Yesterday, March 20, on day one of The Innovation Project™, our ThinkAThon™ teams convened to tackle five of the industry’s toughest questions. Please follow the background links to learn about the issues presented, then read below to see what creative solutions our innovative companies have come up with. Winners will be revealed at the Innovator Awards Gala on March 21.

The views expressed here do not necessarily reflect views of any specific company, PYMNTS.com, or The Innovation Project 2013. They are they collaborative output of a team that considered these difficult issues in a 90 minute brainstorming session at Innovation Project 2013 on March 20 in Cambridge, MA.

ISSUE #1: Consumer Privacy and Mobile Commerce

How should we deal with real and imagined privacy concerns to maximize the potential of mobile commerce for consumers?

Background: http://www.pymnts.com/briefing-room/commerce-3-0/ip2013-thinkathon/issue-1-consumer-privacy-and-mobile-commerce/

Team Captain: Alex Doll

Stakeholders to self regulate by extending PCI to balance consumer privacy and mobile payment innovation.

In order to deal with real and imagined privacy concerns and avoid external regulation of the payments industry, mobile commerce stakeholders should enhance self-regulation by expanding the information subject to PCI. PCI can be expanded to include the device information (MAC Address, Phone number, Geolocation), shopping cart contents and other personal consumer information.

In addition, the consumer’s position has to rise in prominence by more clear and direct disclosure of the potential uses of data, and some limitations on the extent of the “opt-in” at the time of transacting.  Care must be taken to ensure that PCI standards promote innovation while considering the needs of all constituencies: Consumers, Merchants, Issuers, Acquirers/Processors, Regulators and Technology Providers and the Card Networks.

Existing business models and innovation can still flourish, with the added requirement that participants comply with PCI standards, because the compliance investment is more than offset by reduced risk benefit. The ability to pick up information “on the fly” without explicit consumer permission would be curtailed, leaving healthy competition in the payments market where models based on the value driven to consumers and to merchants are left to thrive. Confidence and trust in the entire system delivers value to all constituents.

Benefits to:

Consumers: Convenience — 1-click, better UX, privacy, security, explicit control

Merchants: Better qualified data, efficiency in operations, reduction in breach exposure (shared secrets), reduction in fines

Issuers: Continued prominent role in mobile payments system, more transactions, better user experiences for merchants/consumers, replace cash economy, carrying a lot of regulatory burden today (spread out)

Card Networks: More transactions, confidence/trust, less government intervention

Governments: Removed, Enforcement not required, industry provides better solution

Technology Companies: change opportunity, innovation, level playing field

Team Captain: Jason Kolbenheyer

A key problem that needs to be solved in terms of consumer privacy and mobile commerce is the need for greater transparency and consumer choice at the point of transaction. All channel types should have a consistent level of transparency that does not exist today.  This can be achieved by creating a standardized framework establishing the way payment and personal data is exchanged between the consumer and the merchant by extending choice and control to the consumer about the information being shared. This can be accomplished by creating best practices, technology toolkits, and certification programs.

Team Captain: Wally Mlynarski

Define a Consumer Privacy Preference Rating Standard that is industry self-regulated and universally adopted, which allows for consumers and merchants to agree on the use of personal identifiable information (PII) and shopping data. This standard would be similar to the MPAA rating for movies and would allow consumers to easily identify the level of data sharing of a transaction that they are engaging with a Wallet Provider or Merchant. Merchants and Wallet Providers may choose to implement choices of different rated transactions with different value propositions back to the consumer. Merchants and Wallet providers can identify the value that they will provide to the consumer based on the level of data sharing and allow for the market to identify competitive offerings. The ratings could be based on, but not limited to the following categories:

  • Personal Identifiable Information
  • Location Data of a Consumer
  • Purchase and Transaction History
  • Sharing data with external companies

This solution will remove the barriers of data sharing by educating consumers on the level of information sharing that they are engaging with. This will also protect Wallet Providers and Merchants by allowing them to secure the necessary agreements with consumers to utilize their information.

