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:
International payments provider TransferMate has begun offering a cross-border payment option for Alibaba.com, allowing customers from across the globe to make purchases using their local currency. Sellers on the marketplace will receive the full amount the same day or next day and will incur no incoming bank transfer fees. The service expects to help sellers bypass the traditional banking system and associated fees for facilitating cross-border payments, while also shortening transaction times and catering to a wider customer base.
Rules and standards:
This May, the Federal Reserve proposed draft changes to the Durbin Amendment (Regulation II – Debit Card Interchange Fees and Routing), for which it is inviting industry comments until July 12, 2021. For card-not-present debit transactions, the proposal clarifies that debit card issuers should enable and allow merchants to choose from at least two unaffiliated networks. The proposal results from information indicating that often debit card issuers enable only one network for these types of transactions.
Customers’ evolving expectations:
A new report from The Ascent found that customer usage of Buy Now, Pay Later (BNPL) services will continue to increase dramatically. Based on the survey, the company found that as of March 2021, ~56% of consumers had used a BNPL service, up from ~38% in July 2020. Customers most commonly use these payment methods for larger purchases that don’t fit within their budget (45% of respondents). Additionally, 3 in 5 BNPL users prefer using a BNPL service offered directly by the merchant they’re buying from, rather than going through a third-party provider.
A recent report by PYMNTS.com and Onfido found that as consumers become increasingly concerned about the security of their online accounts, 55% are willing to spend more time verifying their identity when opening nonbank accounts (e.g., those offered by merchants) to improve security levels. A new method of remote identity verification relies on using a live selfie checked against a photo ID, with the ease of use of the method driving customer satisfaction. The survey found that 76% of millennials are very satisfied with the technology, and 84% of millennials would be willing to verify their identities with selfies if their account provider required it.
Leveraging its recent acquisition of online lender Kabbage, American Express has launched its first checking account for small businesses. The digital account, termed Kabbage Checking, charges no fees and pays 1.1% interest on up to $100,000 in balances, and includes access to mobile check deposits, a debit card, bill pay, and targeted savings features, plus access to an ATM network and retail locations for cash transactions. AmEx began piloting Kabbage’s services to its small business customers earlier this year by offering credit lines of $1,000 to $150,000.
is expanding its partnership with Google and with Facebook. It will soon enable merchants selling through the two tech giants to use its e-commerce checkout system, Shop Pay, which saves users’ information to speed up online transactions. More than 1 million merchants sell on Facebook and Google platforms. This is the first time Shopify has offered a product to merchants not using its platform.
Bill.com, a cloud-based software provider for small and midsize businesses’ (SMBs) back-office financial operations, completed its acquisition of the spend management company, Divvy. The company hopes that the combination of its workflow software and Divvy’s spend management solution will provide real-time insights into spend and cash flow for SMBs. It expects these businesses to be able to manage accounts payable, accounts receivable, and corporate spend, all with Bill.com as a “one-stop-shop” provider.
Facebook has integrated payments into its Messenger app. It has added in QR codes and payment links that enable users to send and receive money from anyone via Facebook Pay, which is backed by a user’s bank card or PayPal account. The feature is currently only available for US users. Users do not have to be “friends” on the social network to use these features, simplifying the process for transactions made via Facebook marketplace.
Amazon has launched its first full-size grocery store using its ‘Just Walk Out’ cashierless technology. The store is in Bellevue, Washington and further scales the technology, which has already been deployed in smaller locations and at third-party merchants. The technology allows shoppers to scan a code from within the Amazon app, float their palm over a biometric palm scanner in the store, or insert their Amazon account-linked card. Then, a combination of ceiling cameras, shelf weight sensors, and other technologies update the shoppers’ virtual carts in tandem with their physical carts, allowing them to use the Just Walk Out option.
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.