MPE Summer Week is a virtual addition to the MPE annual conference, a place where merchants, acquirers, and payment providers connect to discuss a variety of themes that are highly relevant for the payments and commerce industry in light of these unforeseen circumstances. Some of the topics that will be touched upon during the virtual conference are: commerce and payments during the COVID-19 crisis; chargebacks and dispute management; the post-PSD2 SCA era; changing card acquiring and payments acceptance.
Business models
How do retailers need to adjust their business models to survive and thrive in 2020, and what are the opportunities for merchant service providers in 2020-2021?
Holly Worst (HW), Director Strategy and Marketing, Retail & B2B, Global enterprise eCommerce, Worldpay: The biggest business model shift that retailers need to make in order to survive is to think of their customer's total lifetime value, no matter what channel they shop in, and to develop an omnichannel strategy that integrates their products, customers, and payment methods in a seamless manner. Being present in all channels and being able to get a single customer view to understand customer shopping habits and preferences can help retailers deliver better recommendations and streamlined shopping experiences to their customers.
Chris Skinner (CS), author of Doing Digital: Lessons from Leaders and commentator at www.thefinanser.com: For over a decade, I've been arguing that the business model of finance – payments, commerce, trade finance, treasury, branch retail operations, cash, card and more – is built on a flawed business model of physicality, as all these sectors came from the last century model of dealing with paper distribution with buildings and humans (think payables and receivables, cash and cheque, and more). Today's world is all about the digital distribution of data through software and servers, and it demands a fundamentally different business model and structure. Unfortunately, most of the institutions that were thinking about this pre-pandemic have purely implemented fast fixes to deal with it. Therefore, after the pandemic, banks and payments companies really need to rethink to be truly digital.
How to differentiate your business and stay ahead of the industry in the times of the COVID-19 global pandemic?
HW: You can differentiate your business during the COVID-19 crisis by being present where your customers are. For instance, if you have a younger customer base, you must begin to develop a seamless shopping experience through social media. Facebook, Instagram, and even Tik Tok have released streamlined shopping and payment experiences through an in-app checkout. Furthermore, by offering Apple Pay or Google Pay as payment methods, your shoppers can check out with one easy click. Therefore, if your customers are at home, the solution will have to ensure a frictionless online shopping journey with a ‘one-click’ checkout, security icons featured on the website, and guest checkout offered for a faster checkout process.
Jared Drieling (JD), Senior Director of Consulting & Market Intelligence, TSG: The opportunity for merchant service providers in this new reality is having the ability to support merchants that need to be able to adjust or pivot. For example, in order to survive, many small merchants need to shift their business activity on the ecommerce channel and enable applications such as online order and physical pickup, while building more complex reward and loyalty solutions. Therefore, merchant service providers that focus on offering integrated payments across all channels and support merchants to pivot or adjust their businesses have seen their strategy pay off. Moreover, payments players are investing heavily in making their platforms easier to integrate with software solutions, as the worlds of payments, software, and technology are intersecting at a rapid rate. Software is quickly becoming the driving force behind commerce and it’s going to determine with whom the merchants will choose to work, how they run their businesses, and where they can find service providers.
Merchant payments – adapted solutions during the ‘new normal’
How can payment providers help merchants navigate through the COVID-19 pandemic and drive frictionless payments?
HW: Payment providers can help merchants by optimising their authorisation and approval rates, while reducing chargebacks and fraud occurrences, thus reducing costs. Besides, if merchants are delivering a seamless online and in-store payment journey for their customers this will lead to a decrease in abandoned baskets.
Gary Munro (GM), Consult Hyperion: In our ‘new normal’ scenario, customers use contactless payments and are unlikely to return to cash and touching POS or PIN pads. The blurring of the line between online, in-app, and in-store is happening – and payment providers need to work with merchants to provide contactless payments that allow them to determine the user experience through omnichannel solutions, while enabling the consumer to choose how they order and pay. Moreover, whilst consumers avoid receipts for small value payments, the move to a more digital payment experience allows merchants to offer e-receipts and warranties for larger purchases as well as building different repayment options at the point of purchase.
Fraud and security
This pandemic can be regarded as an opportunity for ecommerce merchants. However, it also brings a massive wave of fraud attacks into the online environment. What are the new security and risk-related challenges for acquirers, PSPs, and merchants?
