Insights

Merchant Payments Digest - 3rd Edition

The Merchant Payments Digest is a regular update from Oliver Wyman to keep merchants apprised of developments in the rapidly shifting payments space.

Oliver Wyman is a global leader in management consulting with offices in 50+ cities across nearly 30 countries. Our Payments practice works with constituents across the payments value chain to deliver insights with real impact, combining deep industry expertise with powerful consulting capabilities. To have a discussion with Oliver Wyman on your payments issues and opportunities, please contact Beth Costa at payments@oliverwyman.com.


PAYMENTS SPOTLIGHT

 

Transformational payments solutions:Worldpay has developed a card terminal that will allow merchants to accept contactless card transactions on their smartphones by simply downloading an app, without the need for specific hardware. Contactless card payments can be accepted by merchants anywhere, any time for up to £30 by using the app – ‘My Business Mobile’. This software only application is currently being piloted in London.

Source: Worldpay
(http://www.worldpay.com/us/about/media-center/2017-06/worldpay-launches-entirely-downloadable-card-terminal-for-smartphones)

 

Regulatory landscape:Payment Service Providers (PSPs) in the UK are struggling to comply with the PSD2 regulation. According to a survey of 144 UK payment service providers, 44% did not know the changes they would need to make to comply with the regulation, while an additional 29% were aware of the changes but do not understand them. This highlights challenges in the current state of education and understanding of the requirements within the payments industry. The regulation has many aspects but one primary focus is to make customer data open and accessible to third parties based on explicit customer consent.

Source: Finextra
(https://www.finextra.com/pressarticle/69482/payment-industry-unprepared-for-impending-psd2-regulation)

 

Customers’ evolving expectations:57% of global consumers shop cross-border, but are forced to contend with a less-than-ideal payments experience in many instances – impacting conversion rates for merchants. To address this, First Data and Global Payments have both recently announced the expansion of their merchant offerings to include more local payments solutions tailored to customers’ payment preferences. The new offerings from both players are single integrated platforms which enable a range of payment options such as online banking, direct debit, and wallets, among others.

Source: First Data and Global Payments
(https://www.firstdata.com/en_us/about-first-data/media/press-releases/06_26_17.html)
(https://investors.globalpaymentsinc.com/releasedetail.cfm?ReleaseID=1031381)

 

Data:Merchants generate large volumes of payments data based on invoices and receipts, which if structured and used well can drive decision making. Stripe launched a new SQL-based analytics tool to help merchants track and analyze their payments data. Available to merchants who use Stripe’s payments system, the solution comes with pre-written queries for key reports, with flexibility to customize as needed.

Source: Business Insider
(http://www.businessinsider.com/stripe-launches-sigma-sql-data-analysis-2017-6)

   

New providers:Square is entering the POS financing space by extending loans to customers of its small business clients, initially across six U.S. states. Merchants who use Square Invoices can offer their customers POS loans. Customers will have the option of repaying them over a period of three, six or 12 months, at a flat APR of 9.99%. Loans will vary from $250 to $10,000 in size.

Source: The Business Journals
(http://www.bizjournals.com/sanfrancisco/news/2017/06/28/square-small-business-loans.html)




PARTNERSHIP SPOTLIGHT

  • Citi Retail Services and ExxonMobil announced a new feature within ExxonMobil’s Speedpass+ mobile payment app, allowing customers to apply for ExxonMobil’s Smart Card credit card through the Speedpass app
    • This new feature, called “Apply and Buy” will also allow customers to choose the ExxonMobil Smart Card as the purchase card, immediately after the approval of the card application
    • Cardholders purchasing gas at U.S. retail locations will be able to save 6 cents on every gallon using the Smart Card at the pump or through the Speedpass app

Source: Citi (http://www.citigroup.com/citi/news/2017/170613a.htm)

  • Visa announced an investment in Klarna, an online payments company that serves 70,000 merchants and 60 MM consumers. A future strategic partnership will focus on driving commerce – both online and mobile for merchants and consumers
    • Klarna is looking to strengthen its global presence and product offerings through this partnership 
    • Visa’s investment is in line with its strategy of supporting new partners who are focused on transforming the purchase experience for customers globally

Source: Klarna (https://www.klarna.com/international/press/news/global-visa-commits-strategic-investment-klarna-companies-plan-partnership-deal)

  • Vantiv announced a deal to buy Britain’s largest payments firm Worldpay for $10 billion, highlighting the interest among banks and credit card companies to capture a larger share of the growing mobile and cardless payments space 
    • Vantiv, which is geographically concentrated in North America, will become global with Worldpay’s eCommerce business, which boasts an estimated 400K merchants across 146 countries 
    • The deal focuses on potential geographic and cross-sell synergies as Vantiv and Worldpay have core strengths across different markets

Source: Reuters (https://www.reuters.com/article/us-worldpay-m-a-vantiv-inc-idUSKBN19Q1JK)

 



MERCHANT SPOTLIGHT

Amazon
Amazon has stepped up its efforts in the payments and financial services space in 2017 via a series of new launches and product expansions:

  • Amazon Prime Reload: Offers 2% cash back to Amazon Prime customers for balance reloads from a bank account / debit card onto their Amazon prepaid account 
  • Amazon Cash: Offers a prepaid account for unbanked or underbanked customers that can be used for purchases on Amazon.com. Customers can preload cash without any fees to their Amazon accounts through a number of participating merchants, including CVS Pharmacy, Speedway, GameStop, and others
  • Amazon Prime Rewards Visa Signature Card: Relaunch of the Prime Credit Card, targeted at Amazon Prime customers to encourage loyalty. Card users are entitled to a 5% cash back for purchases made on Amazon and 1-2% cash back on purchases made at other merchants
  • Amazon Lending: Launched in 2011 and targeted at Amazon sellers based on their transaction history and working capital requirements, this product has now surpassed $3 BN in originations since inception, and $1 BN in the past year (as of June ’17)

Source: Amazon and Bloomberg
(https://www.amazon.com/b?node=15452216011)
(https://www.amazon.com/b?node=14583169011)
(https://www.amazon.com/Amazon-Prime-Rewards-Visa-Signature/dp/BT00LN946S) 
(https://www.bloomberg.com/news/articles/2017-06-08/amazon-s-lending-business-for-online-merchants-gains-momentum)