The Paypers attended the 2020 edition of Merchant Payments Ecosystem in Berlin, and grasped the opportunity of charting the key trends of the payments industry for this year
MPE 2020 had a diverse agenda and outstanding presentations, setting the scene for what’s about to happen in the payments industry, and providing a thorough analysis of the mega trends: omnichannel experience, social commerce, real-time payments, new business models, super apps, data platforms, and many more. From the multi-directional set of presentations, we have gleaned a couple of topics that the whole industry should have in sight in 2020, so that it can anticipate the next big thing(s).
The PSD2 and SCA saga – getting ready for the milestones
Industry experts discussed the impact of SCA implementation and the way merchants should prepare until the next deadline of December 2020. As a kind reminder, merchants should consider the following dates:
14 March 2020 EMV 3DS 2.1 Visa mandate for issuers
1 July 2020 EMV 3DS 2.1+ Mastercard mandate for issuers
14 September 2020 EMV 3DS 2.2 Visa mandate for issuers
31 December 2020 Current SCA deadline – full SCA from 1 January 2021
SCA regards other actors as well, such as banks and PSPs, but it should definitely not regard those 300+ million online shoppers. The whole industry is aware of the consequences of non-compliance with SCA, and no online merchant wants to see a rise in decline rates and a fall in conversion rates.
Merchants should already have the EMV 3DS implemented in their payment flow, otherwise, they can go straight to EMV 3DS 2.1. However, some schemes ask for an immediate 3DS 2.1 implementation, and regulatory bodies have their own rollout plans. The challenges lie in synchronising the compliance activities. And more importantly, merchants should not leave everything to the last minute. They should set their own deadline much earlier than December 2020, to make sure everything is in place before the sales boom period starts (Black Friday, pre-holiday).
Can SCA threaten the existing PSP–merchant relationships? Only if both parties want it. Normally, their relationship should be stronger than ever – some PSPs even offer to the merchants authentication optimisation solutions designed for SCA.
‘Open banking is both regulatory-driven and industry-led’
This is what Paul Stoddard of Mastercard said. In regulatory-driven markets, open banking is able to drive more competition and innovation. The implementation of oversight bodies significantly changes market dynamics by setting standards or monitoring compliance. In an industry-led market, open banking can be a competitive advantage against fintechs. It provides incumbency benefits for early participants in industry initiatives – or being one of the first service providers (e.g. Plaid in the US).
The ‘platformification’ of payments
This is the term that we thought of when hearing so much talk about platforms and the ways in which businesses are looking to upgrade their own platforms. Apart from the tech giants that are in a continuous race with each other, other companies are changing their business model either via partnerships or acquisitions, to build the ‘full suite’: rich data insights, frictionless omnichannel experiences, multiple payment methods, POS lending, account to account payments, loyalty schemes, and enhanced payment acceptance systems. In the end, it’s a game of volume and big data, where companies seek to drive production, lower the costs, and still get high margins.
The ‘e’ from ‘ecommerce’ is for ‘everywhere’ commerce
Actually, Peter Vesco from Rezolve came up with a more interesting concept: Anywhere commerce (A-commerce). It seems that payment is just a hygiene factor. Now, we have ecommerce, mcommerce, social commerce, in-store commerce – the industry is clearly going omnichannel and beyond channels. Anywhere commerce is a lifestyle, the evolution of payments has created lifestyles. Considering the preferred payment methods from a specific region or country, both the online space and the offline space have their share; however, the consumers are becoming mobile-first, at least that’s the experts’ observation. The smartphone is the go-to device for shopping, and in some instances, it can also turn into a POS. It has become multifunctional, and so did the mobile apps, in order to increase the users’ convenience.