ISSUE #2: Catastrophic Failure and Systemic Risk

How can society best insure against the catastrophic failure of the electronic payments system and minimize the consequences of such a failure were it to occur?

Background: http://www.pymnts.com/briefing-room/commerce-3-0/ip2013-thinkathon/issue-2-catastrophic-failure-and-systemic-risk/

Team Captain: Mark Sole

As was evidenced by the near freezing of interbank financial transactions and money flows in 2008, the loss of the SWIFTFED/FEDWIRE, even for a day much less seven, would cause significant societal disruption. The possibilities of such an event from a terrorist attack, natural disaster, cyber attack for ransom or outcomes of other systemic failure warrant an innovative standby.

The hypothesis is that the SWIFT/FEDWIRE and its private network evaporate and cease to perform their function of moving ~2.7.T[i] daily between global banks. Assuming that an attack is successful at destroying that networks capacity, a standby alternative should be available to take its place.

We propose i) a highly distributed, open source, cryptographically hardened, Internet-based standby network built by prize/competition and maintained in the event of its need, ii) that that network, as one of its maintenance tasks, remotely monitor SWIFT/FEDWIRE network for statement of health and disaster monitoring for determination of recovery protocols, iii) that the network be built to take “point in time” end of day for the 7300[ii] users of SWIFT/FEDWIRE for “break the glass” reconstitution of journal balances, counterparty liabilities and settlement requirements, iv) that a “break the protocol” protocol be adopted for invoking by trusted authorities in the event that threshold events have occurred.

In the event that the protocol is invoked, this system will become the network used for supplanting the FEDWIRE for an interim period such that a policy decision can be made to replace the SWIFT/FEDWIRE or continue to operate the new network under its management regime.

Although unlikely, the effects of this systemic failure merit an option that could succeed should it be needed. By taking this innovative approach, society can only plan, but not insure, for what occurs should the payments system fail.

Team Captain: Patrick Andersson


Federal legislation is required to truly address catastrophic failure. This legislation would mandate that all payment system entities, including networks and processors, jointly develop a solution to guard against catastrophe by December 2016. Such a solution might include interoperability amongst payment processing players so that combined infrastructure can be leveraged in the event of catastrophe. It might also include requiring all payment transactions to flow through a single Federally-regulated system, like the ACH, with data centers on multiple continents. This system would be a redundancy for all network activity and utilized in the event of systemic failure.


In the event of a catastrophe, we must: “Ensure that commerce and payments can prevail to the lowest denominator.” There needs to be a readiness for availability of cash through a Mobile ATM Trailer Fleet and a supply chain that will allow merchants, money transfer players, ATM’s, etc. to be cash agents to put cash in the hands of consumers.

This will require the involvement of the Fed, FIs, Money Transfer Players, Merchants, Cash and Transit Players, Local and State Government and Law Enforcement.

Team Captain: Sarah McCray

Problem Statement:

When the electronic payment infrastructure is unavailable an alternative product with an agreed upon value which can be exchanged for goods and services is needed. Individuals with limited cash reserves and dependence on electronic benefits from government programs would be highly impacted by the unavailability of the systems.


  1. Individuals will be able to use their mobile phone accounts to exchange minutes, or other pre-stored value, as currency and be a source of emergency lending.
  2. There is an opportunity for MNO to step-in and provide an alternative system to enable the exchange of value, for example by means of SMS text.
  3. Merchant acquirers would enable merchants to accept this form of value and settle it.
  4. MNOs could market pre-purchase plans and have stored value associated with the customer’s account in preparation for an emergency.


  1. Electronic payment systems are not available to process debit, credit, or ATM transactions. Cash is not accessible or not on-hand.
  2. Mobile networks are available and power outage is not a cause of system failure.
  3. Regulators would grant power to the MNO to be money transmitters and special emergency lenders. The fed would set the value of dollars to minutes to control arbitrage schemes.
  4. Electronic benefits could be enabled to deliver emergency funds and benefits to recipients.
  5. Fraud will occur, but by implementing caps on lending and transactions we believe the good outweighs the potential loss.
  6. This solution is meant to be limited in duration – 4 to 5 days.
  7. The solution could be backed-up with a cross-border partner, like Canada, to provide diverse location.
  8. Requires a settlement and recovery process post-crisis.
  9. Awareness campaigns required.
  10. Enlist designers to ensure ease of use and awareness.

