In recent years, the payments industry has experienced a rapid transformation, mainly driven by product innovation, shifting consumer behaviours, expansion strategies, and regulatory developments. Amidst meaningful discussions and insightful sessions, the Merchant Payments Ecosystem (MPE) conference was the place where expert speakers delineated a comprehensive picture for 2024 while sharing insights on how merchants, PSPs, issuers, acquirers, and other stakeholders in the payments ecosystem can prepare for what the future holds.
As long-term media partners of MPE, we will elaborate on some of the key topics discussed at the event, touching upon the evolving trends in payment optimisation and the complexity challenge in payments, marketplaces and online platforms, real-time payments, GenAI, and cross-border payments.
Today, terms like Merchant of Record, marketplace, platform, or payment facilitator (PayFac) have become increasingly popular in the payments industry, especially considering the rise we’ve witnessed in the ecommerce space. However, despite their prominence and the fact these models are explicitly defined by card schemes, there is still a considerable amount of confusion when delineating between them – partly due to the overlap of the concepts, local regulatory considerations, and the overall complexity of the ecosystem.
To bring clarity to the matter, MPE Berlin set about discussing the gains and limitations of each model via a panel that outlined the role that payment providers and acquirers play in each model and explored the intricacies that scheme-imposed location rules bring to the equation. Regarding this aspect, one important point of the conversation had to do with the differences between how US- and European-based Merchant of Record models operate in alignment with location rules mandated by card schemes. Furthermore, the panellists underscored the various liability types at play and emphasised how the willingness of merchants and platforms to accept any of these directly influences the model they choose.
When it comes to payments, ‘the complexity challenge’ is not a new topic for the industry and, if we are to believe the panellists discussing it at MPE Berlin, not one we will stop talking about any time soon.
In today's world, customer demand is constantly changing due to individual and cultural influences. This results in the emergence of increasingly different payment behaviours across the regions of the globe. Moreover, new payment methods are being introduced constantly, making payments more and more complex. On top of this, payment acceptance is made even more intricate when factoring in additional considerations such as security, compliance, customer experience, or the emergence of new payment methods – just to name a few.
Out of all the actors in the payments space, merchants are considerably more affected by the implications of the ‘complexity challenge’. Whilst the consumer will ultimately pay with their preferred method, the merchant must navigate a wide range of choices to ensure it presents its customers with a payment journey that is personalised, optimised, secure, and seamless. Consequently, rather than offering a multitude of payment methods indiscriminately, merchants must adapt their strategies to streamline their checkout process by offering only the options that align with customer preferences and needs.
According to the MPE panellists discussing the topic, one possible solution that can help tackle the ‘complexity challenge’ is payment orchestration. However, orchestration is not, by far, a one-size-fits-all answer and, while it can help merchants optimise payments from a technological standpoint, it cannot address issues such as the need to localise payment options so that they fit customer demand and needs.
There is an increasing demand for fast and convenient payment processes, which real-time payments and account-to-account transactions are suited to meet – and while these technologies are not new, they have become more and more popular and relevant in this fast-paced digital era, offering immediate benefits to consumers and merchants alike by providing lower transaction fees, eliminating uncertainty about account balances, and enhancing liquidity control.
While the level of maturity in real-time payment systems varies among countries, influenced by factors such as consumer behaviour or government involvement, in Europe, 2024 is expected to be a transformative year for this space. The proliferation of digital wallets, coupled with emerging regulations like instant payment regulation and PSD3, are anticipated to foster a dynamic Open Banking and Open Finance landscape, promising an enriched commerce experience for consumers and merchants.
As emphasized at MPE 2024, several domestic A2A schemes, such as iDEAL in the Netherlands and BLIK in Poland, have been very successful in providing a seamless customer experience, offering a glimpse into the future of this payment method. Efforts are already underway for these domestic schemes to expand across borders, and the Poland-based payments company BLIK has announced, for instance, its expansion into Romania, where it is set to develop a digital payment system in RON, the local currency – and into Slovakia, aiming to serve the fastest-growing ecommerce segments in the country.
As a testimonial to the growing importance of real-time payments, on the second day of MPE, consultants, payment method representatives, and solution providers joined Masha Cilliers of Payment Options for a panel discussion on this subject. The main topics tackled during the session were:
What's new in the realm of real-time and local payments;
Subscription-based payment methods as a revenue source for different merchant verticals;
Why do local APMs matter – the changing consumer behaviour;
The relevance of local mobile payment methods in Europe.
