans that are coming into, you know, a concert or a sporting event. If you remember the days of, it's the end of the quarter. It's halftime. There's a break at the concert. Everybody rushes out of their seat and they go to the retail store to buy a souvenir for the event that they're attending or they run to the concession area to get a hot dog or hamburger and a soda and the lines just back up. Everybody's rushing through the aisles. Everybody is going upstairs or downstairs to get there as fast as possible. And then they're waiting and they're waiting and they're waiting. And then the game starts up again. The concert starts up again.
And then they're sitting there going, Do I still wait in line? Or do I just go back to my seat to go back to watch my sporting event or watch my concert? And it's an experience that many fans have gone through. Those days are starting to be fewer and far between.
FITZGERALD:
Essentially, Clover is bringing the mobile order-and-delivery process consumers got used to during the pandemic, to fans in stadiums who will be able to order food, drinks and merchandise from apps on their mobile phones, kiosks and order points throughout the arena, and have these things delivered right to their seats, so they don't miss a minute of the event.
BJERKE:
So they're making it much easier for the fans to actually watch the event that they came there to enjoy. And so that's being used through mobile
ordering, unattended kiosks, line-busting with mobile ordering and mobile payment devices. If you're actually standing in line there…there's so many different ways that the fan experience is improving through the use of innovative technology.
FITZGERALD:
Equally significant to the streamlined fan experience is what's going on behind the scenes for all the local and national businesses connected to transactions taking place throughout stadiums and arenas during games and concerts.
BJERKE:
All of these venues that are deploying this technology, they're getting a lot of data of how the fans want to interact in the overall experience. And with Clover, all of that data is stored within one platform. And we give access to the operators and the venues to actually mine that data to determine, at certain events, how do fans order? What do fans order? When do they order it? Where within the larger venue are they actually ordering things? And they use that data to plan out where they staff in certain areas within the venue. They use that data to determine what they're going to offer on the menu. They use that data to send loyalty and rewards and notifications to the fans and give them access to offers for things that they know that that fan is going to be interested in, so that they can have a much better fan experience so leveraging data in this environment is super important as well.
FITZGERALD:
Right now the venues we mentioned are being rewired for mobile transactions and in-seat food delivery, but the full capabilities will roll out gradually over the next year or so.
BJERKE:
It's pretty early stages right now. And a lot of the deployment of this technology is dependent not necessarily even on the actual kiosk itself, but it's the integration of the orders to the back of the house operations.
FITZGERALD:
So it's not going to happen overnight to your local sports stadium, but the widespread adoption of digital payments technology at entertainment is inevitable. Stadium operators have always struggled to find staff at vending operations at events that only happen during part of the year, and that has only become more difficult in the last several years. Clover's type of technology solves this problem, and a lot more.
BJERKE:
Most of the stadiums are starting with QR-code ordering, in-seat ordering from their mobile app, which we call online ordering. Those are becoming more and more prevalent. But again, if you look across all the large, you know sports and entertainment venues across the country, you know, not all of them are enabled that way. And so I think you know, as they look to provide more convenience to the fan experience; as they look to address the staffing challenges that they're running into, they're now coming to the realization that deploying innovative technology like this, both order from your mobile phone or order from an unattended kiosk, the ability to use QR codes to bring up menus on the mobile phone for the fan experience, are all strategic items that they have to deploy.
FITZGERALD:
Now we're going to hop over and talk to one of Visa's payment innovators, who happens to be in Scotland. Nick Mackie is vice president of Visa Acceptance Solutions and head of Urban Mobility & Government, where he helps build the infrastructure for streamlined payments on public transit. In places like New York and London — and a growing number of other cities in the U.S. and around the world — you can just tap your card or phone as you get on the bus or train, eliminating the need to buy and reload tickets, or to carry vouchers and coins. Nick works with teams at Visa to make that happen by connecting the card network with transit agencies and third parties, which all rely on unique systems. One of the most interesting emerging use cases Visa is working on is called Mobility-as-a-Service.
