Merchant Payments Digest

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

PAYMENTS SPOTLIGHT


	Transformational payments solutions:Mastercard announced that biometric identification must be made available for all their users by April 2019. This is in response to a recent study conducted by Oxford in collaboration with Mastercard, showing that 93% of consumers favor biometrics over passwords. Mastercard’s Identify Check already operates in 37 countries, and this advancement reinforces its action plan to prevent fraud. Moreover, the full transition into biometric identification helps both banks and merchants increase security and improve customer experience. The biometric technology meets the regulatory requirements around Strong Customer Authentication set out by PSD2. Source: Mastercard (https://newsroom.mastercard.com/eu/press-releases/biometric-identification-must-be-made-available-for-all-mastercard-users-by-april-2019/)

	Regulatory landscape: The Consumer Financial Protection Bureau will delay the adoption of new regulation on prepaid cards by a year (now in effect in April 2019). This regulation is in response to the growing prepaid market (estimated to hold $116 billion in value by 2020) and the corresponding limited protection from fraud. The CFPB mandated last year that companies must be transparent with fees and work with consumers who are victims of fraud. However, now, more flexibility will be provided to cards that are incorporated within digital wallets, and more time to investigate fraud claims will be given to prepaid card providers. Source: The Washington Post (https://www.washingtonpost.com/news/get-there/wp/2018/01/25/consumer-watchdog-delaying-new-prepaid-card-protections-by-one-year/?utm_term=.a42e622d5505)

	Customers’ evolving expectations: Amazon Go has opened to the public on January 22nd, 2018. Amazon’s cashless grocery proposal uses a new Amazon mobile app to streamline the grocery checkout experience. With the go in and walk out experience, consumers can download this app, pick up the necessary groceries, and leave. Amazon still foresees potential for transactions in brick-and-mortar sales, starting in the grocery market. This new experience revolutionizes the grocery customer journey, limiting the issue of long lines at checkout. Source: USA today (https://www.usatoday.com/story/tech/news/2018/01/21/amazon-set-open-its-grocery-store-without-checkout-line-public/1048492001/)

	Data:OnePlus a Chinese smartphone manufacturer, experienced a data breach from its online store, and credit card information of as many as 40,000 customers was stolen. This breach occurred in November 2017 and was in response to a number of customers reporting fraud on their bank accounts after executing a purchase on the OnePlus website. OnePlus has since made a statement to work with its payment solutions providers to increase security and improve data protection of its customers. Source: Forbes (https://www.forbes.com/sites/thomasbrewster/2018/01/19/oneplus-hacked-40000-credit-card-data-theft/#33e0d9b277ad)
	New providers: Singapore Airline’s frequent flyer program, KrisFlyer, is planning to introduce a new digital wallet feature that will be blockchain-based, becoming the first global airline to offer this program. This new digital wallet will allow KrisFlyer loyalty members to use their miles at various merchant partners. According to the CEO, the digitalization of miles is meant to enhance the customer experience. Prior to its official launch in six months, KrisFlyer will focus on finding more retail partners in the Singapore market first. Source: Singapore Airlines (https://www.singaporeair.com/en_UK/sg/media-centre/press-release/article/?q=en_UK/2018/January-March/ne0518-180205)

PARTNERSHIP SPOTLIGHT

eBay declares Adyen, a Dutch global payments solution company, as its main partner for processing payments, adjusting its current agreement with PayPal
- PayPal will remain a payment option at checkout until July 2023
- eBay will now manage its own payments flow, streamlining the end-to-end experience for both buyers and sellers

Source: eBay
(https://www.ebayinc.com/stories/news/ebay-to-intermediate-payments-on-its-marketplace-platform/)

Square has acquired Entrees On-Trays, an on-demand food delivery company, to supplement Caviar, Square’s food delivery service.
- Entrees On-Trays has served the Dallas-Fort Worth area for more than 30 years and partners with local restaurants to provide food delivery service
- Square’s Caviar is one of several business services it offers to its restaurant clients, and with this acquisition, Square hopes to expand its reach and grow its sales in the restaurant / dining industry

Source: Nasdaq
(https://www.nasdaq.com/press-release/square-acquires-entrees-ontrays-expanding-its-caviar-footprint-in-dallasfort-worth-20180125-00667))

MERCHANT SPOTLIGHT

Starbucks and Chase announced the Starbucks Rewards Visa Card where for every purchase (in or out of Starbucks) you earn a Star. These loyalty rewards will be exchangeable for food and drink at any Starbucks in the country
- This will further build Starbucks’ loyalty program, which has more than 14 million daily members utilizing this program
- Cardholders will automatically become ‘Gold Status’, which allows the customer to earn more rewards, in the Starbucks loyalty program

Source: Starbucks
(https://news.starbucks.com/press-releases/starbucks-and-chase-launch-starbucks-rewards-visa-card)

Apple will begin to accept Alipay in its 41 mainland China stores. This will be first time the U.S.-based tech company will allow a third-party payment solution in any of its stores.
- Apple is seeking to further build its presence in the Chinese market by working more closely with the Chinese government and local partners
- Alipay has dominated the Chinese mobile payments market, but is facing increasing competition from WeChat

Source: Reuters
(https://www.reuters.com/article/us-china-apple/apple-brings-alibaba-linked-payment-system-into-china-stores-amid-market-push-idUSKBN1FR0FH?utm_source=34553&utm_medium=partner)

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.