ISSUE #3: Financial Inclusion

How can innovators, governments, and incumbents work together, or by themselves to best use the disruptive innovation occurring in payments be used to deploy at large scale banking services to the underserved? 

Background: http://www.pymnts.com/briefing-room/commerce-3-0/ip2013-thinkathon/issue-3-financial-inclusion-and-the-other-2-billion-people/

Team Captain: Chris Colson

The biggest challenge in delivering financial services to the “other 2 billion” are the many forms of mistrust.  The only way to overcome that hurdle is to put a system in place that leverages existing trusted relationships: the most ubiquitous of which are local trusted merchants.

To leverage these existing local trusted relationships, Team TSYS/Netspend proposes the establishment of national merchant networks that allow consumers to open stored value accounts based upon their existing merchant/customer relationship.  These accounts would enable each consumer to buy goods or services, cash out, transfer money, pay bills and purchase online through any merchant who is a member.   While the specifics of each network will vary to suit the needs and preferences of each local market, each network will need the ability to credential consumers, store value, account for transactions and transfer funds between other merchants in the network.

Picture this: Miguel Sanchez, a resident of Mexico, visits his favorite neighborhood store and realizes he forgot his wallet.  Based on his existing relationship with the merchant, he can purchase beans, rice and eggs without any credentials other than his bright smile.  Further leveraging that existing relationship, since the merchant already trusts Miguel, he would use that trust as the basis for opening an account in Miguel’s name that will allow him to send money to his sister in Cancun; who then, in turn, can pay her electric bill with the money Miguel just sent her.

Team Captain: Rob Rosenblatt

Welcome to Posse-Pay!

Objective: give the last 2.5B access to basic elements of “commerce-ability.” Beta in the U.S., expand globally once proven. Construct is a universal Vessel that contains a new ID (not SSN), transaction ID, and/or phone #.  Vessel is fully secure at time of approval for mobile (when credit check is generally performed). Entails creation of new entity or central source.

Basic services:

•enable exchange of value (most fundamental construct) Identity, commerce, money on, money off.

•Expansion over time to more robust services including lending, rewards, etc.  Vessel connects to all payment networks based on cards resident in the customer’s vessel.

•Load funds using today’s load networks, DD, bank accounts, etc.

•For non-mobile owners, extend form factor to include email (multi-level authentication).

•Default merchant network is PIN-debit network (dual network, etc.).

•For credit CMs, network is V/MC/D/AE.

•Funds held in vessel-ID-specific accounts, fully FDIC insured, with participation by all banks in the banking system to diversify risk and minimize failures.  Non-banked vessel owners have the opportunity over time to graduate into the banking system, if they so desire.

Long range goal, in addition to “commerce-ability”, is to enable “bankability” and “lendability”.

Team Captain: Kahina Van Dyke

Situation: 2.5 billion people worldwide don’t have access to formal financial services. There are no simple Solutions; there is not one widget that will solve this.

Complication: Often there is a lack of trust between consumers and exisiting institutions. There needs to be a value proposition for all members of the value chain (consumers, governments, telco providers); there are questions of standardization and interoperability.

Resolution: Any solution needs to incorporate these elements…

– Standard / Consumer bill of rights addressing personal dignity

– Delivery through mobile channel – incumbents need to be on board

– physical cash in, cash out capability

– global interoperability / existing network

– create clear consumer value proposition, addressing need to store and transfer money safely, take friction out

– P2P elements needs to be real time and final

– clear value proposition to incentivize all stakeholders in the system

Infrastructure already exists – everyone wins if we use it collectively to address the neds of the 2.5 billion people – it’s all upside as it lifts new participants into global commerce and formal economy.

ISSUE #4: The New Point of Sale

How can merchants, issuers, acquirers, networks, and perhaps even consumers work together to reach the best solution most efficiently?