NICK MACKIE:
So mobility as a service in its simplest form is how do we connect people's journeys from door to door, to recognizing that they make a trip from home to a place of work, or leisure or education and back…but recognizing that there might be a trip to a station or transport mode…avride on that network and then a ride at the other end. So our job is to try to make that experience as easy and as simple as possible. So you don't need one ticket for one part of the journey, another transaction for the middle part and yet another transaction on the other end. If we can simplify that whole experience so that in a single payment, we can complete that journey from one door to the other, we believe that can be a successful outcome for Mobility as a Service.
FITZGERALD:
The positive environmental impacts of Mobility-as-a-Service are potentially huge, and a big part of it is making the experience of using public transit so much better that people will choose it over driving their own car, or renting a car when they travel.
MACKIE:
Well, I think the essence of the work that we do is how do we help compel people to take public and shared transport means over taking a private vehicle? We want to kind of drive that environmental agenda really towards less private vehicle usage, which is less emissions, less congested roads and so on. And encourage people to use shared and public transportation means. And again, Mobility as a Service can play a really key role
in compelling people that way. So let me just bring that to life a little bit. Imagine I wanted to make a trip where my outward trip, I wanted it to be as quick as possible. Literally getting from A to B as fast as possible was key, because the meeting was urgent. I might then on the way home optimize my trip to be as carbon-neutral as possible. In fact maybe even zero-carbon, where I actually take a walk on the way back and then take a bike-share for example, and then some other mode of electric vehicle, which is completely sustainable. And so there is a really important angle here around how we can help make sure that we serve the environment and this works as well at delivering great experiences for the traveling public.
FITZGERALD:
So that's the ideally optimized vision of a journey using Mobility as a Service, and I can't wait to use it when I'm commuting and traveling so I can enjoy the trip instead of worrying so much about logistics and parking.
MACKIE:
Where we're at, now, is that we've gone past the tipping point. The global momentum is clearly there, like most agencies are now convinced on deploying this technology, or technology based on open-loop architecture. And so now the
question isn't should I do it… It's about how do I best do it in the most cost-effective and impactful way for my rider base, for my patrons, but also in a way that's future-proof?
FITZGERALD:
Mobility as a Service is developing at different rates around the world. It's already a reality in some parts of Asia, but it's not likely to reach every smaller city and town for a while.
MACKIE:
Maybe, for some people, Mobility as a Service will mean going into an app to obtain tickets or access to public transport. For other people it might be that they just pull out their Apple Pay or bank card and they just tap to ride and I think what we recognize here is that the future will probably be a blend of these things. For some people, it may be more convenient one way and for others, something else will be more compelling.
FITZGERALD:
So one of the other goals of payments innovation is making sure the new approaches can be adapted to the next and the next and the next technology that may come along.
MACKIE:
But I think pretty much everyone that we've ever spoken to would agree that more innovation in this domain would be really welcome because it would cut friction and ultimately make the experience more compelling. So our job right now is to equip the entire transit world with our technology stacks, with Visa-built
capabilities–basically Infrastructure as a Service, which makes it much easier–like orders of magnitude easier–for agencies to deploy these types of systems that can allow them to keep pace with the rate of change that we're seeing… not just now, but as we look forward to the next five-ten years.
FITZGERALD:
The last use case we're looking at is fuel cards in the trucking industry, and how that concept is moving from specially configured payment cards that truck drivers use to purchase diesel at truck stops and all the other stuff they need on the road, to a fully digital experience where there are no cards at all, and payments are conducted in a private cloud-based network. We have Ryan Droege, who is co-founder and CEO of Relay Payments, which is a five-year-old fleet and trucking payment network based in Atlanta, that's taking all kinds of friction and uncertainty out of trucking-industry payments.
RYAN DROEGE:
If you actually go back kind of the early 1980s, some of these fleet and fuel cards were some of the first cards to be accepted, when people made the change to actually start fueling up through an automated fuel dispenser, versus you know, we used to have an attendant actually there either putting gasoline or diesel into your car. And so there's a lot of innovation that took place in the 80s and the 90s. And they were really leading the forefront in some of these reconciliation methods and some of these payment methods and some of these accounting systems. And it made a lot of sense back then. You know, they were innovative products and they were kind of at the forefront, neck and neck with where Visa and Mastercard were on the consumer side. You know, these specific fleet cards were kind of building the same technology specifically tailored to the trucking industry.
