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Fintech News Supplements 2022 Thought Leadership

EXCLUSIVE: “Payments Pledge” – Alex Gatiragas, Giesecke + Devrient in ‘Discover Money20/20’

Alex Gatiragas describes how G+D is aiming to save the world, one payment at a time Alex Gatiragas, G+D | Fintech Finance

When it comes to payments, Giesecke + Devrient (G+D) has seen it all. Back in the 1800s, it helped banks to print cash; now, it supports not only banks, but fintechs and an increasing number of non-financial providers, too, with everything from physical cards to mobile wallets and other digital payments. Most recently, it’s helped in the modelling of central bank digital currencies, including a project with Bank of Ghana. Whatever the payment type, its solutions provide a safe transaction environment in which customers remain in control.

One of its most recent innovations, Token Cockpit, for example, is a way for account providers to remove the frustration consumers often experience in trying to keep track of card-on-file and subscription commitments. It monitors their payments so that they don’t pay unnecessary and unfair repeat charges. This same solution enabled the tokenisation of those cards-on-file, for increased online checkout security.

Now, the company is addressing another of their key concerns – helping to minimise the environmental impact of their payments.

WALKING THE WALK

The company signalled its commitment to protecting the planet by becoming one of 24 German businesses to participate in the United Nations’ Sustainable Development Goals Ambition Initiative in late 2020. As well as committing to reducing its own direct and indirect CO2 emissions by 25 percent by 2022, it committed to helping its customers and end-consumers achieve their sustainability goals.

To this end, G + D has recently announced two new partnerships. It teamed up with sustainable digital solutions provider Doconomy, which makes visible the environmental impact that purchases have, thereby enabling consumers to make positive choices. And, in April, it announced it would be working with Patch.io, an API-based solution for climate action that enables customers to influence the environmental outcomes of those payments by, for example, making carbon offsetting donations.

G+D is now also working with Parley for the Oceans, a non-profit environmental group which is campaigning for greater awareness of plastic contamination of sea water. This partnership allows G+D to offer reclaimed plastic cards as well as giving clients the opportunity to support and encourage direct environmental action.

All these initiatives are not just testament to how conscious consumerism is influencing financial innovation. They also play into the other urgent priority that payments organisations face, which is the need to demonstrate their corporate commitment to higher environmental, social and governance (ESG) standards. It’s not just a case of keeping consumers happy, but also all the other stakeholders in G+D’s business.

“It comes down to looking at the role of payments as a lifestyle enabler, a gateway for people to live their lives the way they want to and make a difference,” says Alex Gatiragas, director, solution experience for G+D.

Explaining how the new relationship with Doconomy supports this new mission, he says: “Doconomy is one of the league-leading organisations when it comes to providing data on environmental impact. Together we can help consumers make informed decisions like ‘do I use this ride-share company or that one whose green energy rating is better?’. It will help them take stock of their environmental impact.”

Armed with that information, they can then choose to take positive action courtesy of Patch.io’s API-based solution, which has been integrated into G+D’s Convego Beyond sustainable payments facilitation platform. The plug-in enables G+D’s clients to let their customers seamlessly make offsetting payments to global carbon removal projects. These include natural and human-engineered solutions, all verified by third parties, with the added benefit that companies offering this service can also use it to quantify their own environmental impacts through corporate responsibility reporting cycles.

Illustrating how the two digital services dovetail, Gatiragas says: “A consumer might have purchased some goods and had them delivered because there was no other option, and this therefore had an environmental or carbon impact. Doconomy helps them see exactly what that impact is and Patch.io then gives them the option to make a small investment to offset it and, effectively, remove it from the environment.

“That’s on the digital side, where we’re looking at how we can integrate these with some of our wallet technologies. On the physical side, our partnership with Parley for the Oceans, means we can provide programmes for issuers where they can offer physical products, like payment cards produced from ocean-recovered plastics.

“Five grams of reclaimed plastic for each card doesn’t sound like a lot,” says Gatiragas, “but it’s really symbolic of the owner’s commitment to the oceans agenda – as is belonging to an organisation that is committed to doing other things to improve the health of those sea waters.”

One G + D customer which has taken advantage of that already is fintech startup WLTH in Australia: it’s already organising beach clean-up days for customers off the back of it.

“I’m Australian, although I live in Helsinki now,” says Gatiragas. “With Australia being surrounded by water, the majority of the population is living reasonably close to the shore, so we are very concerned about the health of our oceans.”

WLTH is among the next generation of fintechs for which the environmental agenda is part of their DNA. But enquiries aren’t just coming from startups.

“We’ve had conversations with Mastercard in relation to its eco Innovation Lab opening in Stockholm, looking at ways in which we can tie their payments together with improving the environment. So, we’re expecting this area to grow,” says Gatiragas.

“Most of the interest at this stage has been around our physical products, because there’s an immediate impact in removing plastics from payments. Our physical product guys have done a great job in producing payment products that have a positive eco outcome” he adds.

Gatiragas believes that, if they want to future-proof their businesses, payment providers should be focussed, above all, on offering customers choice – ideally, a blend of the physical and digital – but that should be closely followed by empowerment.

