A biometrics solution for Commercial Cards.

Fingerprints and selfies are coming to the Commercial Card world! I view this as big news. Last year, the headlines were all about EMV/chip cards. Now the tide is turning toward improving the security of online purchases, which often comprise a large portion of Purchasing Card transactions in particular. BMO Financial Group (BMO) and MasterCard have an answer. Following is content from their related press release.

These two organizations have begun a phased launch of the first biometric corporate credit card program in Canada and the U.S. that will enable cardholders to verify transactions using facial recognition and fingerprint biometrics when making online purchases. The introduction of this technology will increase security when making payments that do not include a face-to-face interaction, and will be integrated seamlessly for easy use in reducing the likelihood of a card being used by anyone who is not the cardholder.   

Beginning with corporate cards issued to BMO employees in Canada and the U.S., the MasterCard Identity Check mobile app will prompt participants to:

  • scan fingerprints or snap selfies to validate their identities via biometrics; and
  • when verified, return to the merchant site to complete the online purchase

“The use of biometric technology has become more common for consumers looking for convenient and secure ways to make purchases using their smartphones, so this was the natural next step for us as innovators in the payment security space,” said Steve Pedersen, Vice President, Head, North American Corporate Card Products, BMO Financial Group. “Mitigating the risk of fraud is always our top priority, and the inclusion of this technology is going to make payment authentication easier, and strengthen the security of the entire payments ecosystem.”

Mr. Pedersen added that the first phase will test the potential of delivering greater security and convenience using BMO employee corporate cardholders in the U.S. and Canada, including establishing and improving best practices in corporate environments, developing better protection against potential fraud and continually minimizing the need for customer service inquiries. Once complete, the next phase will be to make the technology available to customers more broadly beginning in the summer of 2016.

“With BMO, MasterCard is hosting our first Canadian and U.S. corporate card biometric user engagement. It’s always exciting to introduce biometrics to new cardholders. They quickly realize that they don’t have to sacrifice convenience for security. By snapping a selfie or scanning a fingerprint, the person becomes the password,” said Catherine Murchie, Senior Vice President of North America Processing, Enterprise Security & Network Solutions for MasterCard.

Biometrics offer another layer of security for online payments.

Biometrics offer another layer of security for online payments.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization and a leading provider of commercial card and treasury solutions based in North America.  With total assets of approximately $642 billion as of October 31, 2015, and close to 47,000 employees, the bank also offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers.

About MasterCard

MasterCard, www.MasterCard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.

What I Like About This

Besides this being good news overall, when I learned more about their solution, I was excited by a specific element. Any device, including a laptop or even desktop computer, can be used for the online purchasing process. (I was thinking about administrative assistants and others who work at their desks all day.) The authentication, however, will occur via the purchaser’s mobile device.

This is just one more evolving piece of card and payment security—a growing and important part of the industry.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Hair-raising data on checks.

Like everyone else in our industry, I have known that check usage for business-to-business (B2B) payments has remained high, but a recent report published by PayStream Advisors goes a step further to help explain why. As a contributing analyst to the report, I was surprised to discover that survey respondents perceive checks as best in four of 10 attributes, compared to other payment methods. For example, 55% rated checks as the option offering the “most complete remittance information.” As the report notes, favorable views of checks influence payment strategy. 

The Prevalence of Checks

Last year, the AP Automation Study by the Institute of Financial Operations (IFO) revealed 52% of survey respondents use checks for at least half of their B2B payments and 32% use checks for at least 75%. The PayStream survey results are even higher:

The report observes, “Although heavy check users are more challenged by high payment processing costs than the other organizations, they are also less likely to change their payment management strategies; the majority of heavy check users have not taken actions to decrease checks and increase electronic payments in the last two years.” Among heavy check users, 40% have taken actions to decrease checks (they are obviously falling short) compared to 81% of the remaining organizations. Indeed, concerted efforts are necessary to reduce checks, including implementing (and enforcing!) specific payment policies, and educating internal staff and suppliers about the benefits of electronic payments. 

