Looking Ahead - Payment Trends for 2017 (II)

The Paypers has caught up with various thought leaders, industry experts and players, inviting them to share their views on this particular topic. Here is what we found:

Wolf Kring, Alternative Payments

Local payment methods will drive the future of cross-border digital commerce

In the dynamic environment of the contemporary economy, trends in digital payments are rapidly taking over the global market. Local payment methods together with mobile payments will be among the top payment trends in 2017 as they are an important driver in the ecommerce buying experience.

Ecommerce is a global phenomenon and selling cross-border will remain an attractive feature for retailers and brands as it lets businesses boost sales and become more visible. Doing business internationally is highly connected to local payment methods. Alternative payments account for more than 59% of all global transaction methods, and e-businesses will have to optimise the buying process further and respond to the growing demand for localised payment methods.

Seamless checkout with integrated payments presented in local language and currency, with increased security and privacy protection will add trust and comfort to the checkout process. These factors will translate into increased sales. It is all about improving the users experience and with alternative payments, mobile payments and other integrated fintech solutions the future of digital commerce looks bright for all ecommerce businesses.

Mike Camerling, AEVI

Payments industry needs to think outside of the box

Merchant banks and acquirers are boxed in, literally. Card terminals are essentially isolated within a walled garden tightly controlled by the hardware vendor, and offer little more than basic payment functionality. Acquirers need to think outside of those boxes in 2017 to bring together the best available payment options on one side, with far more demanding merchants on the other. Merchants need not only cost-effective payment solutions, but the complete business functionality that is made available via an open ecosystem of additional apps and services.

Because of the lack of app capability currently available in the market, acquirers are limited in the value they can add to benefit the modern merchant. Currently the only means for differentiation is in how creatively can you price that plastic box that sits on a merchant countertop. So the problem becomes about stickiness. How can an acquirer reduce customer attrition and ensure you are adding value to your merchants at the same time? The answer… value-added apps and services. 

It’s already happening. Many fintech start-ups offer alternative payment services and easy-to-use business management tools. To compete, what banks and merchant acquirers need is choice.

Merchants banks and acquirers have been hemmed in, but if they start embracing an open and secure ecosystem built upon apps and services then they will be liberated and pioneer change in the payments industry.

Karen Pepper, Amazon Payments UK

Payments technology will continue to evolve

2017 will see payments technology continue to evolve, with payment providers looking to increase convenience and security for the consumer. But it is crucial to recognise that the consumer is also evolving, both in terms of their behaviour and attitudes to shopping online.

According to research commissioned by Amazon in 2016 which looked at the behaviour of digital shoppers, consumers are becoming increasingly digitally savvy, and as a result are making more purchases through the likes of mobile and connected devices. We expect that trend to continue into 2017, therefore, online payment solutions will continue to blur the line between online and offline shopping experiences, making it feel seamless for customers.

Trust and security will of course remain as one of the key issues for consumers and merchants when it comes to paying for goods and services online. However, improving security and simplifying the customer experience should not be seen as mutually exclusive. As online retailers look to integrate ever advanced security measures, the challenge will be to keep the customer experience as simple, fluid and efficient as possible.

Consumers expect online transactions to be quick, seamless and secure – this will further drive the need for convenience and simplicity whilst shopping online.

Neira Jones, Emerging Payments Association

2017 - The Year of RegTech

Because I like technology, I always start the year with CES (http://www.ces.tech/)... This time, the automotive industry made headlines by embracing technology in so many diverse ways. From autonomous vehicles to innovations in payments and financial services in general, the many facets have been dissected by many before me. The possibilities are endless. Consequently, hyper-connectivity and digitisation (and this is not just about cars) and their many benefits cannot happen without opening the flood gates on data. And we’ll all agree that protecting that ever increasing data is a challenge. Indeed, governments are scrambling about trying to catch up with criminals by developing regulations to cope with “X” (You can decide whether “X” is IoT, Autonomous Vehicles, Artificial Intelligence, Big Data, etc.).

Regulatory risk has never been so much in the limelight, not only because we have imminent regulations such as the 2nd Payments Service Directive, the 4th & 5th Anti-Money Laundering Directives, the General Data Protection Regulation, and the many others being developed worldwide.

This systemic complexity can only be handled through better automation, supported by technologies, such as behavioural analytics, artificial intelligence, blockchain, etc. which, whilst suited to improve efficiency, agility and speed, are now key to solving regulatory challenges. Indeed, many financial services institutions have acquired stakes in such technology companies, and the level of VC investment mirror this trend. My prediction: 2017 will be the year of RegTech (https://www.entrepreneur.com/article/288207), and it’s very exciting!

Ralf Ohlhausen, PPRO Group

Expect 2017 to be a year of technological innovation taking place in an environment of change and, in part, uncertainty

With the coming into force of PSD2, payment providers will have to implement Strong Customer Authentication (SCA). This will make transactions more secure, but will also make payments harder to use – the opposite of what consumers and merchants want.

In fact, another big trend this year will be a push for greater ease of use. Mobile payments came of age in 2016; this year we can REALLY expect them to start going mainstream.

Other technological developments to watch include Amazon’s cashier-free stores. If they work, expect the industry to follow. Expect Peer-to-Peer (P2P) payments to start becoming accepted in Western European markets. And I would be very surprised if blockchain doesn’t carry on popping up in new and unexpected places, as the industry finds more and more uses for it.

The fifth anti-money laundry directive (AML5) looks like it’s going to have a massive impact on e-money institutions. The Euro Retail Payments Board (ERPB) will carry on pushing for the development of instant payments, so that the EU doesn’t fall behind. And then, of course, there’s Brexit. If the UK does leave the single market, we expect to see a fintech exodus from London.

You can read the first part of this series here.