This is the first post in a three-part series. You’ve probably heard the adage “There is a little poison in every medication,” which typically is attributed to Paracelsus (1493–1541), the father of toxicology. The trick, of course, is to prescribe the correct balance of agents to improve the patient while doing the least harm. One might think of data governance in a similar manner. A well-disciplined and well-executed data governance regimen provides significant improvements to the organization. So too, an overly restrictive or poorly designed and/or ineffectively monitored data governance ecosystem can result in significant harm; less than optimal models/scorecards, inaccurate reporting, imprecise portfolio outcome forecasts and poor regulatory reports, subsequently resulting in significant investment and loss of reputation. In this blog series, we will address the issues and best practices associated with the broad mandate of data governance. In its simplest definition, data governance is the management of the availability, usability, integrity and security of the data employed in an enterprise. A sound data governance program includes a governing body or council, a defined set of procedures and a plan to execute those procedures. Well, upon quick reflection, effective data governance is not simple at all. After all, data is ubiquitous, is becoming more available, encompasses aspects of our digital lives not envisioned as little as 15 years ago and is constantly changing as people’s behavior changes. To add another level of complexity, regulatory oversight is becoming more pervasive as regulations passed since the Great Recession have become more intrusive, granular and demanding. When addressing issues of data governance lenders, service providers and insurers find themselves trying to incorporate a wide range of issues.  Some of these are time-tested best practices, while others previously were never considered. Here is a reasonable checklist of data governance concerns to consider: Who owns the data governance responsibility within the organization? Is the data governance group seen as an impediment to change or is it a ready part of the change management culture? Is the backup and retrieval discipline — redundancy and recovery — well-planned and periodically tested? How agile/flexible is the governance structure to new data sources? How does the governance structure document and reconcile similar data across multiple providers? Are there appropriate and documented approvals and consents from the data provider(s) for all disclosures? Are systemic access and modification controls and reporting fully deployed and monitored for periodic refinement? Does the monitoring of data integrity, persistence and entitled access enable a quick fix culture where issues are identified and resolved at the source of the problem and not settled by downstream processes? Are all data sources, including those that are proprietary, fully documented and subject to systemic accuracy/integrity reporting? Once obtained, how is the data stored and protected in both definition and accessibility? How do we alter data and leverage the modified outcome? Are there reasonable audits and tracking of downstream reporting? In the event of a data breach, does the organization have well-documented protocols and notification thresholds in place? How recently and to what extent have all data retrieval, manipulation, usage and protection policies and processes been audited? Are there scheduled and periodic reports made to the institution board on issues of data governance? Certainly, many institutions have most of these aspects covered. However, “most” is imprecise medicine, and ill effects are certain to follow. As Paracelsus stated, “The doctor can have a stronger impact on the patient than any drug.” As in medical services, for data governance initiatives those impacts can be beneficial or harmful. In our next blog, we’ll discuss observations of client data governance gaps and lessons learned in evaluating the existing data governance ecosystem. Make sure to read Compliance as a Differentiator perspective paper for deeper insight on regulations affecting financial institutions and how you can prepare your business. Discover how a proven partner with rich experience in data governance, such as Experian, can provide the support your company needs to ensure a rigorous data governance ecosystem. Do more than comply. Succeed with an effective data governance program.  

