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What Can We Learn from the History of #EMV?

Written by from the EMV Department · July 28, 2014
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History teaches us valuable lessons about past human behaviors, endeavors, triumphs and failures. As EMV continues to take hold in the U.S., it’s worthwhile to take a look at its global history.

EMV was developed in 1994 when Europay, MasterCard and Visa came together to found EMVCo. Its purpose was to develop a global chip specification for payment systems. EMV became the trademark of the newly formed entity’s technology standard.

At the time, many financial institutions (FIs) in Europe recognized the benefits of chip-based payments and understood that international standards for such payments were needed to help foster global interoperability. The original EMV specifications were created to fill that void. As the industry has evolved, additional specifications have been written to advance new payments initiatives.

MasterCard absorbed Europay in 2002. Japan Credit Bureau joined EMVCo in 2004, American Express in 2009 and, most recently, Discover and UnionPay in 2013.

Adoption and Usage
Eighty countries are currently in various stages of EMV migration, including the U.S., Canada and countries in Europe, Latin America and Asia. There were 1.6 billion EMV-compliant payment cards in use across the globe at the end of 2012.

History shows many countries have seen lower levels of physical, card-present fraud as a result of EMV implementation and use. However, one area that does not benefit from EMV technology is e-commerce with its dependence on card-not-present transactions.

What’s Next
As the U.S. payments industry works toward its own EMV implementation, we can look at the history of EMV and learn what works and what doesn’t. EMV technology will no doubt continue to evolve as these lessons are learned along the way.

Importantly, TMG has enjoyed an influential seat at the table during U.S. EMV migration discussions. One of the first members of the EMV Migration Forum and the first processor to launch an EMV credit card in the U.S., we are extremely proud of our own history with the technology. As we continue to help FIs across the country make their own migrations to EMV credit, we are poised to very soon do the same with debit.

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Marriage of #Mobile Banking and Payments Key to Success

Written by from the Mobile Department · July 25, 2014
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Year-end 2013 saw fewer than 10 percent of mobile phones incorporating mobile wallet functionality. In the coming years, however, that statistic is expected to more than double, reaching 20 percent by 2018. That’s according to Juniper Research’s recently released Mobile Wallets: Strategies for Developed and Developing Markets 2014-2019.

The report also predicts contactless payment functionality to be increasingly featured in mobile wallets. Specifically, Juniper forecasts more than 50 percent of wallets in developed markets will rely on contactless technology by 2018; globally, more than a third will do so. The potential introduction of the Apple iWallet is expected to spur some of this market uplift. Additionally, deployments are anticipated to get a boost from Near Field Communication (NFC) services incorporating Host Card Emulation (HCE).

Another growth driver will be the launch of additional Person to Person (P2P) payment initiatives similar to Paym in the U.K. or Dwolla in the U.S. Such services will provide another method of payment as they are incorporated into consumers’ current mobile banking or payment apps.

The practice of combining mobile payments functionality with a mobile banking app is a great way to allow consumers to see their complete financial picture from within a single app.

For example, if a customer/member of your financial institution (FI) plans to use his phone to buy a TV at Best Buy, he would be able to check his savings, checking and/or credit card balances via the same app before he decides which method to use for his payment. As an added benefit, he would be able to see how many rewards he could earn with the purchase or see if his FI has any relationships with Best Buy that would result in a discount. Best part – he could then initiate that payment immediately from the same interface, without having to leave the app.

Offering a mobile wallet directly connected to your FI’s mobile banking platform will provide your customers/members with that value-added functionality many appear to be craving. This has the potential to place your mobile wallet product high above the competition, which is becoming more intense with each new provider that enters the market.

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#EMV Technology and Use Climbing Worldwide

Written by from the EMV Department · July 23, 2014
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The global spread of EMV cards continues, with new statistics showing a significant increase in the number of EMV payment cards in circulation.

Specifically, a new report from EMVCo shows there were more than 2 billion EMV payment cards in circulation worldwide by the end of 2013. That’s up from 1.6 billion the year before. Additionally, the number of active EMV terminals jumped from 23 million to 37 million over the same time period.

chip card in usaThe highest number of EMV cards in circulation at the end of 2013 was in the Asia Pacific region, which had 942 million cards and an adoption rate of 71 percent. However, the Canada, Latin America and the Caribbean region boasted the highest adoption rate at nearly 85 percent. There were 471 million cards in circulation in this region at the end of 2013.