Nowadays, the notion of not being able to shop online or access cross-border payments is bizarre. To this point, as shown by a recent study conducted by Statista, it is projected that by 2027 a quarter of all global retail sales will occur online. Despite this notable growth, cross-border payments continue to be costly and sluggish, often lacking transparency and accessibility. However, in an era where business expansions demand precision and leave no room for failure, keeping up to date with the latest developments in cross-border ecommerce and payments, leveraging the latest technologies, and forging strategic partnerships become essential.
MPE Berlin was the forum of a fascinating debate on this subject, moderated by Volker Schloenvoigt of Edgar, Dunn & Company, and the key points tackled were the challenges of cross-border payments and how they can best be addressed. The discussion started with a comprehensive overview of this space, featuring definitions, market size data, and an analysis of current and future business models and players. Subsequently, expert speakers discussed some of the most pressing issues around cross-border payments, which are transparency, timing, and costs, highlighting the gradual shift driven by fintech innovation. The panellists also emphasised the importance of close interaction with local regulators and the need for standards, questioning the feasibility of global versus regional ones.
The session concluded by exploring future technologies and steps with a potential impact on cross-border payments, such as open interoperability, API connectivity, and the potential of digital wallets and CBDCs as alternative means to move money. While the process of further streamlining cross-border transactions is ongoing and might take more time, the emergence of new players and innovative technologies marks a shift in this landscape, prompting stakeholders to keep a close eye on these developments.
Lately, generative artificial intelligence (GenAI) has been at the forefront of AI-related discussions, especially after the release of chatbots such as ChatGPT, which led many industries, including the financial services one, to re-evaluate their processes and the importance of human resources.
As outlined at the beginning of the panel hosted by MPE Berlin, equity investment in GenAI companies grew from USD 2.5 billion in 2022 to USD 20.1 billion in 2023. This significant rise reflects the wider interest in the topic. However, despite its popularity and the known use cases of GenAI along the payment value chain – spanning from KYC automation and customer service chatbots to fraud detection – there are still a handful of questions that the payments industry has yet to answer when it comes to the matter.
On the last day of MPE Berlin, merchants, consultants, and PSP representatives came together for a discussion about the impact of GenAI on payments. The panel aimed to examine:
How does Chat GPT drive commerce innovation?
What exactly does AI in payments mean, and what technologies and implications are there beyond fraud?
How does AI differ from machine learning, and what impact does AI have on businesses and payments?
How can existing AI use cases impact payments?
As highlighted in the first part of the session, GenAI is expected to have a positive impact on the payments sector, primarily by reducing costs and only secondarily by increasing revenues. According to the panellists, the impact of GenAI on the financial industry is undeniable. However, they stressed that there are still fundamental issues that need to be addressed, especially as AI technology is progressing at a rapid pace.
Moreover, as many of the panellists remarked, going forward, looking for ways to use AI in the payments industry should not be a goal in itself – instead, businesses should focus on identifying the problems that they are facing, and only after doing so, look for ways to leverage technology to tackle them.
MPE 2024 proved to be a very successful conference, offering valuable insights into the future of payments. By tackling key topics for merchants, acquirers, PSPs, issuers, and other industry professionals, MPE 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 2024 and beyond.
From the evolving trends in payment optimisation and marketplaces and online platforms to real-time payments, GenAI, and cross-border payments, the conference provided us with a peek into the factors that are expected to further drive innovation within the payments industry in the years to come.
The Paypers’ team was delighted to attend the Merchant Payments Ecosystem event in Berlin, and we look forward to yet another successful edition in 2025!
Raluca is a Lead Editor at The Paypers. Her expertise lies in payments and ecommerce innovation, with a particular focus on marketplaces and online platforms, cross-border payments, and payment methods. She is thoroughly involved in various activities ranging from coordinating and creating the content strategy for large-scale, industry-specific reports to organising interviews with industry experts, analysing the hottest topics of today and discussing them with thought leaders, and representing The Paypers at various payments and ecommerce industry events across Europe. Raluca can be reached via email at raluca@thepaypers.com or on LinkedIn.
Diana is an experienced and dedicated Content Editor at The Paypers. She has an extensive background in content creation and is a graduate of Foreign Languages and Literature studies, currently specialising in payments and ecommerce. She strives to bring forward the latest trends for our readers, while investigating the ever-evolving landscape of cross-border payments, B2C and B2B ecommerce, and emerging technologies across the globe. Diana can be reached via email at diana@thepaypers.com or on LinkedIn.
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