By: Ori Eisen This article originally appeared on WIRED. When I started 41st Parameter more than a decade ago, I had a sense of what fraud was all about. I’d spent several years dealing with fraud while at VeriSign and American Express. As I considered the problem, I realized that fraud was something that could never be fully prevented. It’s a dispiriting thing to accept that committed criminals will always find some way to get through even the toughest defenses. Dispiriting, but not defeating. The reason I chose to dedicate my life to stopping online fraud is because I saw where the money was going. Once you follow the money and you see how it is used, you can’t “un-know.” The money ends up supporting criminal activities around the globe – not used to buy grandma a gift. Over the past 10 years the nature of fraud has become more sophisticated and systematized. Gone are the days of the lone wolf hacker seeing what they could get away with. Today, those days seem almost simple. Not that I should be saying it, but fraud and the people who perpetrated it had a cavalier air about them, a bravado. It was as if they were saying, in the words of my good friend Frank Abagnale, “catch me if you can.” They learned to mimic the behaviors and clone the devices of legitimate users. This allowed them to have a field day, attacking all sorts of businesses and syphoning away their ill-gotten gains. We learned too. We learned to look hard and close at the devices that attempted to access an account. We looked at things that no one knew could be seen. We learned to recognize all of the little parameters that together represented a device. We learned to notice when even one of them was off. The days of those early fraudsters has faded. New forces are at work to perpetrate fraud on an industrial scale. Criminal enterprises have arisen. Specializations have emerged. Brute force attacks, social engineering, sophisticated malware – all these tools, and so many more – are being applied every day to cracking various security systems. The criminal underworld is awash in credentials, which are being used to create accounts, take over accounts and commit fraudulent transactions. The impact is massive. Every year, billions of dollars are lost due to cyber crime. Aside from the direct monetary losses, customer lose faith in brand and businesses, resources need to be allocated to reviewing suspect transactions and creativity and energy are squandered trying to chase down new risks and threats. To make life just a little simpler, I operate from the assumption that every account, every user name and every password has been compromised. As I said at the start, fraud isn’t something that can be prevented. By hook or by crook (and mainly by crook), fraudsters are finding cracks they can slip through; it’s bound to happen. By watching carefully, we can see when they slip up and stop them from getting away with their intended crimes. If the earliest days of fraud saw impacts on individuals, and fraud today is impacting enterprises, the future of fraud is far more sinister. We’re already seeing hints of fraud’s dark future. Stories are swirling around the recent Wall Street hack. The President and his security team were watching warily, wondering if this was the result of a state-sponsored activity. Rather than just hurting businesses or their customers, we’re on the brink (if we haven’t crossed it already) of fraud being used to destabilize economies. If that doesn’t keep you up at night I don’t know what will. Think about it: in less than a decade we have gone from fraud being an isolated irritant (not that it wasn’t a problem) to being viewed as a potential, if clandestine, weapon. The stakes are no longer the funds in an account or even the well being of a business. Today – and certainly tomorrow – the stakes will be higher. Fraudsters, terrorists really, will look for ways to nudge economies toward the abyss. Sadly, the ability of fraudsters to infiltrate legitimate accounts and networks will never be fully stifled. The options available to them are just too broad for every hole to be plugged. What we can do is recognize when they’ve made it through our defenses and prevent them from taking action. It’s the same approach we’ve always had: they may get in while we do everything possible to prevent them from doing harm. In an ideal world bad guys would never get through in the first place; but we don’t live in an ideal world. In the real world they’re going to get in. Knowing this isn’t easy. It isn’t comforting or comfortable. But in the real world there are real actions we can take to protect the things that matter – your money, your data and your sense of security. We learned how to fight fraud in the past, we are fighting it with new technologies today and we will continue to apply insights and new approaches to protect our future. Download our Perspective Paper to learn about a number of factors that are contributing to the evolving fraud landscape.