“These are impressive figures,” said Dave Meadon, EMVCo executive committee chair. “The continued adoption of EMV chip cards and terminals globally emphasizes the important role this technology plays in securing physical payment transactions.”

American Express, Discover, JCB, MasterCard, UnionPay and Visa collectively own EMVCo. The latest figures are the first EMVCo has reported since adding Discover and UnionPay as new member-owners in 2013. EMVCo’s financial institution members each submitted data for the report. Figures do not include the U.S., as its migration to EMV technology is still in its infancy.

EMVCo’s report clearly indicates EMV is continuing to gain traction worldwide. These numbers, in particular the adoption rates, are encouraging as the U.S. payment infrastructure moves further into EMV implementation.

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#Data Analytics Reveal What Consumers Really Want

Written by from the Data Analytics Department · July 21, 2014
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The majority of consumers are aware that online retailers monitor their shopping habits, and many of them embrace the practice. That is, as long as they believe it enriches their shopping experience.

A recent study found 84 percent of people worldwide understand companies track the websites they visit to recommend products. In the U.S., specifically, this awareness rose significantly from 69 percent in 2011 to 87 percent in 2014.

What’s interesting here is that more than half (65 percent) of consumers worldwide said they are willing to share data if they see how it benefits them. This statistic is also on the rise in the U.S. In 2011, 45 percent of American shoppers said they would be willing to share data if they understood the benefit to them. That number climbed to 61 percent in 2014.

However, the Truth About Shopping study, conducted by McCann Truth Central, concluded some consumers are concerned that retailers’ reliance on algorithms may limit their shopping experience. Fifty-seven percent said they worry they won’t discover new products if companies only market items to them that they’ve shown past interest in purchasing.

Because 66 percent of consumers say they want to “be inspired” while shopping, merchants – and retail financial institutions (FIs), too – now have an open door to offer new products and services, along with highlighting products consumers may have looked at previously.

In short, consumers want the best of both worlds, and it’s up to consumer-savvy FIs to determine the best data analytics programs to deliver that experience. Shoppers expect their shopping preferences and habits to be tracked; how long before banking consumers expect the same?

The key is to keep the experience interesting and valuable. FIs can achieve this by using data analytics, along with better monitoring of consumer engagement, to deliver more customizable, truly valuable promotions — offers that people really want.

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Young People Using Alternative #FinancialServices at Alarming Rate

Written by from the Executive Department · July 18, 2014
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There’s no question the Millennial demographic is a key target market for financial institutions (FIs). Its size, earnings potential and purchasing behavior are among the major factors contributing to the attractiveness of this segment. Yet, that attraction may be unrequited.

Fringe financial service providers, such as check-cashing stores, pawn shops and payday lenders, are attracting college students and recent graduates at alarming rates.

200364668-001In fact, a recent Synergistics Research survey found nearly 80 percent of young people who participated in the survey had used an alternative financial service provider. Convenience and retail stores appear to be common delivery channels for these services, as the survey found 75 percent of Millennial respondents had cashed checks, purchased money orders or used an ATM inside one of these stores.

Yet compared to these providers, a primary FI, such as a credit union or community bank, has a distinct competitive edge – the ability to provide customized, one-on-one relationships. FIs looking to attract and engage young people should highlight – and of course demonstrate – this edge as often as possible. One strategy to ensure this happens is to establish member or customer journey plans, detailing the FI’s outreach strategy at key life stages.

For more immediate results, FIs can create and price their products and services in a way that encourages Gen Yers to look to their primary FI first for all their financial needs. Of course, price isn’t likely to inspire long-term loyalty; it may be just the thing to get cash-strapped students and grads in the door long enough for engagement teams to activate an effective onboarding strategy.

Offering the attention, consultative financial advice, and personalized  service credit unions and community banks are known for, along with providing the conveniences and technology Gen Yers expect, can help keep FIs top of mind when these young people seek out financial services.

As I shared at the recent TMG Executive Summit in Lake Tahoe, a full third of Millennials believe they may never need a financial institution. Maybe it’s less about “need” and more about “want.” By anticipating their needs and working to make their financial lives more enjoyable at every life stage, FIs have the ability to change the minds of Gen Y skeptics.

