1) FreedomPay and Microsoft are working with banks to help them leverage purchase data from merchants to provide new services and targeted promotions. 2) Recent security advancements like point-to-point encryption now allow purchase data to be securely accessed and analyzed. 3) Banks can use data insights to benefit both merchants and customers by creating personalized offers and incentives programs.

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Executive insight | Barclays Bank's Darren Foulds on payments
FreedomPay and Microsoft explain how they’re helping banks
and merchants monetise purchase data
Intelligent commerce
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to empower every person and every
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2. www.onwindows.com 27
Cover story
FreedomPay
Recently validated security solutions are
opening the flood gates for leading banks
to monetise purchase data. Microsoft and
FreedomPay explain how they’re supporting
banks in their innovation efforts
The payments world has become an
increasingly competitive space. We have
witnessed the rise of alternative players
like Apple, Amazon and Starbucks vying
to disintermediate banks and assume the
leadership position. Recent security and
technological advancements have helped
to further protect the data flowing among
consumers, merchants and banks, and
can now deliver the security threshold that
institutional banks demand. Today, with
secure data now ensured, banks across
the world are engaging with Microsoft and
FreedomPay to drive commerce innovation
and reclaim the leadership mantle.
Banks have been slow to leverage their
exalted position in payments and leverage
fast moving technologies, social media and
mobility. Held captive to inadequate data
security protocols – highlighted by recent
breaches at major US companies, including
UPS, Target and Neiman Marcus – both
issuing and acquiring banks have been
handicapped in looking to capitalise on their
unparalleled access to data.
The PCI Security Council, a governing
body charged with defining security protocols
for the payments industry, has only recently
announced a handful of leading security
technology providers capable of fully
protecting all data across the commerce value
chain. Though some have suggested that the
US adopting EMV payments will help solve
the security challenges, EMV only protects
against fraudulent use of a card and does not
address the underlying vulnerability of data on
the merchant’s system. To achieve true security
for payments data, EMV must be paired
with robust security measures that ensure
protection against malware at the point of sale.
With validated security as a backdrop, a
new world is emerging that allows merchants
and banks to monetise transaction data that
has long been unavailable. There is a virtual
revolution going on at the merchant POS.
Smarter and more secure POS systems are
unlocking payment data, enabling banks
to consume that data and power new value
propositions for their retail and merchant
customers. Enabling this capability at the ‘point
of decision’ allows access and action upon
data in real time at the POS, truly transforming
merchant and banking partner collaboration.
Now, banks can deliver more value-added
services, enabling merchants to grow traffic by
using data to create personalised offers and
incentives programmes. Banks are forming
new partnerships around data analysis so they
can deliver targeted promotions to customers
based on spending and lifestyle data.
Unleashing the data that acquiring banks
maintain for their merchants and issuing
banks maintain for their card holders has
been envisioned for over a decade. It has
been a long held truth that this constitutes
the winning hand for the banks and why
they ultimately will prevail in the payments
ecosystem over less entrenched players.
A new breed of global security solutions
is emerging that use the same security
infrastructure and data standards that
banks require for their own data security.
These PCI-validated third-party service
providers are able to solve the merchant’s
need for security at the POS, and also
enable data to be consumed by financial
institutions and technology partners on the
back end, creating a virtual bridge between
the consumer, the merchant and the bank.
Using the industry’s most secure standard
at the merchant level, PCI-validated point-
to-point encryption (P2PE), banks can now
access fully secured data from the POS
system, offering more robust insight about
who buys what, and when, for smarter
marketing analytics. FreedomPay’s P2PE
solution, for example, integrates with POS
systems and can function as a white-label
platform for merchants and POS providers.
“The FreedomPay P2PE solution was built
to be the security wrapper for transaction
data,” says Christopher Kronenthal,
CTO of FreedomPay. “PCI validation for
FreedomPay’s solution gives merchants,
financial services partners and technology
partners the assurance that the data can be
passed from enterprise to enterprise.”
In fact, enterprises in every industry
are upgrading their security and POS
infrastructure to newer cloud-based, PCI-
validated P2PE solutions that secure the data
with hardware encryption and decryption,
Stepping
up to the
payments
challenge

3. 29www.onwindows.com
Cover story
FreedomPay
solution for their customers. With a growing
set of audit and data compliance requirements
challenging merchants, new alliances between
banks and merchants can provide a secure
platform for incentives and data analysis.
Banks and financial institutions are the trusted
partner that both shoppers and merchants
can trust with their data and begin to fully
participate in the future world of commerce.
In Latin America, for example, FreedomPay
is working alongside Microsoft to bring a new
vision of commerce to one of Microsoft’s most
forward-thinking customers. A major issuer/
acquirer is looking to leverage its significant
merchant footprint with a marketplace highly
dependent on smart phone usage – and
extend that for new commerce models.
“By introducing a mobile wallet
ecosystem, our customer is grabbing the
opportunity to take a leadership role
throughout all of Latin America,” says
Guillermo Kopp, Microsoft’s financial
services director for Latin America
and Canada. “In addition to stepping
up and protecting themselves against
disintermediation and losing share of
wallet, this financial leader is delivering
unprecedented added value services to
merchants and customers.”
