Transformational payments solutions:The International Air Transport Association (IATA), the trade association for global airlines with 280 members, announced its plan to develop a web-based real-time payments system for airline tickets that would bypass the card networks. In this model, which would be operated by Deutsche Bank, a customer’s bank account will be checked in real time to confirm funds availability, collect fares, and transfer payments to the airline directly. IATA and Deutsche Bank expect this to potentially save airlines billions of euros in interchange fees. The proposal is possible because of EU’s new Payment Services Directive 2 (PSD2) regulation which requires banks to give third parties access to customer data and allows third parties to initiate payments themselves. The new system is scheduled to be launched across Europe towards the end of 2018.
Source: Deutsche Bank and Financial Times
Regulatory landscape:Bank of England consolidated two U.K. payments systems – Faster Payments and Bacs – under the New Payment System Operator (NPSO). Regulators hope the consolidation will make payments processing easier and more affordable. While both Faster Payments and Bacs are widely used for B2B supplier payments, regulators had concerns that smaller companies faced barriers to access those schemes. Officials also think the move will introduce new industry-standard features in the payments system, including payee confirmation and payment request dispatch.
Source: City A.M.
Customers’ evolving expectations:In response to customer expectations of seamless, embedded payments, Instagram has entered the ‘connected commerce’ space by testing a payments feature for consumers to make direct purchases and payments without leaving Instagram. Select users in the U.S. and U.K can now book appointments and make reservations on Instagram by registering a debit or credit card and setting up a security PIN. The payments functionality will eventually work with “shoppable tags” which currently allow users to click on the products in a post to open a pop-up page on the merchant’s website and complete the checkout process.
Source: CNBC and TechCrunch
Data:American Express (Amex) recently launched a blockchain for its Membership Rewards program. Merchants can use this program to engage customers and drive revenue by linking card rewards to specific products. A private channel created on blockchain for each merchant allows merchants to offer Amex rewards on their websites and apps directly. Merchants can also access and analyze SKU-level purchase data recorded in the distributed ledger in real time to customize product-specific offers. Blockchain significantly shortens the timeframe for onboarding merchants to the rewards platform to less than a few weeks, as opposed to API plug-in solutions which take months. Amex is currently piloting the program with Boxed, the online grocery service, and select card members, with plans to roll out to all merchants and card members over the next few months.
Source: American Banker and CoinDesk
New providers:Adyen, a Dutch payment processor, confirmed an IPO on the Euronext Amsterdam exchange in June. The listing values the firm at $8.6 billion, which makes it one of the largest European FinTechs to go public. Adyen’s platform is built on cloud-based technology and can handle transfers in diverse currencies and payment types, including cross-border payments. Earlier this year, Adyen replaced PayPal as the primary payments provider to eBay. Adyen processes payments for both e-commerce and physical merchants, which include Airbnb, Uber, Netflix, Facebook, Tory Burch, and Sephora. Adyen also plans to expand in instant settlement services and obtained a pan-European banking license late last year.
- Microsoft is partnering with Stripe and other FinTechs to integrate Microsoft Pay – its digital wallet service – into Outlook
The integration will enable merchants to process invoices and make payments directly from the Outlook portal
Stripe will now support Microsoft Pay, enabling businesses that use Stripe to offer Microsoft Pay as an option to customers
Microsoft is also partnering with other payment processors and billing and invoice services providers such as Braintree, FreshBooks, Intuit and Xero among others for Outlook integration
Source: Microsoft and TechCrunch
- PayPal has acquired iZettle in its biggest-ever transaction - an all-cash deal of $2.2 billion
- iZettle is a one-stop digital payments platform that enables small businesses and individuals in Europe and Latin America to accept payments
- The acquisition provides PayPal in-store and mobile point-of-sale capabilities in 11 new markets, as well as in-store expansion opportunities in its existing markets. It also accelerates PayPal’s development of omnichannel commerce solutions
- Reacting to customer complaints, Shake Shack has decided to discontinue its plan to have fully cashless restaurants
- Explaining the decision to add cashiers, CEO Randy Garutti admitted that customers often prefer paying with cash. Online reviews also revealed that many customers were confused about using kiosks
Shake Shack had opened its first cashless, kiosk-only location last October in New York City to test ways to reduce friction and enhance customer experience, with interest in rolling out more cashless locations
Source: Business Insider
- Amazon Cash, a payments offering targeted at underbanked and unbanked customers, is broadening its reach through Coinstar kiosks
- Amazon Cash allows customers to reload their Amazon.com balances with cash at merchants such as 7-Eleven, CVS, and GameStop
- Coinstar which owns and operates self-service coin-counting kiosks located in high-traffic retail locations such as grocery stores, expects to enable ~5,000 kiosks to accept cash for Amazon Cash by the end of this year
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 or Rob Mau at email@example.com.
Note that Oliver Wyman believes the curated content to be reliable, but it has not been verified. As such, Oliver Wyman gives no warranty as to the accuracy of such information. Oliver Wyman’s curation of such content should not be interpreted as an endorsement of the organizations that published the content.