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The Future of Payments 101 - Alistair Combes, Director of Technical Consultancy- - 7 November 2018 -
The Future of Payments 101- Alistair Combes, Director of Technical Consultancy-
- 7 November 2018 -
Future of Payments: Structure
Open Banking & APMSPaymentsSecurity
Acceptance Rates
Future of Payments: Buzzwords
Open Banking & APMsPaymentsSecurity
Acceptance Rates
CMA9
3DS
Future of Payments: Buzzwords
Future of Payments
Open Banking &
APMS
PaymentsSecurity
Acceptance Rates
Future of Payments: Open Banking
Open Banking is the opening of banks, and their customer’s accounts, to TPPs
Traditional flow
New flow
Card Payment PISP PaymentFunds Information
PISPs cut out the card schemes
Introduces competition to Visa and Mastercard
Sales/marketing benefits
Potentially quicker/more secure/reliable payments
Potential lower cost vs card
High risk in new solutions
Additional supply chain complexity
Requires consumer adoption and familiarity
PROs CONs
Merchants
Trusted channel in paying with their bank
Security benefit
Better banking services
Hurdle of registration
Potentially fewer benefits/rights compared to card
Consumers need incentive to adopt
Future of Payments: Open Banking
Consumers
PROs CONs
870 million Annual Active Users Globally
2015 2016 2017
Accepted at 130,000
merchants outside of China.
Germany
UK
France
Italy
Others
Future of Payments: APMs
Share of EuropeanTransaction Volume
Acceptance Outside of China
1.04 billion WeChat Monthly ActiveUsers Globally
Luxury Brands200,000
merchants200k
100k
Future of Payments
Open Banking & APMS
PaymentsSecurity
Acceptance Rates
Before
Future of Payments: SRC
After
KNOWLEDGEPOSSESSION
INHERENCE
Future of Payments: SCA
Future of Payments: SCA
Subscription-based payments
Recurring payments
Invisible payments
One-click checkout
Digital wallet-based payments
Do You Accept These Types of Transactions? Restricted
options due to SCA
Completely incompatible with SCA in current form
Exemption for recurring transactions of the same amount, but what about:
• Discount periods• Trial periods• Upgrades
• Invisible payments• One-click checkout• Digital wallet-based
payments
Future of Payments
Open Banking & APMSPaymentsSecurity Acceptance Rates
Current
With SCA
Rate of transactions continuing
Future of Payments: Acceptance Rates
WebsiteMerchant
credited the transaction
amount
Selection Checkout Paymentdetails
PAY Transaction accepted by issuer
1st AuthenticationFactor
2nd AuthenticationFactor
Current
With PISP
Rate of transactions continuing
Future of Payments: Acceptance Rates
WebsiteMerchant
credited the transaction
amount
Selection Checkout Paymentdetails
PAY Transaction accepted by issuer
Push PaymentStreamlined
?
?
Key Takeaways
• PISPs have the potential to revolutionise payments for the better: merchants can encourage uptake through early adoption
The future of payments is exciting, but there are issues that need addressing before we get there
• SRC & SCA have hidden issues that are not being appropriately addressed, which puts merchantsat risk
• Forthcoming initiatives seek to increase acceptance and reduce risk for issuers, at the expense of greater friction for merchants
Key Takeaways
Open Bankingl
PaymentsSecurity
Acceptance Rates
1
2
3
Thank You
November, 2018
21
Our mission:Growing the Open Banking economy
Francesco SimoneschiFounder & CEO
Serial Entrepreneur and VC. Former Partner @ Mission and Market, Vp of Strategy @FOVE, PM @UpSight
Luca MartinettiFounder & CTO
Serial Entrepreneur and Technologist.Former Lead Engineer @Plaid,
Lead Engineer @UpSight
Shefali RoyCOO
former CCO @Stripe @Apple @Christie’s, Compliance @Goldman Sachs
The Team
Engineers, PMs, Designers, Sales & Growth, CSMs, Technical Support,
Compliance, BizOps, Finance
Raised $11.8M
22
About us
23
PSD2 and OpenBanking
PSD2 & OB = AISP +PISP
24
Payments API at a Glance
25
Product - Payments API
Bank to BankPayment Initiation
Cheaper & Faster
UK + EU
Key Capabilities:
Single Immediate PaymentStanding Orders
IndustriesHigh-risk Industries
E-commerceFInancial Services
GovernmentLendingBanking
InsuranceInvestments
UtilitiesHealthcare
P2P PaymentsB2B Payments
Reduce Direct Costs
• Low fixed fees per transaction
• Simple integration to PISP providers
• Immediate opportunity for large
transactions and cost sensitive industries
26
Payments Economics
Drive more revenues
• Loyalty and rewards
• Lending at POS
27
Challenges of PSD2 and Open Banking
High complexity
• Open Banking and PSD2 APIs • Private APIs• Credential Sharing• Customer journey
Adding Value above standard APIs• Security• Data enhancements• Fraud detection• Disputes and refunds
Remaining Compliant
• PSD2 and GDPR compliant solution• AISP and PISP licensing• GDPR and ISO 27001 compliant
28
The future of OpenBanking Payments
Thank You
The card is dead – long live the APM
Muayad Sayd-Ali - PPRO
Grow Your Business Embracing Local Payment MethodsMuayad Sayd-Ali, Partner Development Manager, Payment Services, PPRO
United Kingdom
Muayad Sayd-AliPartner Development Manager, Payment Services, PPRO
Grow Your Business Embracing Local Payment Methods
Who we are
Gibraltar
Atlanta: 3
London: 21+
Cologne: 13
Luxembourg: 3
Munich: 125+
Gibraltar: 6
Sibiu: 35+
Singapore: 1
We help people pay and get paidWe enable our customers, corporations and payment industry partners to pay anywhere, anytime, anyway.