Through all the rather “invented conflict” of MCX vs Apple Pay by the tech media these last few weeks – very little diligence was done on why merchants have come to reject NFC (near field communication) as the standard of choice. Maybe I can provide some color here – both as to why traditionally merchants have viewed this channel with suspicion leading up to CurrenC choosing QR, and why I believe its time for merchants to give up hating on a radio. Why do merchants hate NFC? Traditionally, any contactless usage in stores stems from international travelers, fragmented mobile NFC rollouts and a cornucopia of failed products using a variety of form factors – all of which effectively was a contactless chip card with some plastic around it. Any merchant supported tended to be in the QSR space – biggest of which was McDonalds – and they saw little to no volume to justify the upgrade costs. Magstripe, on the other hand, was a form factor that was more accessible. It was cheap to manufacture, provisioning was a snap, distribution depended primarily on USPS. Retailers used the form factor themselves for Gift cards, Pre-paid and Private Label. In contrast – complexity varies in contactless for all three – production, provisioning and distribution. If it’s a contactless card – all three can still follow pretty much the norm – as they require no customization or changes post-production. Mobile NFC was an entirely different beast. Depending on the litany of stakeholders in the value chain – from Hardware – OEM and Chipset support – NFC Controller to the Secure Element, the OS Support for the NFC stack, the Services – Trusted Service Managers of each flavor (SE vs SP), the Carriers (in case of OTA provisioning) and the list goes on. The NFC Ecosystem truly deters new entrants by its complexity and costs. Next – there was much ambiguity to what NFC/contactless could come to represent at the point of sale. Merchants delineated an open standard that could ferry over any type of credential – both credit and debit. Even though merchants prefer debit, the true price of a debit transaction varies depending on which set of rails carry the transaction – PIN Debit vs Signature Debit. And the lack of any PIN Debit networks around the contactless paradigm made the merchants fears real – that all debit transactions through NFC will be carried over the more costly signature debit route (favoring V/MA) and that a shift from magstripe to contactless would mean the end to another cost advantage the merchants had to steer transactions towards cheaper rails. The 13 or so PIN debit networks are missing from Apple Pay – and it’s an absence that weighed heavily in the merchants decision to be suspicious of it. Maybe even more important for the merchant – since it has little to do with payment – loyalty was a component that was inadequately addressed via NFC. NFC was effective as a secure communications channel – but was wholly inadequate when it came to transferring loyalty credentials, coupons and other things that justify why merchants would invest in a new technology in the first place. The contactless standards to move non-payment information, centered around ISO 18092 – and had fragmented acceptance in the retail space, and still struggled from a rather constricted pipe. NFC was simply useful as a payments standard and when it came to loyalty – the “invented a decade ago” standard is wholly inadequate to do anything meaningful at the point of sale. If the merchant must wrestle with new ways to do loyalty – then should they go back in time to enable payments, or should they jerry rig payments to be wrapped in to loyalty? What looks better to a merchant? Sending a loyalty token along with the payment credential (via ISO 18092) OR Encapsulating a payment token (as a QR Code) inside the Starbucks Loyalty App? I would guess – the latter. Even more so because in the scenario of accepting a loyalty token alongside an NFC payment – you are trusting the payment enabler (Apple, Google, Networks, Banks) with your loyalty token. Why would you? The reverse makes sense for a merchant. Finally – traditional NFC payments – (before Host Card Emulation in Android) – apart from being needlessly complex – mandated that all communication between the NFC capable device and the point-of-sale terminal be limited to the Secure Element that hosts the credential and the payment applets. Which means if you did not pay your way in to the Secure Element (mostly only due to if you are an issuer) then you have no play. What’s a merchant to do? So if you are a merchant – you are starting off with a disadvantage – as those terminologies and relationships are alien to you. Merchants did not own the credential – unless it was prepaid or private label – and even then, the economics wouldn’t make sense to put those in a Secure Element. Further, Merchants had no control in the issuer’s choice of credential in the Secure Element – which tended to be mostly credit. It was then no surprise that merchants largely avoided this channel – and then gradually started to look at it with suspicion around the same time banks and networks began to pre-ordain NFC as the next stage in payment acceptance evolution. Retailers who by then had been legally embroiled in a number of skirmishes on the interchange front – saw this move as the next land grab. If merchants could not cost effectively compete in this new channel – then credit was most likely to become the most prevalent payment option within. This suspicion was further reinforced with the launch of GoogleWallet, ISIS and now Apple Pay. Each of these wrapped existing rails, maintained status quo and allowed issuers and networks to bridge the gap from plastic to a new modality (smartphones) while changing little else. This is no mere paranoia. The merchants fear that issuers and networks will ultimately use the security and convenience proffered through this channel as an excuse to raise rates again. Or squeeze out the cheaper alternatives – as they did with defaulting to Signature Debit over PIN debit for contactless. As consumers learn a new behavior (tap and pay) they fear that magstripe will eclipse and a high cost alternative will then take root. How is it fair that to access their customer’s funds – our money – one has to go through toll gates that are incentivized to charge higher prices? The fact that there are little to no alternatives between using Cash or using a bank issued instrument to pay for things – should worry us as consumers. As long as merchants are complacent about the costs in place for them to access our money – there won’t be much of an incentive for banks to find quicker and cheaper ways to move money – in and out of the system as a whole. I digress. So the costs and complexities that I pointed to before, that existed in the NFC