A Conversation with Dennis Jones, CEO, Judo Payments

Navigator Edition: November / December 2016

dennis-jones_judo-payments_webWe recently spoke with Dennis Jones, CEO of Judo Payments. In this Q&A format we discuss developments in the in-app payments space, specifics of security and fraud prevention related to in-app payments, and the evolution of Judo as an innovative player in the field.

Dennis Jones is passionate about mobile, design and consumer psychology. He is the CEO of London based Judo Payments (judopay.com) whose mission is to partner with brands to develop mobile experiences their customers will love, supported by the slickest, simplest and safest payments platforms possible. Judopay’s AppCommerce™ platform combines payments, fraud prevention, and identity management for technology platforms and large brands globally.

Founded in 2012 and headquartered in London, Judo Payments provides secure in-app payments solutions to leading large businesses and technology platforms globally. Judo’s technology, including a mobile-specific fraud prevention system, puts apps in the heart of the payment process.

1. Judo is a payment services provider with a deep specialization in in-app payments. What is unique about in-app payments that drives Judo’s specialization?

Businesses build mobile applications (apps) to increase loyalty and efficiency and in turn, increase sales and profit. But consumers have high expectations of what a good app looks like and how it should work. Consumers have no patience for poor design or for time delays in completing their desired activity. And this lack of patience is particularly acute at the point of payment. So the key challenge for in-app payments is delivering a frictionless, fast experience, with minimum data entry, that is also very secure.

Balancing this frictionless experience with security demands a different approach to fraud prevention. Embedding security into the payment request allows us to complete a payment with a single server call and takes the merchant out of handling sensitive card information. On the fraud prevention side, apps give you access to a host of information that can offset the lack of data collection. For example, instead of your billing address, apps can use location and data entry patterns (among many other signals) to detect and prevent fraud.

By focusing on in-app payments and working closely with our customers, we’ve developed solutions that uniquely meet the needs of large merchants by making payments simple, frictionlessand protected.

2. Where is in-app commerce and in-app payments along their development path? Is it still in early days and where do you see growth coming from in the future?

We are at the inflection point of in-app commerce similar to where e-commerce was in 2002. The parallels are uncanny with the key difference being the speed of change: app adoption and consumer behavior change is occurring at about three times the speed we saw with e-commerce.

Consumers have been trained by great in-app experiences like Uber, Starbucks and Amazon. In turn, these businesses have shown their industries how smartphones can solve their unique business problems. As consumers vote with their fingers, investment in apps is increasing to compete with the innovators, resulting in higher quality apps across the board (First Annapolis shows the percent of US consumers using apps doubling in the past year, reflecting this higher quality). And in the past year, we’ve exceeded 50% of US consumers having registered a card in a mobile app. So businesses are investing, mainstream consumers are following, and we are in a virtuous cycle where the more consumers use these apps, the better the performance of the businesses that invest in them (and the faster the decline of the businesses that don’t).

Once businesses face the competitive pressure of first movers, the entire industry is forced to follow. Over time, we expect to see the card terminal completely disappear – there is simply no use case for this antiquated technology after adoption of apps moves into the mainstream somewhere around 2020.

3. What types of customers does Judo target and work with and how is this changing as the in-app payments marketplace evolves?

Judopay currently focuses on ‘new to digital’ merchants in the Travel & Transport and Food & Beverage verticals. We’ve focused on these verticals because they are being disrupted rapidly by startups and leaders, because the use case for apps is most compelling, and also because of the lack of existing card not present payment infrastructure (e.g. no incumbent to replace). We work primarily with large businesses who value our technology and our connection to over 190 acquiring banks globally. Over the coming year, we will expand into Ticketing, Grocery and Retail as these businesses have started making the investment decisions to move away from legacy e-commerce gateways that are deeply embedded in their technology stack but antiquated.

4. What will the evolution of mobile wallets such as Apple Pay mean for in-app commerce? And where are we today along this evolution – is Apple Pay making a difference already?

Apple Pay, Android Pay and the various other “Pay’s” are excellent for the adoption of app commerce. They remove the need to enter data and handle security and fraud prevention fairly well. With apps focused on millennials in large cities, we see over 50% of transactions on iOS coming from Apple Pay. In other small cities, we see close to 0% of transactions through Apple or Android Pay. But many users don’t see the advantage, partially because many apps don’t make full use of the functionality available, like bypassing registration. The battle here is around who owns customer data and large merchants are giving up easily. Our view on the Pay’s is that they are a payment option and merchants should support whatever payment method their customers want, but merchants are going to hamper their widespread adoption by limiting the functionality provided for users.

All told, the increasing publicity and energy around app commerce greatly benefits the ecosystem and will help accelerate adoption over the coming months and years.

5. Fraud is an ongoing challenge for mobile commerce. How does Judo help to solve the unique fraud challenges presented by mobile commerce?

Unfortunately, fraudsters are targeting mobile apps, with fraud rates reported as being multiples of e-commerce rates and growing faster. As ever, these bad actors are choosing the path of least resistance. They know that the traditional defenses available to businesses for card not present transactions don’t exist with mobile: IP address is near useless (many devices on single address), there is often no time for manual review of a suspect transaction, and merchants have lowered built in protection by making payments frictionless. As a result, some merchants in Europe have forced transactions to go down 3D Secure (e.g. Verified by Visa) and see a dramatic dropoff in conversion.

JudoShield was developed in 2013 to block these bad actors without sacrificing the frictionless experience. We are able to evaluate a transaction request across millions of rows of data in fractions of a second and return a score 100% of the time. The merchant then sets their risk preferences and depending on the score, the transaction is processed, immediately declined, or sent down 3D Secure as a ‘hail Mary’.

Our merchants using JudoShield often see chargebacks drop over 60% (with equal or higher conversion rates) in the first few months of switching to our more specialized in-app solution. Across our enabled merchant set, our total chargeback rates are about 1/10th the industry average.

For more information on in-app payments, we invite you to read Sizing and Profiling In-App Payments.

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