Another presentation that triggered our interest was delivered by Wei Zhihong from UnionPay, revealing how social payments and social commerce may develop in the next ten years. Social media payments have a lot of potential and present many opportunities, considering the large signed up users’ base. Here’s why:
Super apps – redefining commerce
Social commerce, defined as the introduction of social elements to the online purchase experience, is on the rise especially in India, China, and the US, as Wei Zhihong argues. However, the same trend can be seen in European markets, with China-based apps Alipay and WeChat Pay expanding overseas, even beyond their vertical industries.
This led to the birth of the new digital marketplace: the super app. And with it, the role of an app is transforming – from providing a single service to becoming a platform through which promotions reach users directly. The experts attending MPE 2020 expect super apps to continue to emerge and expand, as more and more people are becoming mobile-first.
The new era of retail
Together with the overall progress registered by the ecommerce market, we can observe a steady growth of the online retail sector, while commerce in general isn’t just becoming more ‘global’, but also more ‘local’ than ever before.
In this context, merchants that can go past specific challenges and meet their customers’ omnichannel expectations have the upper hand, since providing a streamlined customer experience has become an advantage. As Elad Cohen from Riskified presented, merchants want to adopt revenue-driving flows, to optimise margins, and to protect their business from fraud, while consumers expect to receive a smooth shopping journey across different devices and geographies, competitive pricing/promotions that are consistent across channels, and fast, easy, friction-free checkout. That is why, just like the banking industry, the retail industry must continuously re-invent itself.
Retail POS – in the hands of shoppers
Sam Shawki from MagicCube argued that, nowadays, ecommerce makes up 11.9% of all retail sales worldwide, leaving the majority of commerce to face-to-face transactions. These require card readers and terminals, which are expensive, and it can be a burden (especially for the merchants) to operate and maintain them. That is why innovation and change when it comes to POS terminals is encouraged, especially now, when the new EMVCo vTEE certification enables soft POS or Tap & PIN deployment.
However, there is also a shift in the way in which consumers pay for online shopping, in part due to the success registered by contactless card payments, which changed the retail POS experience for consumers. According to Risto Savolainen from iAxept, a Kantar TNS study representing 2,5 million smartphone users revealed that 94% would abandon transactions due to complex checkout, while 55% do not want to key in or save their card details, and 33% would buy more online if there was a secure and easy checkout process. Accordingly, companies such as Cellfie and iAxept came up with online contactless solutions, turning card-not-present transactions into card-present transactions and addressing issues such as consumer friction at checkout, CNP false declines, CNP chargebacks, and payment data breaches.
Towards invisible payment experiences – the potential of IoT
In today’s hyper-connected world, the IoT has the potential to play a major part in micro-payments by converting connected devices into payment channels. IoT payments help merchants increase conversion and streamline the payments experience, but what is more, some of the opportunities presented by IoT Payments when it comes to the customers’ journey are not even explored by merchants.
There has been a notable growth when it comes to this technology trend in 2019, and payment professionals expect it to continue its growth in 2020 as well. Evelien Witlox from ING argued that the number of connected devices as part of the IoT will reach 21,5 billion in the coming years. But the biggest challenges in this picture – technology implementation immaturity; security and privacy aspects; lack of (international) regulation; and monetisation – still need to be addressed, as technology is impacting the customers’ expectations. And in order to streamline the customer experience, one needs to secure speed, easiness, and trust.
Final thoughts
Tackling key topics – such as the status quo of PSD2, open banking and APIs, ways in which to mitigate risk and fraud, marketplaces and social media commerce changing the future of retail, IoT and retail POS innovation, the growth of superplatforms, and many more – for merchants, acquirers, PSPs, and other industry professionals, MPE 2020 provided a comprehensive analysis of the payments industry, helped define the future of merchant payments, and provided its attendees with insightful tips on how to thrive in the new era of payments.
About Anda Kania
About Raluca Constantinescu
As a Content Editor at The Paypers, Raluca is specialising in payments and commerce. Passionately curious, she is fascinated by the way in which technology and innovation impact our lives and she is always keen on discovering the latest trends in the payments industry. Raluca has an extensive background in editing, publishing and marketing and she graduated in Foreign Languages and Literature.
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