payments ecosystem – served to not only keep retailers out, but also impacted issuers ability to scale NFC payments. These costs materialized in to higher interchange cards for the issuer when these initiatives took flight – partly because the issuer was losing money already, and had then little interest to enable debit as a payments choice. GoogleWallet itself had to resort to a bit of “negative margin strategy” to allow debit cards to be used within. ISIS had little to no clout, nor any interest to push issuers to pick debit. All of which must have been quite vexing for an observant merchant. Furthermore, just as digital and mobile offers newer ways to interact with consumers – they also portend a new reality – that new ecosystems are taking shape across that landscape. And these ecosystems are hardly open – Facebook, Twitter, Google, Apple – and they have their own toll gates as well. Finally – A retail payment friend told me recently that merchants view the plethora of software, systems and services that encapsulate cross-channel commerce as a form of “Retailer OS”. And if Payment acceptance devices are end-points in to that closed ecosystem of systems and software – they are rightfully hesitant in handing over those keys to the networks and banks. The last thing they want to do is let someone else control those toll-gates. And it makes sense and ironically – it has parallel in the iOS ecosystem. Apple’s MFi program is an example of an ecosystem owner choosing to secure those end-points – especially when those are manufactured by a third party. This is why Apple exacts a toll and mandates that third party iOS accessory manufacturers must include an Apple IC to securely connect and communicate with an iOS device. If Apple can mandate that, then why is it that a retailer should have no say over the end-points through which payments occur in it’s own retail ecosystem? Too late to write about how the retailer view of NFC must evolve – in the face of an open standard, aided by Host Card Emulation – but that’s gotta be another post. Another time. See you all in Vegas. Make sure to join the Experian #MobilePayChat on Twitter this Tuesday at 12:15 p.m. PT during Money2020 conference: http://ex.pn/Money2020. If you are attending the event please stop by our booth #218. This post originally appeared here. 

This is the first post in a three-part series. You’ve probably heard the adage “There is a little poison in every medication,” which typically is attributed to Paracelsus (1493–1541), the father of toxicology. The trick, of course, is to prescribe the correct balance of agents to improve the patient while doing the least harm. One might think of data governance in a similar manner. A well-disciplined and well-executed data governance regimen provides significant improvements to the organization. So too, an overly restrictive or poorly designed and/or ineffectively monitored data governance ecosystem can result in significant harm; less than optimal models/scorecards, inaccurate reporting, imprecise portfolio outcome forecasts and poor regulatory reports, subsequently resulting in significant investment and loss of reputation. In this blog series, we will address the issues and best practices associated with the broad mandate of data governance. In its simplest definition, data governance is the management of the availability, usability, integrity and security of the data employed in an enterprise. A sound data governance program includes a governing body or council, a defined set of procedures and a plan to execute those procedures. Well, upon quick reflection, effective data governance is not simple at all. After all, data is ubiquitous, is becoming more available, encompasses aspects of our digital lives not envisioned as little as 15 years ago and is constantly changing as people’s behavior changes. To add another level of complexity, regulatory oversight is becoming more pervasive as regulations passed since the Great Recession have become more intrusive, granular and demanding. When addressing issues of data governance lenders, service providers and insurers find themselves trying to incorporate a wide range of issues.  Some of these are time-tested best practices, while others previously were never considered. Here is a reasonable checklist of data governance concerns to consider: Who owns the data governance responsibility within the organization? Is the data governance group seen as an impediment to change or is it a ready part of the change management culture? Is the backup and retrieval discipline — redundancy and recovery — well-planned and periodically tested? How agile/flexible is the governance structure to new data sources? How does the governance structure document and reconcile similar data across multiple providers? Are there appropriate and documented approvals and consents from the data provider(s) for all disclosures? Are systemic access and modification controls and reporting fully deployed and monitored for periodic refinement? Does the monitoring of data integrity, persistence and entitled access enable a quick fix culture where issues are identified and resolved at the source of the problem and not settled by downstream processes? Are all data sources, including those that are proprietary, fully documented and subject to systemic accuracy/integrity reporting? Once obtained, how is the data stored and protected in both definition and accessibility? How do we alter data and leverage the modified outcome? Are there reasonable audits and tracking of downstream reporting? In the event of a data breach, does the organization have well-documented protocols and notification thresholds in place? How recently and to what extent have all data retrieval, manipulation, usage and protection policies and processes been audited? Are there scheduled and periodic reports made to the institution board on issues of data governance? Certainly, many institutions have most of these aspects covered. However, “most” is imprecise medicine, and ill effects are certain to follow. As Paracelsus stated, “The doctor can have a stronger impact on the patient than any drug.” As in medical services, for data governance initiatives those impacts can be beneficial or harmful. In our next blog, we’ll discuss observations of client data governance gaps and lessons learned in evaluating the existing data governance ecosystem. Make sure to read Compliance as a Differentiator perspective paper for deeper insight on regulations affecting financial institutions and how you can prepare your business. Discover how a proven partner with rich experience in data governance, such as Experian, can provide the support your company needs to ensure a rigorous data governance ecosystem. Do more than comply. Succeed with an effective data governance program.  

