The Merchant Payments Digest is a regular update from Oliver Wyman to keep merchants apprised of developments in the rapidly shifting payments space.
Transformational payments solutions:
Stripe is partnering with Afterpay to allow Stripe merchants to seamlessly integrate a buy-now-pay-later option into their existing online payment methods. Stripe merchants can now directly offer this service to their customers without the need for a separate application or underwriting. Squarespace is the first to offer this new service. While initially available to Stripe merchants in the US, UK, Australia and New Zealand, the offering will soon be expanded to merchants in Canada.
Source: PR Newswire
Rules and standards:
In an effort to maintain stability as the pandemic persists, Visa and Mastercard are postponing their plans to increase the interchange fees for U.S. merchants. The higher fees that were originally supposed to go into effect in April 2020 were initially delayed until April 2021 and have now again been pushed back by a year to April 2022. In April 2022, the interchange fees for card-not-present transactions performed using a traditional Visa card for a $100 transaction will climb from $1.90 to $1.99 and for premium Visa cards, from $2.50 to $2.60. The reduced swipe fees for supermarkets and grocers that Visa introduced in 2020 will continue to stay at the same levels.
Customers’ evolving expectations:
According to Worldpay, digital wallet usage surpassed cash for in-store payments for the first time. Based on a survey of 46,000 consumers in 41 countries, Worldpay observed that cash usage fell by 10% accounting for ~20% of all in-person transactions while digital wallet-based transactions grew by 7% to 25.7% of all in-person transactions. Worldpay also predicts that by 2024, cash will account for less than 10% of in-store payments in the U.S. while digital wallet payments will account for more than 1 in 3 in-store payments.
Source: Digital Transactions, Business Wire
Following Brexit, the UK is now looking to reform its data protection laws that it had previously modeled around the EUs GDPR regime. With the new legislation, the UK hopes to retain many of the original EU GDPR provisions including strict data protection rules, but also focus on growth – especially of the digital economy, which UK believes may be constrained by the current GDPR rules due to more restrictions on merchants. Data-sharing deals with non-EU countries is also another key objective that the new rules will look to support.
Source: Financial Times, Reuters
Marqeta, the Fintech card-issuing platform announced a new initiative to help merchants launch credit card programs. By partnering with the startup Deserve, it plans to expand its product suite beyond its current offerings which includes debit cards, digital wallets, and other payment mechanisms. Marqeta hopes to differentiate itself by offering its clients the flexibility to process real-time changes to account features such as rewards, APR and credit limits based on custom rules. Marqeta currently provides card issuing services with just-in-time funding and card controls to delivery aggregators such as DoorDash and Instacart, and alternative financial services providers such as Cash App and Affirm.
Source: Tech Crunch
Fiserv Inc. has agreed to acquire Ondot Systems allowing cardholders more control over data and card usage. Fiserv expects Ondot to help it compete for digital customer acquisition, increase card activation and usage, and reduce service costs. Ondot is also capable of allowing customers to identify merchant information (map location, contact information, merchant name) on transactions, track monthly subscriptions, and view which merchants have their card-on-file. Additionally, Ondot will also enable Fiserv to support account applications through mobile devices and digital debit/credit card issuance.
Source: Digital Transactions
GoDaddy, the web domain and hosting service, is buying Poynt, the POS terminal provider. As a payment facilitator (PayFac) Poynt onboards small merchants and processes their transactions on Poynt’s merchant account. This deal will allow GoDaddy to offer processing capabilities to over 20 million merchants on its platform.
Source: Digital Transactions
Twitter is looking to enter the contextual commerce space and is testing a new feature where a “shop” button with product details can be integrated in the tweet directly, that in turn links to an e-commerce product page. The new integrations are part of Twitter’s push to become a creator platform. Twitter also recently announced the “Super Follow” subscription which allows Twitter users to follow a specific account for subscriber-only perks such as newsletters, exclusive content, and other deals and discounts.
Source: Tech Crunch
Amazon will make advertised content shoppable by allowing the purchase of goods directly from TV screens while watching programs. “tCommerce,” as Amazon calls it, will allow merchants to increase commerce opportunities with at-home customers. tCommerce aims to create a shopping “event experience” incorporating purchase opportunities into programs such as fashion shows.
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.