Are Card Payments Getting Simpler... Or More Complex?
2017 is now well underway, and the trends that will shape the year ahead in payments are taking shape. There has already been plenty of discussion around frictionless payments, and reducing complexity for both consumers and for merchants. So, are card payments getting simpler, or more complex? The answer seems to be… both.
The processes and IT systems needed by a retailer to send card payments to a bank for authorization, and subsequently to settle them, are simple. Many retailers have their own payments systems in place to do this, whilst others use payment service providers (PSPs). In both cases, the interaction between those systems and the banks have not changed much for many years. They get updated occasionally to cater for new requirements like contactless, but these are relatively minor technical evolutions, rather than large-scale disruptions.
However, things are more complex is on the customer side, where the shopper uses a card and interacts with the retailer.
Retailers now see payments as a means to compete for shoppers and show that they are up-to-date, modern and relevant – to appeal to millennials and their shopping behaviors. Contactless helps in this endeavor; as do Apple and Android Pay. But retailer wallets, integration with loyalty schemes, order ahead, click-and-collect and other shopping behaviors all need to be accounted for in the context of payments.
So how do simple and complex come together to enable retailers to deliver these shopping and payment services to the customer? Once the transaction gets to the payments system – the retailer’s own platform or the PSP’s – the authorization and settlement of that transaction is easy. But getting the transaction there can be the complex piece. There are various customer channels to consider: store checkouts, self-checkouts, kiosks, customers’ mobile devices, tablets, call centres, and traditional desktop. The more progressive retailers look to integrate these channels as best they can to deliver an omni-channel strategy, but each channel is subject to its own payment requirements, its own technology, often sourced from different IT vendors and operated by an independent division. To get each of those systems to be able to offer payment processing means integration with the retailer’s payment systems or with their chosen PSP.
It’s the flexibility and agility of those payment systems and PSPs that become either the enabler or the blocker to retailers’ ability to deliver the next generation of shopping and payment services. The payment platform should be seen as a card payments hub, allowing each channel to consume payments services. Send it a transaction, let it deal with it and get the response back – irrespective of whether the customer is transacting from the store, online or from a mobile device. The payments hub should be agnostic in this regard.
For a retailer’s payments strategy to be fulfilled with relative ease, a payments hub should allow disparate systems to consume the payment services through a range of means – whatever is the simplest in the circumstances – be it web services, APIs or even legacy protocols. Retailers need to ensure they have the right payment systems or the right PSPs available to them that can effectively deliver the simple bit, as well as offering a means to deal with complex integrations.
It has been said by others before, but the best solution to complexity really is using simple systems.
Related Blog Posts
European Banks Have the Right Tools to Stay Ahead – But Will Big Tech Overtake?
Open banking and immediate payments have come a long way, according to the panellists who joined me during the ‘Open Banking in an Instant World’ session at EBAday in Stockholm recently. The building blocks are now falling into place through the introduction of national and regional schemes, open banking initiatives, regulations such as PSD2 and the acceptance and use of APIs.
Checkout Optimization Challenges: Top Tips for Online Merchants
As the current conference season draws to a close, it’s time to reflect on one of the key topics topping the agenda for many online merchants: checkout optimization.
How Banks and Acquirers Can Deliver on the Benefits of PSD2 SCA Exemptions and Differentiate Their Merchant Services
PSD2 is an opportunity for acquirers to differentiate themselves by delivering improved services to their merchants, if they implement modern solutions to manage SCA exemptions. This will drive the best customer experience in combination with regulatory compliance.
How UPI is Driving India's Shift from Cash to Digital Payments
The Indian economy has traditionally been heavily dominated by cash, while experiencing low adoption of various online payment systems including National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) and inter-bank mobile payments. The dominance of cash is evidenced by the ratio of cash withdrawals at ATMs vs debit card usage at Point of Sale (POS)—ATM transaction volume is more than 2x greater than POS.
Cooperation, Consultation and Collaboration Are the Keys to Countering CNP Fraud in Australia
As Europe, and other parts of the world ramp up for regulatory changes around PSD2, Australia is about to launch its own strategy to combat Card Not Present (CNP) fraud.
PSD2 and Strong Customer Authentication – What's in Store for Merchants?
With the final pieces of the Payment Services Directive (PSD2) puzzle coming together, payments businesses are highly focused on meeting their compliance obligations. But the forthcoming changes will affect everyone in the payments chain – and it’s important for merchants and PSPs to understand the practical implications for their businesses and customer relationships.
Transforming Telecom Companies in a Retail World
The recent MVNO World Congress in Amsterdam brought fascinating insights into the changing telecom industry, particularly around the opportunities that lie ahead for Mobile Virtual Network Operators (MVNOs) and how they can they can cement their position in today’s fast-paced climate.
Success Speaks: Surprising New Ways Students Want to Pay
Colleges and universities are facing the dual tasks of accommodating not only new payment methods, but also a new generation of students, Gen Z, whose expectations differ greatly from even millennials. How can higher education institutions meet these demands?
In our latest Success Speaks webinar, experts from Temple University, FutureCast, ACI and MTFX Group of Companies explored today’s payments landscape for colleges and universities, payment desires of Gen Z, innovations the higher education sector is already implementing and how schools can better assist with international payments.
Women Must Choose to Rise Up Despite Past, Current and Future Circumstances
Money20/20, Europe’s biggest payments and fintech event, was recently held in Amsterdam and featured Rise Up Money20/20, a global program designed to address the gender imbalance in leadership positions within the financial services and fintech industries. A cohort of 30 female professionals was selected to take part in an exclusive curated agenda, complete with a series of bespoke content sessions, one-to-one mentoring and unique networking opportunities.
Beyond Borders: Navigating the Challenges of eCommerce Expansion
eCommerce continues to flourish, with impressive growth figures year after year. In 2018, global online sales reached almost $3 trillion, and are expected to hit $4 trillion by the end of 2020.
Despite eCommerce taking an increasing slice of the retail pie (which could now be as high as 15 percent according to recent figures), it is increasingly challenging, with competition and cost pressures creating significant issues for merchants of all sizes.