By: Ori Eisen This article originally appeared on WIRED. When I started 41st Parameter more than a decade ago, I had a sense of what fraud was all about. I’d spent several years dealing with fraud while at VeriSign and American Express. As I considered the problem, I realized that fraud was something that could never be fully prevented. It’s a dispiriting thing to accept that committed criminals will always find some way to get through even the toughest defenses. Dispiriting, but not defeating. The reason I chose to dedicate my life to stopping online fraud is because I saw where the money was going. Once you follow the money and you see how it is used, you can’t “un-know.” The money ends up supporting criminal activities around the globe – not used to buy grandma a gift. Over the past 10 years the nature of fraud has become more sophisticated and systematized. Gone are the days of the lone wolf hacker seeing what they could get away with. Today, those days seem almost simple. Not that I should be saying it, but fraud and the people who perpetrated it had a cavalier air about them, a bravado. It was as if they were saying, in the words of my good friend Frank Abagnale, “catch me if you can.” They learned to mimic the behaviors and clone the devices of legitimate users. This allowed them to have a field day, attacking all sorts of businesses and syphoning away their ill-gotten gains. We learned too. We learned to look hard and close at the devices that attempted to access an account. We looked at things that no one knew could be seen. We learned to recognize all of the little parameters that together represented a device. We learned to notice when even one of them was off. The days of those early fraudsters has faded. New forces are at work to perpetrate fraud on an industrial scale. Criminal enterprises have arisen. Specializations have emerged. Brute force attacks, social engineering, sophisticated malware – all these tools, and so many more – are being applied every day to cracking various security systems. The criminal underworld is awash in credentials, which are being used to create accounts, take over accounts and commit fraudulent transactions. The impact is massive. Every year, billions of dollars are lost due to cyber crime. Aside from the direct monetary losses, customer lose faith in brand and businesses, resources need to be allocated to reviewing suspect transactions and creativity and energy are squandered trying to chase down new risks and threats. To make life just a little simpler, I operate from the assumption that every account, every user name and every password has been compromised. As I said at the start, fraud isn’t something that can be prevented. By hook or by crook (and mainly by crook), fraudsters are finding cracks they can slip through; it’s bound to happen. By watching carefully, we can see when they slip up and stop them from getting away with their intended crimes. If the earliest days of fraud saw impacts on individuals, and fraud today is impacting enterprises, the future of fraud is far more sinister. We’re already seeing hints of fraud’s dark future. Stories are swirling around the recent Wall Street hack. The President and his security team were watching warily, wondering if this was the result of a state-sponsored activity. Rather than just hurting businesses or their customers, we’re on the brink (if we haven’t crossed it already) of fraud being used to destabilize economies. If that doesn’t keep you up at night I don’t know what will. Think about it: in less than a decade we have gone from fraud being an isolated irritant (not that it wasn’t a problem) to being viewed as a potential, if clandestine, weapon. The stakes are no longer the funds in an account or even the well being of a business. Today – and certainly tomorrow – the stakes will be higher. Fraudsters, terrorists really, will look for ways to nudge economies toward the abyss. Sadly, the ability of fraudsters to infiltrate legitimate accounts and networks will never be fully stifled. The options available to them are just too broad for every hole to be plugged. What we can do is recognize when they’ve made it through our defenses and prevent them from taking action. It’s the same approach we’ve always had: they may get in while we do everything possible to prevent them from doing harm. In an ideal world bad guys would never get through in the first place; but we don’t live in an ideal world. In the real world they’re going to get in. Knowing this isn’t easy. It isn’t comforting or comfortable. But in the real world there are real actions we can take to protect the things that matter – your money, your data and your sense of security. We learned how to fight fraud in the past, we are fighting it with new technologies today and we will continue to apply insights and new approaches to protect our future. Download our Perspective Paper to learn about a number of factors that are contributing to the evolving fraud landscape.

