Render Dahiya, CEO of Arroweye Solutions, joins PaymentEye's Senior Reporter, Sarah Gill, in our Finetics™ Studio at Money20/20, and provides an issuer’s point of view about the impact of the shift to EMV.
Sarah Gill, Reporter: I'm joined by Render Dahiya, CEO of Arroweye Solutions. One of the biggest stories in the US to do with finance and payments is the shift to EMV. I mean, I'm kind of interested in that from the issuing side.
Render Dahiya: Yes. EMV is--obviously, you had the October deadline that just passed, and I think only about 30% of credit and debit cards have moved to EMV by the end of the year. Many merchants are still in the process, so it's still way out there in terms of opportunities to implement. At the same time, it's very complex, right? It's added two things to the whole card-issuing model. It's added complexity and it's added cost. So complexity-wise, there's a lot more upfront work to start a program on EMV than there used to be and a lot more administrative models. Cost-wise, it's 5 to 10X to get cards in the marketplace.
So if you think it over, it's modifying the whole P&L of issuing a card. And for our customers, we're telling them, "You really want to look at models where you don't have to change your portfolio." You don't want to get so lost in the EMV upfront cost and administration involved in it that you forget you're trying to service a consumer and you're trying to gain share from other companies. And how you handle this rollout, the flexibility, how you don't change your card programs, and how you handle the balance sheet impacts are really key to how successful you are in this rollout.
Sarah Gill, Reporter: Yes. I mean, do you see it as a turning point in the industry?
Render Dahiya: I think there's still a lot of work to do on fraud. EMV puts a stopgap measure in terms of swipe fraud and counterfeit fraud, especially once more merchants start accepting EMV cards. But you still have to battle card-not-present fraud going forward.
Sarah Gill, Reporter: Yes. I mean, there is the argument it's just going to push fraud somewhere else.
Render Dahiya: Well, I think all the statistics from other countries say fraud goes--you know, like anything, it follows the easiest path it can. So definitely card-not-present would be where it goes. And I know in the background, anybody who's dealing with that is building more databases and more fraud protection tools to keep us from going down a bad path there.
Sarah Gill, Reporter: And do you feel like there's any problems or issues that people aren't looking at on solving?
Render Dahiya: You know, I think in this industry, you always have to be concerned about regulatory influences. Not regulatory influences because anything's being done wrong; regulatory influences because people don't understand, possibly, how prepaid works. When you look at the regulators and the bureaucracy, they're not users of prepaid at this juncture, in most cases. So they look at it, they may not understand the benefits that's driving consumers, and they may take a harsh look at it, and as such, put more regulations into the industry that could slow people down. That's always why I preach to our customers, "Maintain flexibility," because you don't know how the government or bureaucracy may drive changes to your marketplace.
Sarah Gill, Reporter: I mean, how can these conversations between regulators and innovators improve, or what needs to be done?
Render Dahiya: Well, I think we've got some good lobbying going on out there. We have our annual conference in DC. It's a lot about education and getting their minds around it and making sure we don't get caught from behind, where somebody starts pushing something that really doesn't fit what the prepaid model's supposed to be doing.
Sarah Gill, Reporter: Yes, I mean, it's interesting. There's definitely a lot of fragmentation in payments right now. Do you think that's going to go away any time soon, or do you think that's just the nature of disrupting a century's-old industry?
Render Dahiya: Well, I think there's always fragmentation as new payment technologies come out, like mobile. But if you look at some of the older stuff, I mean, to a certain extent, prepaid in general is starting to mature a little bit, and you're starting to see more consolidation. I also think, as the government has started to bring in more regulatory influence and oversight, it's increased the cost of the prepaid programs in general, and that's starting to lead to some consolidation. I think you've seen that in the last 12 to 18 months, and I think you'll continue to see that on the older kind of--not older technologies, but the more mature technologies, let's call it--while things like mobile, we're still trying to pinpoint where are the right solutions, who are the right players. There, you're going to see a lot more fragmentation as testing goes on.
Sarah Gill, Reporter: Yes, completely. And why is it something you care about? Why are you passionate about this section of the payments and finance industry?
Render Dahiya: Well, you know, I've been fortunate enough. I've worked in three completely different industries--financial services, retail, consumer services--and I love innovation. Two of those were very innovative products, where I'm at today and where I was in the past. And what's great about innovation and bringing new products to bear, and it gets me excited, is when I see our customers react to them. When I can go to our clients and say, "I can help you differentiate yourself in the marketplace," and they say, "You know, you did. In the end, you did," that's really exciting and gets me pumped up every day.
Sarah Gill, Reporter: I'm kind of interested--what's kind of the most important thing you've learned along the journey of building this business up?
Render Dahiya: It's definitely perseverance. You know, you asked earlier, "How do you start off with an innovative technology?" And this is probably the earliest-stage company. I joined back in 2007, and it's probably the earliest-stage company I've ever been in. And when you're at that stage back then--I consider ourselves teenagers like prepaid now--back then, you know, there are skeptics, there are people who aren't willing to take risks, there are people who could really easily poke at what you're trying to do and say, "Well, nobody's ever done it before. Why would you do it this way?"
And what keeps you going is once every three or four days, somebody comes in and says, "Wow, this is phenomenal." And hearing that, or hearing that you solved a problem or hearing, "I've thought of doing that," that makes you wake up every day with a whole renewed sense of energy and vigor to go get it again. So for us, that's really been a lesson for me, since I had never been at this stage back in '07 as I was before. And I'd recommend all entrepreneurs, when you wake up and you're innovating, there are going to be those days when you've got to think to have the same value propositions you're offering your customers are still there and keep on fighting to get those out front.
The opinions, findings, or perspectives expressed in this content are those of the participants and do not reflect the official policy or position of The Bancorp, Inc., its affiliates, or its or their employees.