The biggest challenges and opportunities for the industry in 2018

Eliad Saporta, Managing Director, Coriunder

2018 brings with it new opportunities to all payment service providers as both PSD2 and GDPR reveal a huge potential to new services to be created. Moreover, new types of service providers will launch as a result of the new regulations. We embraced the new regulation and have prepared a set of new tools to serve our customers looking to expand in 2018.

Michael Rolph, CEO and co-founder, Yoyo

In 2018 retailers will need to deliver a more rewarding customer experience on the high street. This experience goes beyond a fast way to pay for goods, and aims to combat the onslaught of online. As well as creating more engaging loyalty and CRM programmes, customers will need to be taken on a positive payment journey that goes beyond the checkout.

For all the gloom that is reported, high street retailers are still processing millions and millions of transactions a year, and some have been quick to realise the additional value these transactions can generate at the point-of-sale.

Brands such as Caffè Nero and Planet Organic launched combined payment and loyalty mobile app services for their customers in 2017, which have, uniquely, been able to tap into the point-of-sale and gain individual basket data from each transaction.

Through this mobile-led strategy, this basket data insight has been able to turn anonymous app customers into individuals with purchasing preferences and habits, who are gaining a more personalised experience by being instantly rewarded with tailor-made offers at the point-of-sale.

The beginning of 2018 has now seen retailer attention fall upon the introduction of Open Banking, where, for the first time, trusted third parties will be able to access a consumer’s banking data. According to consulting company Accenture, 74% of retailers they surveyed in December 2017 want to access this data so they can better tailor their products.

Open Banking now opens up a whole new world of opportunities for retailers that goes beyond mobile. As we hurtle towards a cashless society, the payments process could be transformed for virtually every retail customer, whether they pay through card or mobile.

 The benefits for the customer? Being instantly rewarded with offers, discounts or special offers based on their individual shopping behaviour, regardless of their card or mobile payment method and without the need of a loyalty app or card.

At the same time, retailers would have at their fingertips a mechanic that didnt just appeal to their most loyal customers, but a tool so frictionless it would enable them broaden their CRM activity to identify, segment and potentially retain all customers, as well as set conditions that could really drive behaviour.

Urs Gubser, Head E-Commerce, SIX Payment Services

From an ecommerce point of view, its powerful platforms that will shape digital commerce in 2018. The payments process is still at the core of these developments, but more and more payment gateways look to become platforms in order to create an ecosystem that extends their service offering. They enable this by adding functionalities from internal and external solution partners that allow them to expand their market position or assume a different role. Established gateways and acquirers will try and leverage the capabilities they already have and look towards closer integration of existing business processes and technologies, leveraging their customer relationships. Or in other words, they will invest internally to align and bundle capabilities that were previously not properly integrated. In absence of that scope of services, incumbents will try and partner with fintech companies, which effectively means they buy capabilities, or invest heavily in new technologies and build capabilities.

There are several reasons for this development:

a) Merchants demand it - with customers increasingly asking their gateway provider to fulfil more and more requirements that have not traditionally been the domain of gateways. For example business functions (collection and marketplace capabilities, but also sophisticated analytics and fraud prevention know-how, as well as supporting new omni-channel and seamless commerce use cases). This is an arena where well-established multi-national acquirers and acquiring processors clearly have an advantage.

b) Market forces and regulatory changes require it - whilst providing more and more functionality, the payment function itself is becoming more and more a commodity business. With new regulation (PSD2) and especially open API banking and account-to-account transactions, a change in the payment landscape is forthcoming. This will force the industry to work together and create services that can be incorporated in their core offering. Smart new players – if cleverly plugged in - may bring new momentum to the ecosystems.

c) Technology and new channels enable it - this is a two-way development. On one hand, barriers of entry for new technology entrants have come down significantly thanks to advance in cloud technology. Creating a platform from scratch is, thus, no longer an undertaking with heavy upfront costs. On the other hand, there are new channels enabled by new platforms, such as conversational commerce and programmatic commerce. Whilst this is a vast playground, the ongoing industry consolidation amongst payment providers is probably a certain limiting factor here.

Meet us at MPE!

The Paypers will be attending the MPE event on the 20th to 22nd of February, in Berlin. Meet us there to discuss more on the payments and ecommerce ecosystem and how 2018 will bring a new, innovative mindset in the industry.