Obtain the PayStream Report

The PayStream Advisors’ report, Electronic Payments and Card Solutions in 2015: Perceptions, Realities and Strategies, features:

  • trends in B2B payment method usage 
  • the status of Commercial Cards
  • influential factors for payment strategies
  • a look into payment solution providers

The report is available from PayStream Advisors.

Where Does Your Organization Stand?

Is your organization among the heavy check users? My January 5, 2015, blog post on reappraising the value of card payments included three key questions for organizations to address about their B2B payment strategies.

  1. What will drive your organization to reduce its check volume by adopting more card payments? 
  2. What percentage of B2B payments do checks comprise? 
  3. What is your card payments opportunity?

As you seek increased buy-in for expanded card usage, it can help to first understand what is behind any resistance. Many factors influence people’s perceptions about Commercial Card programs: previous experiences, lack of knowledge, media reports, and resistance to/fear of change. To combat misperceptions, the best approach is to avoid emotional arguments and stick to the facts. 

Face your payment strategy pitfalls head on and embark on some clean up. 

Face your payment strategy pitfalls head on and embark on some clean up. 

Available Education

For those interested in a broad introduction of Purchasing Cards and electronic payables, both of which are key ways to diversify a payments strategy, consider the on-demand course I created for Proformative Academy, an online professional development platform for CFOs and similar. 

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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I hereby renew my vows to card acceptance.

The term irreconcilable differences is often associated with divorce, but it also applies to the ongoing battles over card acceptance fees. I find the related litigation tiresome, so I am offering a different perspective below. However, I also share some litigation/regulation highlights elsewhere on my website, including something new from Colorado.

My Card Acceptance Experience

With Valentine’s Day looming in the United States, it seemed appropriate to use this blog post to declare my love of card payments from a supplier’s point of view. I do not receive the lowest fee out there, but, considering various factors, I would not expect royal treatment. I simply expect a fair deal. Rather than focusing on the fee alone, I view my entire value package—namely, electronic payments that I do not need to touch and a no-surprise, consistent fee. I am grateful, not disgruntled like many suppliers.

Relationships Can Go Wrong

I realize other card acceptance relationships might be rocky, even if they started blissfully. The romance can fade. There are suppliers who outgrow their acquiring partners and the initial deals. Others are wooed by rates that dazzle and cause an immediate attraction. Such rates could be masking an ugly side—low fees that are unattainable most of the time due to corresponding requirements a transaction must meet. If something looks too good to be true, it is worth uncovering the faults before committing.

Suppliers who have already committed to a tedious and/or unfair fee structure should weigh their options. Renegotiating a better deal might be possible. If the partnership cannot be saved (here enters irreconcilable differences again), the supplier should seek a business divorce and move on.

I have a business owner friend who did just that. He initially pursued card acceptance with his bank; it was a natural choice given the banking relationship. However, it quickly proved to be the wrong choice. A couple $1,000 transactions from two different customers ended up incurring fees amounting to nearly 7%! The same thing could have happened with a non-bank partner. The devil is in the details. Fortunately, this story has a good ending. He later switched to a different card acceptance route that works better for him.

For suppliers, the key to loving card acceptance lies in finding the right acquiring partner and appreciating the entire value package. 

For suppliers, the key to loving card acceptance lies in finding the right acquiring partner and appreciating the entire value package. 

Advice to Suppliers

In the business-to-business (B2B) payments world, it is critical to find an acquirer who specializes in this space; Commercial Cards are unique and have more complexities. I invite industry providers and others to expand on this advice in the comments section below, but no bashing of another provider, please!

A supplier always has the option of forgoing card acceptance altogether, but other payment methods have costs, too, and other drawbacks. Suppliers tend to forget this. I encourage any supplier who is dissatisfied with card acceptance to channel their energy into:

  • evaluating the entire card acceptance value package for their business
  • understanding and calculating the costs of other payment methods
  • finding a different acquiring partner, if necessary

Let’s show a little love for the positive things payment cards have allowed businesses and consumers alike to do. If we really need to become riled up over something, look no further than the industry with unpredictable, ever-changing pricing; excessive fees; an unpleasant environment for customers; and inconsistent service. Need I say more? Airlines. They give everyone plenty of reasons to be disgruntled.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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