European ISO offer
European Payments Gateway Conference,
Brussels 9nd June 2016
Niklaus Santschi, nps fintech & payment consulting
Experience related to the topic
10/06/2016 2
• 2006 at Multipay: Build of a “all-in-one” POS proposition/offline proposition for Swiss SME Merchants including all relevant acceptance brands (direct acquiring and routing to 3party acquirers), DCC, VAT Refund, Couponing, Loyalty, own POS hardware and own EMV software
• 2008 at Multipay later SIX Pay: Build of an all-in-one offline proposition and distribution for large multi national large retailers, hotel chains and UAT customers, including all relevant brands, POS software/PSP services, DCC, VAT Refund, Loyalty for all European markets independent of currencies, languages, ECRs, etc.
• 2010 at SIX Pay: Build of a integrated PSP/Acquiring offer for SME in the DACH region.
• 2011 at SIX Pay: Build of an international SME offline proposition and distribution for Germany, Poland, Czech Rep., Hungary, Italy and Belgium
• 2015 as Advisor: Consulting PE’s on acquisition targets in the PSP and Acquiring space.
Definition: European ISO
10/06/2016 3
• Multi-country and
• Multi-channel (off- & online) offering of
• Relevant payment acceptance brands and infrastructure for
• SME merchants
7 reasons not do spend any effort on this topic
• Too complex
• Too strong local competition
• Too many innovation in the market to assess per market and to cope with it
• Margin pressure and the low customer lifetime value in SME will never payout the investments and efforts needed
• Different jurisdictions and ongoing pressure from regulation will increasecosts and absorb management attention and available funds
• No way to scale and to build an efficient operation model within thisfragmented setting
• Too high risk of failure before doing the first transaction
10/06/2016 4
10/06/2016 5
10/06/2016 6
Herzlichen Dank! Merci
beaucoup! Mille grazie!
Muchas gracias !
Tack så mycket ! شكرا جزيال
большое спасибо !どうもありがとう非常感谢Many thanks!
7 reasons to consider it
• Large customer potential
• High potential of winning new customers – hold-outs due to increasing
card payment driven by changing habits and new to the business
customers
• Often neglected by local Acquirers – so high churn potential
• Underserviced
• Good margins, with an «extra» as Acquirer didn’t passed on IC reduction
• Lower price pressure
• Stand alone POS and standard brand offering needed
10/06/2016 7
Merchants perspective
10/06/2016 8
• «My passion is my business»: Payment is only the element which fulfills the «contract: money for goods/services».
• «I am special»: The payment proposition needs to fit my business, my customers, my needs
• «I need it simple»: Ease of on-boarding, easy techno-handling, ease of use for consumer
• «I am growing: I may open another shop or channel»
• «Is it secure and reliable?»:
• «It’s too expensive!»
• «What can you do for me? Do you understand my local needs?»:
• «Are you responsible? Can I call you personally if it doesn’t work?»
Perception equals reality
Suggestion for positioning
10/06/2016 10
LeadingEdge
Average
LoosingEnd
Geo-graphy
Europe
Local
Stable,Secure
High
Low
Low
High
PriceProduct/Solution
High
Low
Cust.Service
High
Low
Time toMarket
Fast
Slow
ProductRange
Broad
Narrow
Differentiation
Customer
proximity
Super service
quick and easy
Customer proximity • Focus either on a vertical or a niche, or on a typical domestic or foreigner oriented
segment
• Offer one contract for all product & services, with incentivicing conditions
• Add local expertise and flavor
• Deliver multilingual interfaces
CRM • One central marketing, sales, on-boarding and CRM platform, combined with
operations and self-self services
• Automated data feed as source for marketing and sales
Sales • Lead generation by
• Outbound/Telesales
• Free lancer field sales
• Partners / Integrators
• Resellers
• Anchorman on the ground
On-boarding • easy and quick “do-it-yourself”
• fully digital without media gaps
• with video identification or Bank ID integration
• Upload of docs and scans
10/06/2016 11
Provide best customer experience at any touchpoint
First contact
• Immediately after successful on-boarding
• Customer chooses POS, devices, etc. as packages in the internet
• Shipment of POS to merchant
• Download of Plug-ins or APIs immediately after on-boarding
• E-mail confirmation with Merchant ID and portal login data and tracking
number for shipment of POS device and activation process
• Merchant activation before POS arrives at merchant
• Merchant connects POS and is ready to accept cards; Every successful process
step will be confirmed to merchant via SMS, chat or email (according preference)
Self-Service
Merchant Portal
• Very simple language, tutorials, “payments for dummies”
• Product explanations, guidelines, GTC
• Settlement reports, simple data analytics tailor made for merchants/MCC
• Data maintenance
• Customers sees same data than staff
Communication
Channels
• Just any! Let the customer choose!!
• Chat, email, phone, skype, letter…..
Service taff • First contact – great experience!
• Immediate answer – no IVR and blablabla
• Super nice and competent staff, ideally in mother tongue
• No up- and cross-selling – just real help
• In case of trouble – send “sorry and gifts”. Be nice and keep10/06/2016 12
Customer proximity, ease and speed of service
Critical factors for market development
(1) Market: Size, growth rates, structure, potential
(2) Competitive environment: local/regional players, ISO and/or bank distribution, domestic brands (debit) and loyalty
(3) Margins per segment and market
(4) Localized needs: Technical specifics, languages, holidays, culture, habits
(5) Local partners: As partner for the solution (debit, etc.), delivery/logistics
(6) Readiness for ISO: Labour law, availability & cost of (free lance), sales staff
10/06/2016 13
SME markets, segmentation & target groups
10/06/2016 14
low ´high
foreigners
Market size
Co
nsu
me
r ty
pe
slocals
Restaurants3
Every day spending1
Tourism & Travel4
Luxury goods6
1-4 Star Hotels 5
Standard high street2
Key markets
• UK / Ireland
• DACH & BeNe
• Spain
• Poland (& CEE)
• Italy
Product offer: «Pragmatic» approach
SME domestic business
• POS, mPOS and materials
• E-Com plug-in, PSP, inApp
• Card acceptance• MC, VISA, MAE, Vpay• Domestic Debit
• Domestic/regional relevant APM
• Domestic relevant closed loop orvouchers
• Value adds• Couponing, loyalty scheme
• Volume incentiviced pricing
SME tourist business
• POS, mPOS and materials
• E-Com plug-in, PSP, inApp
• Special integration hospitality ortravel system
• Card acceptance• MC, VISA, MAE, Vpay, CUP, Diners,
Amex, JCB• Domestic Debit (only few countries)
• Value adds• DCC, VAT refund
• Value incentiviced pricing
10/06/2016 15
Strategic partners
European:
• Acquirer and processor needs to support multi, multi, multi….
• PSP with broad offer of APM
• POS vendor and logistics provider
Local / regional:
• POS SW engineering
• NSP for local/domestic specials (i.e. Girocard, Postfinance, Edenred, Sodexo….)
• Job and recruiting partners/platforms
• Market research and networking organisations
10/06/2016 16
Key success criteria
• Proposition: Reduce to the max! Segmentation is key!
• Focus on the key touch points: «Communicaton» and«Tangibles» (POS, mPOS, paper, reporting, contract
• Digital marketing & sales: Fully digital processes for marketing, distrubution and service
• Digital services, such as automated on-boarding, self service & merchant portal
• Local anchorman and knowledge within service organisation
• Scalable and flexible partners/suppliers
10/06/2016 17
Thanks!
European Payments Gateway Conference,
Brussels 9nd June 2016
Niklaus Santschi, nps fintech & payment consulting