FITZGERALD:
The existing fuel and fleet card networks worked really well for decades, with all kinds of controls for managers to make sure fuel purchases were in line with company policies, and drivers could use the cards to pay for tolls, flat tires and other expenses. But about 20 years ago the same kind of card fraud that started to plague the consumer payment card arena bled into fleet cards and it got worse and worse, creating special problems for truck drivers.
DROEGE:
So Imagine you go on vacation, you're going to be gone for two weeks. And as soon as you get there, you want to go pay for a rental car and maybe pay for your hotel. As soon as you swipe your credit card, it is denied due to fraud. You now have no other way of getting a credit card because they're going to mail it back home to you and you have to go pick it up in four weeks. That is effectively what the over-the-road truck driver deals with, on a pretty regular basis. They run into this fraud issue where their cards get turned off and they're away from home. They may not be home for three weeks and so what do you do in that scenario? [GAP WE COULD CLOSE] Historically, people would have to figure out how to get them a card. We've heard of people who have to get in a car from the headquarters of the trucking company and drive multiple states over and hand-deliver a physical plastic card, in order to keep that truck moving.
DROEGE:
So five years ago, myself and my co-founder got the idea that we could take some of the modern innovations that existed in consumer payments and bring them into the over-the-road trucking space.
The experience with Relay is that a driver can get up and running in a matter of minutes. First off, they don't get stuck because we removed the fraud component. The digital solution is much more secure than a plastic card which could get stolen or skimmed. So first off, you don't get your card turned off. There isn't a card to turn off and they're able to keep moving. They're able to keep rolling. And at the end of the day, if you're an independent truck driver, your business is hauling freight. We want to keep you on the road. We want to keep you fueled up and we want to keep you going and we do that with a digital payment solution.
FITZGERALD:
A lot of other fuel and fleet card operators have also added mobile, digital payments and virtual cards to modernize their truck drivers' experiences. But what sets Relay apart is that it started from Day One as a digital approach with no cards at all.
DROEGE:
So all of our payments are electronic cloud based payments. We don't require any physical checks, any physical cards. It's all a mobile based digital experience.
FITZGERALD:
It always takes time to scale a new concept and break into an established industry, especially in a complex, fragmented ecosystem like truck-driving where there's a lot of driver turnover because it's been very hard to train and hire people, especially through the pandemic.
DROEGE:
We've seen that the industry is very open to change. You know, all these truck drivers, they have their own personal electronic payments that they use, on, call it the consumer side. And so a lot of them say, Well, why can't I have that same experience on my business side? And we allow them to do that. And so, you see that the adoption is actually pretty quick. It's now about one in 10 drivers in the United States uses Relay in some form or fashion.
FITZGERALD:
These are some pretty cool deployments, but some of them are still developing. One that I've been hearing about for years is the so-called "connected car," which anticipates what you need and orders your groceries and food for you as you drive along, like The Jetsons.
JACKSON:
Yeah, I think the Internet of Things and connected commerce is one area that is a place where we haven't quite gotten there yet. And it's because the use case is not terribly strong, in that, with all payments, you have to have the environment that they can flourish in.
And so I think that we're going to see things where some of these ideas are going to arrive just a little too soon. The connected car– do I need my car to order a pizza? No. But would it be nice if I pulled up to the gas pump and the car and the gas pump could somehow communicate and my rewards and my payment were all instantly there? And they know it's me and all I have to do is pump the gas. And maybe someday I won't even have to do that right and then it'll be a charger. All I will have to do is the robot arm will snake out and plug into the car and off we go. So I think that people are always gonna have to look around at their environment and say what is this environment ready for.
CHANA SCHOENBERGER:
This episode of Bankshot was written and produced by Kate Fitzgerald. Our sound engineer is Kellie Malone Yee. Special thanks this week to the Innovative Payments Association, Fiserv and its Clover division, Visa and Relay Payments. If you like the show, please like and subscribe or visit