HW: I wouldn't say that we will see any new security or risk challenges, but we will see an increase in online fraud. Card-not-present transactions have always carried a higher fraud risk, thus acquirers are working on new products to get smarter at capturing customer data and to ensure that fraud stays low. Besides, new regulations like PSD2's SCA will require double account verification at the checkout. While this may cause added friction, with the rise of biometrics and mobile payments, we should see this quickly becoming a mainstream practice that consumers are willing to partake in. Moreover, retailers need to be diligent on the data they are capturing, while using biometrics and working with their payment provider to find the right balance between high acceptance, approval rates, and the fraud risk they are willing to take.
Paul Rodgers (PR), Chairman, Vendorcom: With the increase in ecommerce traffic due to COVID-19, it is vital to deliver to the objectives of the SCA regulations as fast as possible to prevent a surge in fraud. Ironically, because of the inconsistent, uncoordinated, and issuer-dominated way that is being rolled out, it will take much longer to have the desired effect in the merchant payments ecosystem. Consequently, the impact on the economy and consumer experience in Europe will be dramatic, as we approach the Black Friday and Christmas shopping period, and the need of National Competent Authorities to relax the stringent enforcement criteria will weaken the overall effectiveness of this fraud prevention measure. With some issuers continuing to use insecure methods such as one-time passcode by SMS or a knowledge-based second factor, there is a strong possibility that SCA, as currently designed, could add to the fraud problem, especially for the most disadvantaged cardholders and consumers. Therefore, I urge merchants to protect their transactions by investing in additional fraud monitoring solutions during this difficult time.
Gijs Boudewijn (GB), Deputy general manager, Dutch Payments Association: ‘Request to Pay’ (RtP) payments will become increasingly important and give maximum control to consumers, especially since the RtP Scheme Rulebook of the European Payments Council is expected to go live later in 2020. Since the outbreak of the COVID-19, we have seen a considerable increase in what is called ‘Authorised Push Payments’ (APP) fraud. Accordingly, consumers receive payment requests from fraudsters through social media channels, often impersonating children or relatives claiming to be in distress and in urgent need of money. A good ‘Confirmation of Payee’ (CoP) service can really help fight this type of fraud.
4 trends radically accelerated by the COVID-19 crisis
Daniel Kornitzer, Chief Business Development Officer, Paysafe Group: We’ve recently done a research study based on a survey of 8,000 consumers from Europe and North America, and we identified four long-term trends that have accelerated following the COVID-19 crisis.
Trend #1: the shift to online and the diversification of the checkout – the COVID-19 crisis has forced more people to shop online, with 18% of consumers doing so for the first time during the pandemic. And this is not a short-term trend. 38% said that they would be shopping online more often, even after the pandemic. Consumers also want a choice in how they pay: 56% of respondents stated that they made an online payment using an alternative payment method with which they were previously unfamiliar, during the first month of the lockdown.
Trend #2: a merger of the physical and digital worlds – regarding businesses with a physical presence, in addition to having to accelerate their plans to establish an online presence, they must think about how they can integrate their brand and checkout effectively. This means an omnichannel user and brand experience on the front-end and integrating data from online and physical checkouts to give better customer insights at the back-end.
Trend #3: the growth of contactless and the emergence of frictionless – consumers are changing the way they spend in-store, adopting contactless payments more and more. Besides, 56% of consumers are more comfortable using contactless cards (compared to 2019), while 53% stated that they are now more familiar with the concept of a ‘contactless society’ – and 65% believe that contactless payments are more convenient than cash.
Trend #4: the growth of subscription payments – the subscription economy is another growth area, as 53% of consumers see this method as a convenient way to make regular payments. Accordingly, 50% of international consumers already have at least two monthly subscription payments, and 27% expect this number to increase in 2021. As more people turn to online businesses on a regular basis, we’re likely to see this trend grow.
In the current context, retailers and merchant service providers need to work together to adjust their business models and implement solutions to deliver a streamlined shopping experience, taking into account the ever-changing needs of the customers. To find out more about the best practices regarding these relevant topics we invite you to register now for MPE Summer Week 2020, the virtual event taking place between 7-11 September.
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