“In terms of consumer trends, we’re seeing global growth in the acceptance of digital wallets and, of course, a willingness to do a lot more online purchases,” he says.

“Having said that, what we’re seeing is that getting rid of the physical payment instrument isn’t as common as people might think. Digital wallets are definitely growing but the physical card is becoming a companion to the digital wallet and vice versa, because consumers want everything available to them in order to quickly select what payment instrument they want to use for whatever they want to do at a particular time.”

Gatiragas acknowledges the heavy investment the industry has made to support digital, ‘[because] post-pandemic, a lot more people are comfortable using it’.

“But card rails have been a common way of accepting payments in the past so, for merchants and payments services providers (PSPs), it’s now about offering multiple choices.

“The conversations we’re having with PSPs and some of the large merchants, are about how they need to be prepared for what this might look like in the not-too-distant future, because they don’t want to lose out on opportunities to sell their goods and services. Being able to offer alternatives like e-payments, account-based payments, or whatever else, is something we’ll see continue to grow.”

As the range of payments becomes ever more extensive, Gatiragas believes G+D’s innovative Token Cockpit dashboard will become increasingly instrumental in helping consumers take control of their financial lives and make appropriate selections, by increasing visibility around their transactions, including the environmental impact they’re having.

“Token Cockpit is an example of how we’re moving away from securing digital payments being a back-end processing concern – something that lives in a server room, that’s somewhat invisible to a consumer. Token Cockpit is the start of being able to put payment control back in the consumer‘s hands through greater visibility of, and control over, their payment instruments,” says Gatiragas.

“That means everything from environmental impact awareness to avoiding that painful realisation that the card they’ve had on file at a merchant’s store, that card they’ve forgotten about, has just automatically renewed their two-year subscription and their money’s gone.

“Improving the customer’s experience to increase their trust in payments is definitely an area of focus for us at the moment,” he adds.

MULTIVERSE OF USES

Reluctant to back any one horse in an eclectic payments race where the competition has been hotting up now for some time, G+D is continuing to lead on innovative solutions for everything from embedded, internet of things (IoT) payments – including those to support the practicalities of increasing electric car use – to the potential development of e-currencies and digital currency-based solutions. It’s balancing security with the seamlessness that consumers demand, while ensuring cost efficiency for organisations struggling to maintain their bottom lines amidst the explosion in high-volume, low-value transactions.

“With the introduction of 5G technologies and the reduction in costs for IoT devices, the need to try to keep the cost of doing increasing volumes of micro-payments down is really coming to the fore,” says Gatiragas. “One example of how we’re dealing with that is we’re looking at helping electric vehicle users pay for tolls, road taxes and charging stations via in-built, invisible payment methods.

“We have a long history of making sure everything we do is secure, but then not overburdening the consumer experience with that security to make sure payments are also seamless. We’re seeing a lot of interest at the moment, from both the merchant and the PSP side, in simple payment solutions such as Click to Pay for guest checkout. We’re trying to make it as easy as possible for our clients to onboard solutions like that for their customers.

“We’re seeing big growth in Click to Pay and also in e-payments, because of the way we’re all starting to live our lives and the small things we need to do, just to get by from day to day. Companies have to service that cost-effectively.”

He continues: “We’re also seeing a lot of interest in single-click payments, with our customers and the industry generally wanting to be able to support multiple payment methods is this area. But there are pain points to overcome for businesses looking to enable such things. The infrastructure investment needed is the main thing, as well as being able to balance risk with having that seamless customer experience. That’s particularly so on the merchant side, where the aim is to improve the checkout experience to increase sales,” he says.

CONTINUOUS INNOVATION

A conflagration of circumstances created by the COVID-induced switch to digital, geopolitical events, changes in consumer behaviour and the different regulations and infrastructure being introduced to help manage and control all of this – including Europay, Mastercard and Visa (EMV) tokenisation and the imminent universal introduction of the ISO 20022 payments messaging standard – is creating a burning platform like never seen before. Providers need to invest in getting this right.

“It’s a great time to be in the payments industry because there is so much happening,” says Gatiragas. “Digital payments, digital currencies, instant payments, peer-to-peer payments, IoT, all these things are more than just buzzwords these days, and we’re seeing a lot of activity globally. Our role is to help our customers navigate through all these different options.

“I’m a technologist at heart and I’m loving all this, but I’d hate to predict which payment form is going to win out in the end,” he adds. “Certainly, in the near- to mid-term, I think providers need to be able to support multiple payment methods, because, ultimately, choice is key to consumers. And for providers, it’s about being able to offer that in a way which also reduces the cost of doing business.”

For Gatiragas, G+D is perfectly positioned to help them do just that.

“We’ve been around for 170 years-plus, so it makes sense for an organisation like ours to continue to innovate, lead trends where we can, and work with the industry and our customers to continue that innovation cycle,” he says.

It’s perhaps apt that this established organisation, which was originally focussed on helping banks to print cash, is now working with them to help manage the migration from physical to digital payment methods – including a new kind of currency which is more appropriate to today’s needs.

It’s also reassuring that, although we won’t be able to hold that token of currency in our hands, G+D is committed to it being no less secure.


 

This article was published in Discover Money20/20, Page 40-41

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