Over 12 years of experience providing end-to-end payment services for our customers
FCA regulated, e-money licensed fintech company with over 200 people worldwide
Robust and scalable architecture and infrastructure
Long-term, trusted relationships with numerous local payment schemes globally
Member of the Electronic Transactions Association (ETA)
FCA E-money Institution License
PCI Level 1 Certified
Mastercard and Visa Principal Membership
Member of the Electronic Money Association (EMA)
iDEAL and Bancontact Acquirer
Member of the API Evaluation Group by the European Central Bank
Member of the European Fintech Alliance (EFA)
Member of the Future of European Fintech Alliance (FOEF)
Licenses and certifications:
Over 140 APMswith one integration,
covering over 100 countries
One unified processfor all local payment
methods (APMs)
Enter new marketsand access cross-
border e-commerce
Maximise revenuefor our partners and
their merchants
Covering the full value chain
140+
Processing Local collection Reconciliation Reporting Remittance Settlement
We focus on enabling PSPs and acquirers to enhance their merchant offering
Voucher payment
Direct debit
Local card scheme
Cash payment scheme
Real-time bank transfer
E-wallet
We provide access to over 140 local payment methods
Consumer Merchant Real-time bank transfer
3.
Select bank
4.
Login using regular banking details
6.
Authorise payment
****
5.
Confirm pre-filled payment detailsOrder is complete
8.
Order goods online
1.
Select preferred payment method
2.
Confirm payment
7.
Real-time bank transfer
Cash payment scheme
Consumer Merchant Cash payment scheme
Order is complete
8.
Order goods online
1.
Select preferred payment method
2.
Confirm payment
7.
3.
Payment details are displayed
6.
Pay at a kiosk, bank or store
Beyond the credit card
Romania
Global e-commerce has grown by 14% worldwide
Top 10 growth markets World:
14%
1.2.3.4.5.6.7.8.9.
10.
Indonesia
Mexico
The Philippines
Columbia
United Arab Emirates
Vietnam
Saudi Arabia
Israel
India
China
Top 3 growth markets
1.2.3.4.5.6.7.8.9.
10.
Indonesia
Mexico
The Philippines
Columbia
United Arab Emirates
Vietnam
Saudi Arabia
Israel
India
China
World:
14%
Mexico:
59%
Indonesia:
78%
Philippines:
59%
27%
15%
27%
13%
18%
36%
32%
15%
13%4%
Indonesia Mexico The Philippines
Credit card penetration:
Internet penetration:
Bank account penetration:
1.6% | 17.6%
40% | 46.1%
36% | 61%
WorldCredit card penetration:
Internet penetration:
Bank account penetration:
17.8% | 17.6%
57.4% | 46.1%
38.7% | 61%
World
5%
65%
30%
Credit card penetration:
Internet penetration:
Bank account penetration:
3.2% | 17.6%
52.6% | 46.1%
28% | 61%
World
Onlinetransactions
Onlinetransactions
Onlinetransactions
Other
Bank transfer
Card
E-wallet
Cash
Other
Bank transfer
Card
Cash
E-wallet
Card
Cash
Bank transfer
E-commerce in Asia and Latin America is growingE-commerce in emerging markets is growing
But growth is also happening right in our neighborhood!