But innovation is not limited to South
America. FreedomPay and Microsoft are also
working with customers in North America,
including public and private label issuers
that are creating value-added programmes
to drive demand to their merchant partners.
Financial incentives or loyalty rewards can
be linked to a product, a merchant or a card
type and executed in real time when the
customer makes a purchase. By validating
purchases at a SKU level, banks are helping
make sure that marketing dollars for
financial discounts are targeted efficiently to
drive consumer demand.
“It is great to see our financial services
customers connecting with their cardholders
and merchants globally through the Microsoft
platform,” explains Kopp of Microsoft. “We
are seeing a broad array of opportunities to
transform B2B and B2C business models
coming to the marketplace at a rapid pace.”
Europe, also, is a hotbed of innovation.
Many banks are incubating new business
models and pursuing a culture of
innovation, much of which is in payments.
Many are working to implement offers and
loyalty programmes that, up until now, have
been less available globally.
Microsoft technology is driving innovation
in the payments value chain and is a key
enabler of FreedomPay solutions. Windows
8 phone and tablet devices provide
compelling payments acceptance and
initiation experiences, and the Azure cloud
platform enables new transaction integration
and digital wallet infrastructures that connect
banks and merchants to consumers. Both
banks and merchants can unlock the value
of transaction spending demographic data
using the advanced analytics capabilities
of Microsoft Power BI – a solution that
integrates the capabilities of Excel in Office
365 with Azure.
Banks can add more value to merchants
by engaging earlier in a consumer’s buying
cycle,” explains Richard Peers, Microsoft
Financial Services director for Europe. “For
example, a bank can help merchants offer
specific discounts or financial incentives
if a customer uses the bank’s payment
method for purchases. European banks are
providing merchants greater insight into
customer behaviour to create more strategic
and targeted offers.”
Ultimately, banks are at the epicentre of
where information meets money. This new
paradigm is emerging and adapting to the
changing behaviour and preferences of an
increasingly sophisticated consumer. Data
security protections are now guaranteed by
a group of validated service providers who
are wiping away the fear and uncertainty of
the past. And banks are putting in place the
systems and architecture to leverage this
wealth of insight, and increase profitability.
Spurred by loyalty challenges by well
financed start-ups and industry ‘disruptors’,
financial institutions have begun to fight
back, and are actively developing new ways
to enable their merchant customers to
improve the consumer experience they offer.
and process the data outside of the
merchant’s network. Banks are now seeing
the potential to embrace this trend and lead
it. By working collaboratively with merchants
to solve this challenge, banks can maintain a
foothold in the merchant’s ecosystem to be
able to deliver more value-added services.
The volume of data, the accessibility of
data, and the relevance of data are driving
the global economy, according to Colin Kerr,
director of Worldwide Financial Services at
Microsoft. “The payments space has become
more of an information business,” he says.
“Understanding who people are paying,
what they are paying with, how frequently
they are paying and how much they are
paying is extremely valuable information.
That’s really the key to unlocking value from
payments in today’s world, and our bank
partners are engaging.”
Never before have enterprises been
able to capture, analyse and monetise
payments data for the benefit of every
player in the commerce ecosystem. Legacy,
siloed systems have prevented enterprises
from using payments information that is
expanding and multiplying exponentially
with the adoption of smartphones and
tablets, and the associated location
information. New opportunities are being
created at a rapid pace. Innovations in
commerce technology, coupled with
the new awareness of the importance of
transaction data, have tied together POS
systems, payment processors, financial
institutions and third-party analytics
engines, enabling enterprises to completely
reinvent commerce for the future with
banks leading the charge.
While banks are ensuring lifetime control
over consumer data, and merchants are
creating their own walled-garden environment
to mine their own customer data, a
convergence is taking place. The bank emerges
as a secure broker of the data, bringing these
initiatives into alignment, and gaining flexibility
to extend the value net across the ecosystem
with a common framework of secure data.
“Now, banks are able to proceed with
projects that have been white-boarded for
years, but never able to launch because of
data security,” says Kronenthal. “Now that
the technology has arrived to enable banks
to consume transaction data, banks and their
business intelligence partners across the globe
are looking at new opportunities to provide
services to merchants and customers.”
“As a consumer and enterprise-focused
company, Microsoft provides the technology
that completes that triangular relationship,”
explains Kerr. “It allows a bank to provide
very differentiating experiences to their
merchant customers, which allows the
merchant in turn to add a lot more value to
the experience of their mutual consumers.
This benefits both the retailer and the bank,
but also, of course, the consumer, in that their
shopping experience becomes that much
more fulfilling.” This engenders customer
loyalty to both the bank and the merchant.
Banks are uniquely positioned to create a
secure payment ecosystem and data storage
“The payments
space has
become more of
an information
business”
Colin Kerr
Microsoft
FreedomPay and Microsoft are helping banks and merchants gain greater insight into customer behaviour