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TMG Builds Wearable #Payments App for @GoogleGlass

Written by from the Product, Uncategorized Department · July 16, 2014
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The audience at yesterday’s 2014 TMG Executive Summit in Lake Tahoe, Calif., was intrigued by one of the latest projects to emerge from the TMG Innovation Lab – a payments app for Google Glass we’re calling See2Pay.

brian day google glassTMG Senior Product Manager Brian Day, in a presentation aptly named “The Future of Payments,” gave a demonstration of how this custom-built wearable payments app works.

Built by our teams for use with Google’s smart eyewear Google Glass, See2Pay lets consumers make small-dollar purchases at the point-of-sale with a swipe of the touch pad on the eyewear frames.

The app is a product of the TMG Innovation Lab, a 12-month-old project devoted to building and testing consumer-centric digital payment solutions. The developer team leveraged an established person-to-person (P2P) network to build out the processing system behind the app. Transactions performed through See2Pay are routed through the Dwolla payments platform.

So why did we build a wearable payments app?

In addition to helping our clients meet the changing demands of today’s consumer, it’s crucial that we anticipate the ways in which consumers will transact in the future. Wearables hold a lot of potential for consumer payments, mainly because of their simplicity.

The experiences that come from this wearable app will give both our TMG teams and our clients priceless insight into the behaviors and preferences of the evolving digital consumer.

What’s next?

Our plan is to release the code for See2Pay on GitHub, a web-based hosting service for software development projects. This will open See2Pay up to the larger developer ecosystem, which will increase opportunities for Google Glass owners to begin using the app now.

Stay tuned to this blog for more, as we will report on our learnings from this exciting innovation here on

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#Credit Union Members Use #Mobile Differently Than Bank Customers

Written by from the Mobile Department · July 14, 2014
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According to new research, credit union members and bank customers tend to utilize mobile banking in distinctly different ways.

The study examined more than 2 million log-ins from 158,000 mobile banking users at 144 credit unions and banks. It found a number of differences between credit union members’ and bank customers’ mobile banking habits.

Specifically, the report concludes that credit unions are signing up mobile banking users at a slightly higher rate than banks. Credit unions also experience 9- to 10-percent monthly growth rates in the first six months after mobile banking is introduced, while banks typically see a 7 percent jump.

The data also indicates that, although credit union members and bank customers average the same number of money transfers per month, bank customers transfer higher amounts of cash. Bank customers averaged $456 in cash transfers, compared to $326 for credit union members. Additionally, bank customers generally logged in to mobile banking more frequently than credit union members. However, credit union members had longer session times.

Interestingly, although both bank and credit union account holders have access to the same mobile banking features and functions, they tend to use them differently. Five percent of bank customers make deposits via mobile, compared to nine percent of credit union members. Conversely, 31 percent of bank customers review their transaction histories, compared to 18 percent of credit union members.

These variations in the way consumers use mobile banking highlight the importance of monitoring mobile behaviors as banking apps evolve. For example, how users navigate in mobile banking should tell a community bank or credit union what is important to their users. Ideally, financial institutions will give each user the ability to customize the experience based on what information that user finds important.

Whether you are a credit union or a bank, understanding what your users find most valuable will not only help you determine your mobile strategy; it will also demonstrate to consumers your commitment to listening and adapting as their needs change over time.

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Hackers Want More Than Payment Card Data

Written by from the Fraud Department · July 11, 2014
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Data thieves love to get their hands on payment card information. However, as an emerging trend reveals, payment card data may no longer be the only thing they’re after.

According to a new report from security firm Trustwave, there has been a 33-percent increase in theft of non-card financial credentials, personal communications and personally identifiable information (PII), such as social security numbers.  In all, 45 percent of thefts in 2013 involved non-payment data.

The findings were based on an analysis of nearly 700 data breach investigations conducted in 2013 along with “threat intelligence from Trustwave’s global security operations.” Weak passwords were often to blame for compromises, and 85 percent of the exploits detected involved third-party plug-ins like Java and Adobe programs.  Another interesting finding from the report is the top three countries for hosting malware: the U.S. came in first at 42 percent, followed by Russia at 13 percent and Germany at 9percent.

Studies like this underscore the importance of providing protection for the entirety of a consumer’s personal information. While recent attacks on payment card data make it tempting to focus in on banking and payment credentials, it’s important to not limit consumer education to only these areas.

