The Merchant Payments Ecosystem has gained a well-deserved reputation throughout its nine editions as Europe’s leading event on acquiring and merchant payments, with a main focus on reflecting the ever-changing payments industry transformations. The goal of the event is to bring together the acceptance end of the payments world – acquirers, processors, payment service providers - with the merchants who use their products.
Apart from its clear objectives, great networking opportunities and lively discussions, every edition is also centered around (and thus remembered by) a motto, the choice of which is left to the audience. The tone for this years leitmotiv – as it proved to develop in the course of the debates swirling around industry buzzwords such as frictionless payments, instant payments, invisible checkout and omni-shopper – was set by Neira Jones: Don`t worry, be API. A phrase that quickly became not only the inspiration for the day - quoted, tweeted and retweeted throughout the event - but also a worthy counterpart for last year`s motto: “if you can`t bill it, kill it” (if a business does not return paying customers, then its not a business worth-doing to begin with).
But what if we were to change one letter in the word “API”? Then, the motto would take on a different meaning, pointing out to the tremendous potential inherent in the use of APMs (alternative payment methods).
Innovation in payment processing is often focused on the transaction itself – helping merchants conduct sales and process payments faster and through more convenient platforms, such as online and mobile. In this context, APMs have enormous potential to drive greater value to merchants by not just expanding reach, but also strengthening the merchant-customer relationship.
Laurel Wolfe ?via Twitter: Its no longer about processing a payment, but the value you add to the merchants business. Ron Kalifa @Worldpay #mpecosystem
Do APMs have the potential to challenge card-based payments?Different demographic groups tend to gravitate around different payment options. And while alternative payment methods certainly appeal to the underbanked and unbanked, all types of consumers, including those that hold credit cards, are adopting convenient alternative payment methods.
These are also the answer to merchants’ quest for a mechanism to lower shopping cart abandonment rates, payment processing fees, and raise the appeal for online shopping to specific consumer demographics. In spite of the availability of numerous traditional payment choices (credit and debit cards) at checkout, alternative online payment platforms continue to gain market share, to the detriment of the incumbent players in the payments field.
Some of the factors which have contributed to the growth of these alternative payment options are the promise of lower costs for merchants and the ‘portability’ of online payments, which enables consumers to checkout with a single user name and password, without the need to disclose credit card details.
However, in spite of such advantages, changing the attitudes of card-centric consumers online is very difficult. Geoffrey Barraclough ?@GeoffreyB via Twitter: MasterCard says 50% of retail transactions in Europe are still settled in cash. #mpecosystem
The fact that consumers are already accustomed to using credit cards and the existence of already established networks of retailers who accept credit cards online are undeniable advantages. Nevertheless, an important area of concern inhibiting online transactions remains the security of payment methods, an issue credit card-based methods and even online banking still need to address.
#Digitisation of the economy is a huge opportunity and Cash Displacement is shared goal, says David Dechamps #mpecosystem (via Twitter)
© Empiria Group, the event organizers
Key event takeaways and food for thought:
• Alternative payment systems, especially in the Western hemisphere, will increasingly leverage direct access to the account
• PAY-initiatives (Apple, Samsung, Android etc.) will need to add value beyond payments to increase penetration
• Infrastructure developments (e.g. RTPS) or the blockchain and its application, as well as regulatory initiatives (e.g. PSD2) will support the rise of APMs. Will these change the nature of payments and facilitate the launch of new services and service providers?
• Will APMs force the card schemes to relax their regulatory vice grip on the market and focus on providing services to the merchants?
• Which role will APMs play in the future? Will there be equivalent alternatives to card-based schemes that provide acceptance across the globe and across channels?
Some of these questions have a wait-and-see response, irrespective of the divergent views on what makes a winner in payments. In the end, it all comes down to how much value is delivered to consumers and merchants.
@elavon The only way to win is ensure the customer is at the centre. Drive connection, offer choice and be committed. #mpecosystem (via Twitter)
Clearly, the market share of card-free payment options will continue to grow. The battle is far from over and APMs will always stand out from the crowd because of what they do to make payments a much more interesting place to be. So don`t worry, be (H)API: the future is bright for those who are able to see it.
About the author: Adriana Screpnic is Editor-in-Chief at The Paypers. Adriana has been actively involved in covering online payments-related topics for five years now, taking on diverse and challenging tasks ranging from news editing and market research to writing in-depth analyses and feature articles and becoming involved in large-scale, industry-specific research & contents creation projects.
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