Western Europe
Bank account penetration Credit card penetration
Western Europe
96%World
61%Western Europe
48%World
18%7%
43%
21%
21%
8%
Share of e-commerce transactions
Cash based Card based Bank transfer E-wallet Other
$52.8bn Annual e-commerce transactions
348mPopulation
342mPopulation
(online)
48%Credit card penetration
14%E-commerce
growth
$38,068.33GDP per
capita
Impressive B2C e-commerce growth in the European Union:
23% The Netherlands
16% France
16% Germany
16% Portugal
15% The United Kingdom
14% Austria
13% Denmark
12% Sweden
11% Spain
10% Greece
The Netherlands
Bank account penetration Credit card penetration
The Netherlands
99%
Western Europe
96%The
Netherlands
33%
Western Europe
48% 0%15%
71%
5%
9%
Share of e-commerce transactions
Cash based Card based Bank transfer E-wallet Other
$18bn Annual e-commerce transactions
16.9mPopulation
15.7mPopulation
(online)
33%Credit card penetration
23%E-commerce
growth
$44,290.87GDP per
capita
Globally, credit cards are readily accepted for online
payments.
However, in many countries local payment methods are
more widely preferred and is the choice of the
consumer.
The increasing importance of local payment methods
15%
Credit cards will only account for 15% of global online
payments by 2021
Worldpay report 2017
Increase your reach and conversion
70% 67%
70% of consumers shop cross-border
67% of consumers have abandoned a purchase because their preferred payment method
wasn’t supported
Local Payment Methods
Consumer market surveys PPRO 2018, Germany and UK
Increase your reach and conversion
Your choice of acquirer, processor or PSP
is driven by the ever-expanding range of
international payment methods and the
ability to provide the complete end to end
package (i.e processing, collection,
remittance, reconciliation, settlement).
55%
43%65%
APMs as a percentage of cross-border commerce in South America, Asia and Europe
Local Payment Methods
Who uses Local Payment Methods?
Consumers in some developing countries have no access to credit cards or bank accounts
Consumers have an instinctive fear of security and fraud from sharing personal information
Consumers wish to remain anonymous in the purchasing stage & wish for no bank statement records
Consumers in some markets want to receive their goods first before paying
Consumers always have a preferred way to pay mainly based on cultural and local market drivers
Consumers use of Local Payment Methods is driven mainly as a result of social necessity, pre-existing
payment infrastructure, establishment of new technological advancements or simply cultural preferences:
Why should merchants accept Local Payment Methods?
Merchants get access to new markets with low international branded card coverage
Merchants lower risk of chargebacks
Merchants adhere to consumer behaviour for specific markets and drive consumer loyalty
Merchants build trust with consumer by taking them through a trusted buying process
Merchants increase sales and conversion
Merchants can drive costs down as APMs are more cost-effective to process than cards in some markets
Merchants accept more than just credit/debit cards
Merchants who accept Local Payment Methods not only increase sales and conversion rates but crucially:
What we do
Germany
Acquirer Processor
PSP
Local payment method integration is complex
Integration resources
Time to market
Reconciliation
Reporting
Maintenance contract management
Collection
APM knowledge
Settlement
FX
Local requirements
Challenges include
Merchant
Different Acquirer
ProcessorPSP
girogate(PPRO API)
140+ APMS
Acquirer Processor
PSPMerchant
PPRO reduces the complexity of accessing local payment methods with a single payment integration
Things To Consider
United States of America
5 ways to take advantage of global e-commerce
Identify the customer segment
Create a targeted strategy
Determine customer payment preferences
Ensure your payment provider can meet your needs
Align the customer experience
Thank You
Appendix
Singapore
Direct debit
Consumer Merchant Direct debit
3.
Enter IBAN/BIC and give mandate
Order is complete
8.
Order goods online
1.
Select preferred payment method
2. 4.
Pre-notification sent to consumer
Confirm payment
7.
E-wallet
Consumer Merchant E-wallet
5.
Confirm pre-filled payment detailsOrder is complete
7.
Order goods online
1.
Select preferred payment method
2.
Confirm payment
6.
4.
Select preferred payment method
3.
Login to wallet
Local card scheme
Consumer Merchant Local card scheme
Order is complete
6.
Orders goods online
1.
Select preferred payment method
2.
Confirm payment
5. 4.
Authorise payment
****
3.
Enter card details
Voucher payment
Consumer Merchant Voucher payment
5.
Confirm pre-filled payment detailsOrder is complete
7.
Select preferred payment method
3.
Order goods online
2. 4.
Enter voucher code
****
Purchase voucher
1.
Confirm payment
6.
Thank You
