Transformational payments solutions:Facebook has announced a digital payments system that will launch in early 2020 and will leverage crypto-currency. Currently referred to as GlobalCoin, Facebook’s intent is to lower transaction costs. It hopes to achieve this by marketing the solution as an affordable and secure form of payment, which even consumers without bank accounts can rely on. In order to gain acceptance, Facebook has initiated discussions with banks, merchants and regulators. The company has also met with firms such as Western Union to explore how unbanked Facebook users can transfer money.
Regulatory landscape:Stripe released the results of a recent survey noting that the EU’s new Strong Customer Authentication (SCA) regulation could result in losses of €57 BN for the EU economy in its first year. SCA, which is being introduced in September, mandates that merchants’ websites require two-factor authentication for purchases. According to the survey, roughly half of all merchants will be compliant with SCA by September. Small businesses are more likely to be non-compliant. Additionally, 73% of consumers are unaware of these upcoming changes, indicating the possibility that they may resist additional steps in online checkout and abandon transactions.
Source: Yahoo! Finance
Customers’ evolving expectations:Visa recently announced that contactless payments are gaining traction in the US, catching up to a global trend where customers prefer the seamless form of in-store card payment. 80 of the top 100 Visa merchants in the US now support contactless payments, and 11 of the top 25 card issuers do so as well. This anticipated growth in tap-to-pay transactions can also be seen in high profile projects like the New York City MTA’s new contactless technology for subways and buses. Internationally, dozens of countries have seen an increase in contactless payments of at least 10% this past year, with 48% of all in-person Visa transactions being contactless.
Data:Vacheron Constantin a luxury watchmaker, plans to leverage QR codes and blockchain to digitally track and authenticate data pertaining to the ownership of its watches and to counter fraud. Each watch in its Les Collectionneurs set will come with a digital QR code upon purchase. Any time that a watch is resold, its unique digital certificate will be shared with the new owner. This informs Vacheron of the ownership change, and a new QR code is generated. Using the blockchain ensures the authenticity, traceability and protection of data for the digital certificates, all while ensuring the anonymity of the owner.
Source: NFC World
New providers:Line Pay the payments arm of the Line messaging app which is native to Japan, announced that it is partnering with Visa to offer a digital Visa card within the app. This move to combine traditional and alternate forms of payments will allow Line users to pay at any Visa terminal internationally. All of Line’s over 164 million users will be able to apply for the card, and payments will be available directly from users’ mobile phones. Line has also indicated plans to work on international money transfers with Visa, among other initiatives.
- Global Payments and TSYS have announced a $21.5 BN merger. The combined firm will provide services to over 3 million small and medium-sized merchants and 1,000 financial institutions across 100 countries. TSYS, a global payments processor, works in the credit card issuance space. Global Payments is a merchant acquirer and plans to leverage TSYS to gain a stronger foothold in digital payments. In a statement, the companies said that the merger would result in $300 MM in savings due to operational synergies, and $100 MM in new cross-selling opportunities annually. This is the third major deal in the payments industry in 2019, after Fiserv’s acquisition of First Data, and FIS’s acquisition of Worldpay.
- Amazon and Synchrony Financial have announced a new credit card targeted at consumers with limited credit. The card, called Amazon Credit Builder, is a secured card that is designed for users to improve their credit scores and “graduate” to Amazon’s other credit offerings. Like Amazon’s other card offerings, Amazon Credit Builder offers 5% cash back on purchases to incentivize purchases made on Amazon. 11% of the US population has a credit score below 550, and 4% of the population’s score is below 499, affecting access to financial products like credit cards. After being approved for the Credit Builder card, users can deposit money to secure their credit limit and make purchases.
- The Home Depot, Gap, Lowe’s and Sephora among other merchants are testing a payments app which integrates rewards and loyalty. The app, called Ibotta, has previously served as a mobile service for coupons and rewards. It will now allow customers to pay directly in the app. Termed ‘Pay with Ibotta’, the app distributes rewards for a transaction at checkout among 30 participating merchants. Ibotta looks to appeal to customers by offering a rich user experience and immediate cash back at checkout.
Source: Retail Dive
Oliver Wyman is a global leader in management consulting with offices in 60 cities across 29 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.