Background: http://www.pymnts.com/briefing-room/commerce-3-0/ip2013-thinkathon/issue-4-the-new-point-of-sale/

Team Captain: Dean Seifert

As an industry, we’ve been asking the wrong question related to how to upgrade POS technology to enable safer, faster, cheaper payments.

The real question is “how do we create more value for the consumer AND the merchant, with more value with less hassle, and a consistent experience between channels.

Our focus should be on providing the consumer with value – with product reviews, comparison pricing, and a faster checkout. In exchange for these value adds, the merchant receives the benefit of consumer information and the ability to use this information for marketing purposes.

The business model must change from solving the payment problem – to building a better experience.

Through this exchange of information for value, merchants are incented to make the technology investments necessary to take advantage of this new mobile-enabled experience.

To make this solution work, we must create a layer ON TOP of payments that enables a standard transaction set for driving these new value services – customer enrollment, marketing permission enablement, offers delivery and redemption. The platform provides the flexibility for merchants to ‘subscribe’ to different aspects of the value-added services. These standard transaction sets then enable new innovation and ecosystems to be built upon them – and simplify the chaos of waiting for the market to settle on de facto standards.

Many constituents are in a position to help build this platform or the components to enable it – and the industry can support more than one.  The critical ingredient will be in building an “open” definition that minimizes the focus on the standard itself, and focuses more on the “Apps” that are enabled on top of it to build consumer value.

Imagine a mobile application that enables the consumer to build their grocery shopping list before going to the store to have the products ready when they arrive.  The app recognizes the customer when they arrive and alerts the grocery store, who can then send offers and promotions on special items.  The consumer can then shop for other products and add it to their list.  Payment is seamlessly integrated, and notifies an attendant at the door as they walk out the store via a Tablet or Phone app.  This application leverages the platform to recognize the consumer, obtain permission information and relevant demographic information, present and redeem the offers at the POS and process the payment.

No checkout lane, no plastic, just go.

Team Captain: Farhan Ahmad

Our few principles for this were: any solution needs to be very easy and safe, work the same way across all channels, and give equal access controls to all participants.  We looked at today’s POS and across the various commerce channels available today and identified what ‘best’ looks like for each interaction and how they can work the same way, wherever you use it, with any device. The conclusion was that this is not a hardware problem, but rather an infrastructure challenge, therefore the solution is not about what hardware to use.

Our solution: The POS of the future will be an open platform with payment as merely one of its features. Any party, including merchants, consumers, third party loyalty companies, etc. can provide value through that open platform through easy API’s or even SDK’s. The key is that the consumer will need to ID&V themselves and then payment and other services get automatically triggered, no matter who is providing those services. Close to what PayPal is doing with Home Depot but as an open platform. The platform needs to be location, channel, ID, and preference “aware”. That same platform and ID&V will need to be present across all channels so the consumer always has the same experience. We agreed the best ID&V will be phone number and passcode, so that consumers don’t have to learn a new language. This will not be a replacement to a POS but an addition. We believed acquirers will need to create standards for and deploy this platform, networks will need to adapt their rules so as to accept this new ID&V and not discriminate against it, and merchants will need to deploy it across all channels and train consumers.

Team Captain: Bill Pitman

Mission Statement:

To develop an association that promotes an open standard that provides a mechanism for all the parties in the value chain (merchants, issuers, acquirers, networks, technology providers and consumers) to interact and work seamlessly together at the point-of-sale. This standard will reduce risk and cost and provide competition resulting in the most cost efficient systems that provide incentives to the merchants as well as the consumers.

INTRODUCING: A-POSTS – Association of POS Technology Standards

Year One Association Goals:

1. Establish core membership of industry leaders across the current POS ecosystem including the voice of the consumer.

2. Develop standards that are agreed to by the association and that covers all use cases.

3. Obtain commitment from vendors to support the standards.

4. Association will drive support of pilots and use cases and share results across membership.

5. To provide merchants case studies that improves customer interactions without the burden of uncertain capital investment.