Here are a few tips to share with consumers as you work to make them aware of emerging vulnerabilities in our connected society:

  • Never use the same password for multiple accounts.
  • Make passwords strong even if the site or app does not force it (strong passwords contain upper and lower case letters, numeric and alpha, as well as special characters).
  • Keep computers and mobile devices updated with the latest software.  Users of Microsoft XP are no longer receiving automatic updates, which according to the software giant, makes users five times more vulnerable to attack if they do not update their system on their own.

As payment card data becomes harder to intercept with innovations like EMV, tokenization and mobile-security enhancements, fraudsters will be forced to get creative with the data they pinch. You can be sure they are right now strategizing methods for obtaining PII for the purposes of account takeover and other types of fraud. Financial institutions have a terrific opportunity to make this difficult for the criminals by arming consumers with the right education.

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Consumer Trends Drive Need for #Payments Innovation

Written by from the Product Department · July 9, 2014
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Unspooling the Payments Value Chain,” a white paper I recently wrote, explores the disruptive consumer trends and technologies that are reshaping the way consumers expect to save, spend and make money.

TMG_wp_MobilePaymentsIgnite_blog2In the paper, I highlight the importance of financial institutions (FIs) focusing on consumer relationships and engagement, as well as offering value-added services and social features to payments solutions. Below is an excerpt from the paper:

“Today, FIs are operating in an extremely competitive environment. Not only are consumers’ tastes and expectations changing, technology is evolving rapidly and new channels are emerging and expanding. Two of the biggest areas in the mobile landscape with the potential to improve the user experience are mobile banking and m-commerce…

Experts are quick to point out the mobile landscape is just one area of innovation, and FIs need to offer segmented consumer experiences that are consistent across various applications and provide advanced digital wallet capabilities…

Non-traditional players, such as mobile app providers, are also making strategic moves, introducing even bolder applications. In doing so, they are encroaching
on the role of the FI as a trusted financial advisor and ‘chief of everything’ having to do with buying and saving…

With the explosive growth of digital channels, and as mobile devices continue to grab even greater share of consumers’ time and attention, FIs have the opportunity to leverage this obsession to drive customer loyalty and engagement.

Non-traditional players in the market are no doubt taking this opportunity seriously. Take, for instance, applications like With 10 million users, Mint automatically updates and categorizes financial information from various sources and suggests ways to save…While users can only ‘see’ their money — not transfer or access it — the application does pull information from multiple accounts, such as checking accounts, credit cards and retirement accounts, to provide a complete financial picture on one convenient interface…

Working within new digital parameters, today’s most successful financial innovators are also snapping into the social aspect of banking and money management. Consider SmartyPig, for example. The web application helps people save for specific financial goals like a wedding, a vacation, a charity event or even a flat-screen TV. The FDIC-insured savings account also encourages SmartyPig users to share spending goals with friends and family and offers rewards for hitting the savings goal. This feature scratches the surface of another consumer trend — the need for social engagement from anywhere, anytime…

In my next blog post, I will share an excerpt from the final two sections of the white paper, which explore consumer trust in their FIs and what FIs are doing to innovate. Click here to access the full paper.

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MasterCard Extends Zero-Liability Policy to PIN and ATM Transactions

Written by from the Fraud Department · July 7, 2014
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In response to major data breaches at merchants such as Target, Michael’s and other retailers so far this year, MasterCard has announced it is extending its zero-liability policy for U.S. cardholders. The coverage now includes all PIN-based debit and ATM transactions.

“The changes that we’re making in cardholder protection, combined with our efforts to move the U.S. payments industry to EMV chip technology, will help deliver safer shopping experiences to consumers,” Chris McWilton, president of North American markets for MasterCard, said in a press release.

Some issuers have been quick to point out, however, that this extension of coverage is not exactly new. It’s simply a formalization of protections that credit unions and community banks already offer.

“MasterCard wanted to change our rules and offer broader protections to our cardholders,” MasterCard spokeswoman Beth Kitchener told BankInfoSecurity. “We spoke with our issuers and they agreed with the change. We worked together to make it happen.”

MasterCard is also offering identity-theft resolution assistance, which will alert the credit reporting agencies on behalf of impacted consumers and help victimized cardholders cancel their cards.

The identify theft coverage will begin in July.  The formalized zero-liability extension will happen in October; however, most U.S. cardholders are already protected by their issuing financial institution.

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