Through all the rather “invented conflict” of MCX vs Apple Pay by the tech media these last few weeks – very little diligence was done on why merchants have come to reject NFC (near field communication) as the standard of choice. Maybe I can provide some color here – both as to why traditionally merchants have viewed this channel with suspicion leading up to CurrenC choosing QR, and why I believe its time for merchants to give up hating on a radio. Why do merchants hate NFC? Traditionally, any contactless usage in stores stems from international travelers, fragmented mobile NFC rollouts and a cornucopia of failed products using a variety of form factors – all of which effectively was a contactless chip card with some plastic around it. Any merchant supported tended to be in the QSR space – biggest of which was McDonalds – and they saw little to no volume to justify the upgrade costs. Magstripe, on the other hand, was a form factor that was more accessible. It was cheap to manufacture, provisioning was a snap, distribution depended primarily on USPS. Retailers used the form factor themselves for Gift cards, Pre-paid and Private Label. In contrast – complexity varies in contactless for all three – production, provisioning and distribution. If it’s a contactless card – all three can still follow pretty much the norm – as they require no customization or changes post-production. Mobile NFC was an entirely different beast. Depending on the litany of stakeholders in the value chain – from Hardware – OEM and Chipset support – NFC Controller to the Secure Element, the OS Support for the NFC stack, the Services – Trusted Service Managers of each flavor (SE vs SP), the Carriers (in case of OTA provisioning) and the list goes on. The NFC Ecosystem truly deters new entrants by its complexity and costs. Next – there was much ambiguity to what NFC/contactless could come to represent at the point of sale. Merchants delineated an open standard that could ferry over any type of credential – both credit and debit. Even though merchants prefer debit, the true price of a debit transaction varies depending on which set of rails carry the transaction – PIN Debit vs Signature Debit. And the lack of any PIN Debit networks around the contactless paradigm made the merchants fears real – that all debit transactions through NFC will be carried over the more costly signature debit route (favoring V/MA) and that a shift from magstripe to contactless would mean the end to another cost advantage the merchants had to steer transactions towards cheaper rails. The 13 or so PIN debit networks are missing from Apple Pay – and it’s an absence that weighed heavily in the merchants decision to be suspicious of it. Maybe even more important for the merchant – since it has little to do with payment – loyalty was a component that was inadequately addressed via NFC. NFC was effective as a secure communications channel – but was wholly inadequate when it came to transferring loyalty credentials, coupons and other things that justify why merchants would invest in a new technology in the first place. The contactless standards to move non-payment information, centered around ISO 18092 – and had fragmented acceptance in the retail space, and still struggled from a rather constricted pipe. NFC was simply useful as a payments standard and when it came to loyalty – the “invented a decade ago” standard is wholly inadequate to do anything meaningful at the point of sale. If the merchant must wrestle with new ways to do loyalty – then should they go back in time to enable payments, or should they jerry rig payments to be wrapped in to loyalty? What looks better to a merchant? Sending a loyalty token along with the payment credential (via ISO 18092) OR Encapsulating a payment token (as a QR Code) inside the Starbucks Loyalty App? I would guess – the latter. Even more so because in the scenario of accepting a loyalty token alongside an NFC payment – you are trusting the payment enabler (Apple, Google, Networks, Banks) with your loyalty token. Why would you? The reverse makes sense for a merchant. Finally – traditional NFC payments – (before Host Card Emulation in Android) – apart from being needlessly complex – mandated that all communication between the NFC capable device and the point-of-sale terminal be limited to the Secure Element that hosts the credential and the payment applets. Which means if you did not pay your way in to the Secure Element (mostly only due to if you are an issuer) then you have no play. What’s a merchant to do? So if you are a merchant – you