What do you see as key trends in payment business?
Read below what some of our participants say. If you'd like to share your answer, let us know!
The worldwide increase in using the card-not-present payment solutions (e-commerce, mobile and wallets) will demand some sort of "standardization" between card schemes - similar of what have happenned with chip card payments under EMV. Something similar will have to be made.
Speaking of Europe, I see numerous trends in place:
• Concentration – current acquiring businesses being bought by large acquirers/processors (e.g. Spanish banks are selling their acquiring operations).
• Cross-Border - national/regional acquirers to expand to Pan-European acquirers, starting with their top Pan-European merchants as a base.
• Self-Acquiring – Pan-European and large merchants will look at SEPA evolutions “to be” (messages, files protocols, etc.) and create their own self-acquiring solutions. This will allow them to change their acquiring financial institution quickly and to negotiate with acquirers the best deal for transaction acquiring (MSC, processing costs, etc.). Acquirers will have to adapt to meet the same protocols in order to “stay in the race” for acquiring their transactions.
• SEPA - changes of payment system landscape will tend to make standardize acquiring business and increase competition among acquirers in Europe.
• "Go domestic" - increasing adoption of domestic schemes, even replacement of current Visa and MasterCard cards by domestic brand cards as a defensive manoeuvre by domestic issuers to keep their revenue (interchange fees) since most of the cards issued in each country only process domestically.
There are obvious trends like bank consolidations under processing centers, decreasing profit margins, growing role of national payment systems. You can see that consumers are taking the driving seat in payment industry. and not payment schemes, nor banks, nor merchants - not anymore. So we see a decline for all products which are not for sustainable consumer benefit: DCC, credit cards, etc. There is a worldwide trend to shift from B2C to C2C (e-bay, airbnb, peer-to-peer micro loans). This definitely impacts the payment industry. Products like remittance, mobile POS, peer-to-peer micro-loans continue to grow. Long-term national currencies might start losing their role. So, global corporate currencies and local community currencies take their market share. Processing centers will adjust to it. The banks won't, as they are tightly coupled to national currencies. Banks' role will decline and processing centers will take a key role in XXI century payment business.
Key trends in payment processing is definitely the streamlining of processes due to tightening regulations on the revenue side as well as on the regulatory side.
The current trend I see in the payment industry is the usage of the mobile phone. Despite the slow start of this payment method, the young generation has grown with smartphones or tablets. From a simple mean to call somebody it has become a powerful tool to store data, provide applications used on daily basis, send SMS and occasionally phone. Using the mobile phone to pay in a shop is just a matter of time.
Technology is advancing at a faster pace than many organizations. Transformation to catch up with technology is a challenge for several organizations. What we experience today is something that we didn't even hear a few years back. At this pace, predicting future and aligning systems is a BIG challenge for technology leaders.
Banking scenario is changing the world over, and no Bank can shy away from embracing the new developments. Systems are becoming smarter to understand the customer and respond more intelligently. The payment industry is no more just for cash withdrawals and deposits. Revolutionary changes in the payment industry is opening up new business lines for Banks and more convenience for customers.
What I see as a major incentives in the payment industry is expanding contactless and especially mobile technologies, which is for me the most interesting area these days.
Growing mobile commerce and cashless payments drive the demand for more complex transactions, new mobile payment technologies such as HCE and wearables, even larger volumes and continuous service availability while keeping the security at the highest level. On the other hand, the trend for regulation and cost savings at mature markets such as EU leads the industry to further consolidation and increased competition for products and services, blurring the borders between the countries and businesses, acquirers and issuers.
Banks – not alone anymore. AliExpress, Starbucks, LukOil, Orange, PayPal, Facebook, Apple have already taken their share of e-payments and keep expanding it. It’s crucial for banks to secure strategic partnerships, protect themselves and compete proactively – by leveraging such assets as customer trust, cost-efficient models and value-added services.
Banks that economize. Mobile innovations are necessary but it’s also important to work towards cost reduction. If banks spend 3 times more to process a payment transaction than PayPal, is there a future for banking?
Banks and knowledge. Transition to the omni-channel model benefits not only retailers, but also consumer banking. Possession of customer data and smart analytics tools become the right driver and foundation for this cardinal change in architecture.
Banks – service as the key. Credit and debit cards are dead, and banks promote a new business model for digital banking. Its center is the smartphone and smartwatch with bio-identification and free services to attract and engage customers, and with paid services for monetization.
Banks meaning 24/7 online. Following the business model change, the bank IT infrastructure is reorganized too. The core is a processing system able to support huge transaction volumes and various services in real time and across all the channels.
Banks as vendors of free time. What used to take hours to accomplish, it is done in one click today. Let’s just mention P2P wallets, mobile banking and recurring payments.
Banks as lifestyle savers. Today a bank application may become the smart PFM advisor. It helps a customer to set reasonable financial goals that align with his lifestyle, track the progress, stay aware of profitable opportunities and manage all assets in one place.
Banks are wallets. The payment ecosystem uniting cards and services of multiple providers is practically everything that clients need. It’s the infrastructure powered by the bank but it allows for convenient and fast payments using any instruments – credit cards of any issuer, bitcoins, virtual e-commerce currency or online deposits.
Due to my corporate banking background, I witnessed the rise and collapse of exotic financial products and derivatives that inevitably led to the transformation of the developed banking sector per se. Banks and financial entities having availed (and lost) from aggressive and complex financial strategies are now turning into what one can refer to as traditional retail banking, re-placing their trust into the day-to-day consumer. Mobile and cloud technology will definitely transform the landscape I believe that security for the sake of new trends cannot be compromised. There are opportunities especially in developing markets however, financial entities as well as solution providers cannot ignore the essence of the term secure payment. Otherwise, mobile future will look short-lived with a heavy price to pay for all.