Can merchants keep up with all this change?

Transcription

1 Can merchants keep up with all this change? EPCA Payment Summit 21 March 2013 Chris Jones Director V1 14/08/2012

2 It s already a complicated world payments out there Discounts and Offers PC and Mobile Check-Out Multi/Cross Channel Loyalty Schemes Consumer Touch Points Self Service Tills/ Kiosks Credit Debit Prepaid epos Call Centres Exceptions/ Chargebacks Fraud/Risk Analysis Transaction Acquirer PCI DSS Audit Store Card Consumer Products ewallets WHO ecommerce PSP Infrastructure Gift/Credit Card Processors Cash Vouchers/ Giftcards Alternative Payments WHAT HOW Back-office/ Reconciliation Transaction Switch POS Manufacturer Copyright Payment Systems Europe Ltd

3 and its only getting worse Key Today Key Hotter Direction and extent of travel by 2015 Cooler Copyright Payment Systems Europe Ltd

4 Consumers are also driving change 1 Smartphone usage at a tipping point for the US and UK 52% of UK mobile users have smart phones (42% in the US) The highest penetration is in the group 2 Consumers and merchants not wedded to traditional forms or payment or credit 700,000+ Pingit downloads 20% of US smartphone users have scanned a QR code Over 250m now been loaned by UK peer to peer credit sites 3 Consumers are fascinated by social media Currently there are 848m Facebook users 38m US consumers access social media through their smartphone every day 70m pictures were uploaded to Facebook in Consumers payment needs remain underserved Consumers consumption habits are changing as they use different devices Currently over 100m PayPal accounts c.1m+ small business traders who could be interested in a SQUARE type model in the UK In % of payments in the UK were still with cash 25% of US smartphone users had accessed news/media content via their phones Peak media viewing for a table is about 9pm, versus 9am for PCs Source: CommScore, 1000Memories, Social Bakers.com, International Telecommunication Union, TechDirt.com, Payments Council

5 Example Augmented reality and embedded payments Picture Source: Kurtz Graphic Design 5

6 The scale and degree of change required creates an explosive mix for merchants What merchants are planning to change What s holding them back ECR POS CRM Data warehousing Terminal provider Web provider Complexity of change and / or project risk acts as an inhibitor to decisions on payments projects. Plus it is not easy to find high quality local technical staff.... but although obtaining budget may be difficult, it is not an insurmountable issue if a good business case is built More outsourcing 6

7 Merchants recognise this and are changing their approach For now Most merchants: - outsource POS support - are PCI/DSS compliant - many outsource to third parties - operate loyalty in-house There is a mix of in-house versus external hosting of web platforms (possibly hosted by one party and maintained by another) Outsourcing of private label / co-brand processing to partner banks occurs in almost equal measure with in-house processing Some still operate their own payments switch But in the future The costs of acquiring are of most concern but improving customer relationships is also very important; those with basic loyalty schemes are seeking to enhance Regulation is expected to become more of a headache - acquirers could provide better support PCI DSS is not yet business as usual even though many merchants have solutions in place or identified Fragmentation of systems and finding a single supplier may be a concern Multi-country players are hoping to develop common payments platform 7

8 So what are the key issues for merchants? There is a notable degree of interest in multi-channel strategies: - by sector - greatest interest in multichannel from specialised sectors - transport, department stores, fuel, travel niches and tailored solutions. - benefits of multi-channel solutions - widely recognised, particularly PCI DSS compliance There is also a considerable degree of interest in tailored solutions, built into external payments services mostly niche sector specific Improved fraud management although in some regions, this is well developed Merchants are looking for ways to improve their loyalty offers and most of them want to improve payments efficiency; cost reduction is important but they also want to simplify processes Merchants tell us that their interest in innovation is high and also their MIS, particularly better web reporting / transactional analysis 8

9 Demand for multi-channel is growing The market is interested in PCI DSS compliant solutions; and the multiple acquirer choice gets approval even though it would not necessarily be used An end to end, all in one service is attractive Positive responses to terminal management, self administration and web interface support Many online businesses currently too small Face to face merchants only would select a simpler IP POS platform 9

10 and large merchants are looking for something special We had discussions (about special tailoring) with our acquirer but all they could provide was basic financial acquiring Tailored solutions are perceived as important, reflecting the special sectorial needs of large merchants The market is confident up to a point - that suppliers are able to deliver tailored solutions Specialist merchants prefer in-house build for tailoring whilst large supermarkets prefer standard services We are not sure yet if everything relating to PCI DSS is being provided by our supplier Nor is PCI DSS compliance a painless process; for those who are implementing, the complexity of change causes most anxiety, and some merchants experience implementation problems Also annual costs of compliance may turn out to be higher than expected 10

11 but that s not all Improved payments processing Strong interest in improving efficiency Lower acquiring fees Improving back office/central infrastructure is a medium priority Use of self-service web MIS lower priority We need to alter the way we process, replace our legacy platform and reduce the costs of maintenance Loyalty We don t have a loyalty reward programme, we re behind the market; it must be part of our new customer offer Loyalty rewards are considered very important Few outsource; more are planning to enhance Several wish to add online redemption; and over half would add payments to loyalty 11

12 How can merchants change their payment s infrastructure? Internal Self-service payments concept is starting to be considered Improved integrated loyalty / payments functionality Improved checkout processes (faster throughput.) Instant point of sale / mobile offers / couponing Increased online security confidence External Solutions for low value payment - contactless and mobile payments Tailored solutions from suppliers considered important. but some merchants still want standard platforms Mobile top lower priority requirement Tendency to support outsourcing as merchants do not see payments processing as core business 12

13 Chris Jones +44 (0)