are starting off with a disadvantage – as those terminologies and relationships are alien to you. Merchants did not own the credential – unless it was prepaid or private label – and even then, the economics wouldn’t make sense to put those in a Secure Element. Further, Merchants had no control in the issuer’s choice of credential in the Secure Element – which tended to be mostly credit. It was then no surprise that merchants largely avoided this channel – and then gradually started to look at it with suspicion around the same time banks and networks began to pre-ordain NFC as the next stage in payment acceptance evolution. Retailers who by then had been legally embroiled in a number of skirmishes on the interchange front – saw this move as the next land grab. If merchants could not cost effectively compete in this new channel – then credit was most likely to become the most prevalent payment option within. This suspicion was further reinforced with the launch of GoogleWallet, ISIS and now Apple Pay. Each of these wrapped existing rails, maintained status quo and allowed issuers and networks to bridge the gap from plastic to a new modality (smartphones) while changing little else. This is no mere paranoia. The merchants fear that issuers and networks will ultimately use the security and convenience proffered through this channel as an excuse to raise rates again. Or squeeze out the cheaper alternatives – as they did with defaulting to Signature Debit over PIN debit for contactless. As consumers learn a new behavior (tap and pay) they fear that magstripe will eclipse and a high cost alternative will then take root. How is it fair that to access their customer’s funds – our money – one has to go through toll gates that are incentivized to charge higher prices? The fact that there are little to no alternatives between using Cash or using a bank issued instrument to pay for things – should worry us as consumers. As long as merchants are complacent about the costs in place for them to access our money – there won’t be much of an incentive for banks to find quicker and cheaper ways to move money – in and out of the system as a whole. I digress. So the costs and complexities that I pointed to before, that existed in the NFC payments ecosystem – served to not only keep retailers out, but also impacted issuers ability to scale NFC payments. These costs materialized in to higher interchange cards for the issuer when these initiatives took flight – partly because the issuer was losing money already, and had then little interest to enable debit as a payments choice. GoogleWallet itself had to resort to a bit of “negative margin strategy” to allow debit cards to be used within. ISIS had little to no clout, nor any interest to push issuers to pick debit. All of which must have been quite vexing for an observant merchant. Furthermore, just as digital and mobile offers newer ways to interact with consumers – they also portend a new reality – that new ecosystems are taking shape across that landscape. And these ecosystems are hardly open – Facebook, Twitter, Google, Apple – and they have their own toll gates as well. Finally – A retail payment friend told me recently that merchants view the plethora of software, systems and services that encapsulate cross-channel commerce as a form of “Retailer OS”. And if Payment acceptance devices are end-points in to that closed ecosystem of systems and software – they are rightfully hesitant in handing over those keys to the networks and banks. The last thing they want to do is let someone else control those toll-gates. And it makes sense and ironically – it has parallel in the iOS ecosystem. Apple’s MFi program is an example of an ecosystem owner choosing to secure those end-points – especially when those are manufactured by a third party. This is why Apple exacts a toll and mandates that third party iOS accessory manufacturers must include an Apple IC to securely connect and communicate with an iOS device. If Apple can mandate that, then why is it that a retailer should have no say over the end-points through which payments occur in it’s own retail ecosystem? Too late to write about how the retailer view of NFC must evolve – in the face of an open standard, aided by Host Card Emulation – but that’s gotta be another post. Another time. See you all in Vegas. Make sure to join the Experian #MobilePayChat on Twitter this Tuesday at 12:15 p.m. PT during Money2020 conference: http://ex.pn/Money2020. If you are attending the event please stop by our booth #218. This post originally appeared here.