ISSUE #5: Making Mobile Simpler for Consumers

How can the global payments industry converge most quickly to the mobile payments solution that delights the consumer?

Background: http://www.pymnts.com/briefing-room/commerce-3-0/ip2013-thinkathon/issue-5-making-mobile-simple-for-consumers

Team Captain: Malik Velani

Question: How can the global payments industry converge most quickly to the mobile payments solution that delights the consumer?

Why: Create foundation for consumer friendly applications that include contemporary payment capability that gives consumer the trust and flexibility to pay how they want.

Solve: Body of standardization for transactions allowing services to focus on services using existing open-loop networks:

Guidelines that pertains to digital purses:
1. Payment types of include all payment types, (ach, check, cards, gift, pre-paid, etc.)
2. Risk management
A. Risk and security needs based on payment modality
B. Risk and security constraints bad on transaction size
3. Operating guidelines for ecosystem players
4. Standardize the capture and delivery of data to leverage of added services – loyalty, coupon, and location services
A. Include consumer opt-out/in
5. Standardized data Elements
6. Regulations of government and currency functions
7. Security protocols
A. Hardware functions
B. Software encryption

Team Captain: Will Graylin

To make is simple for consumers and adaptable by the industry, we have created a “Marketing and Payment Facilitator Platform” that includes a mobile wallet system that consumers can use at any merchant location (without change of POS) and at website and apps for remote checkout, and be able to load any payment type, and enable other marketing and loyalty platforms to be delivered to the consumers on their wallet apps, and allow consumers to opt in to merchants promotions in a secure way.

Consumers should be able to choose their tender type of choice, which can be motivated at the time of transaction by merchants or issuers.  Should combine transaction flow of payment, loyalty and incentives together in a simplified process, one action preferably.  Must be secure and not be usable if lost or stolen.  Easy to manage expenses, and receipts, i.e. export to personal finance software, Quicken, Expensify, etc.

Allow merchants to easily implement promotion programs of their choice to these consumers with wallets, provide easy analytics to help them find and keep their customers better, minimize their cost of transactions and implementation.

Allow Acquirers to easily get merchants to signup and utilize the system, with margins for the sales force and easy tracking and reporting of commissions/residuals.

Allow Issuers to access and promote their brands and cards to the mobile wallet and their cardholders, and help Issuers manage credit and fraud risks.

Team Captain: Beth Horowitz

ME3: embrace, empower and extend mobile solutions! In mobile payments to date, point solutions solve a single problem beautifully and are the best examples of customer delight. Uber summons a taxi and seemingly eliminates the transaction. TabbedOut replaces the awkward three-step dining dance of summoning the check, providing a card, writing out the tip with a couple clicks and a graceful departure. Starbucks’ app is faster than mag stripe, plus rewards customers for use. MLB’s app makes sure you don’t forget your tickets on game day. In each case, the experience of making the payment is tightly coupled with the consumer’s goals, context and behavior. The app developers use an intimate understanding of their customer to create delightful and enchanting apps.

We want to accelerate this trend. We can solve the fundamental problems of the point solution, namely managing multiple stores of payment credentials, difficulty finding apps, painful app setup, picking the right app in context. Our solution is an industry standard solution to do these things on behalf of point solution developers. Think of it like Passbook meets Facebook Connect meets Stripe, a thin layer providing simple APIs to let point solutions access payment credentials.

What the thin layer isn’t:

– An attempt to wrest strategic control of data or customers from established players

– A vehicle to capture or monetize consumer data

– A play to increase or capture interchange

– A marketing vehicle for offers

What the thin layer is:

– Enablement technology to let a thousand apps bloom

– A viral technology to simplify consumer experiences and capture consumer preferences

– A cooperative industry effort with an Open Source approaches to IP

Let’s crowdsource customer delight and enable merchants, networks, issuers and application providers to create more delightful consumer experiences.


[i] http://en.wikipedia.org/wiki/Fedwire

[ii] http://www.federalreserve.gov/paymentsystems/fedfunds_about.htm

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