// . //  Insights //  Checkout Enhancements Gain Traction

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

In a move reflective of software increasingly replacing point-of-sale hardware terminals for payments acceptance, PayPal announced that it would soon support Apple’s Tap to Pay on iPhones. Tap to Pay on iPhone enables merchants to accept contactless cards and digital wallets with an iPhone and a partner-enabled iOS app, using NFC technology. Stripe and Square already offer this capability to their merchants via their own iOS apps, and now with PayPal’s entry, this further expands the options available for merchants to facilitate seamless checkout.

Source: TechCrunch

Rules and standards

As a result of a recent class-action settlement with Visa and Mastercard, Canadian merchants now have the ability to surcharge credit card transactions (to offset processing fees). Starting October 6, Canadian merchants can apply a surcharge (capped at 2.4%) after disclosing the surcharge fee clearly to customers and noting that it is being applied by the merchant (not the card issuer). Based on a survey conducted by The Canadian Federation of Independent Business, ~20% of small businesses are considering adding a surcharge, with another quarter of them indicating that they will add a surcharge if their competitors or suppliers do.

Customers’ evolving expectations

Consumer preference for the use of biometrics is growing, with 3 in 4 airline passengers globally indicating a proclivity towards biometric data as a means of authentication, in lieu of passports and boarding passes. According to the International Air Transport Association (IATA), over 1 in 3 travelers have used biometric identification, and about 75% are keen to provide consent for using their biometric data to enhance convenience across the end-to-end customer journey, including embedded payments. Separately, CyberLink, a facial recognition company reported that ~40% of Americans use facial biometrics with at least one app daily, including ~75% of 18- to 34-year-olds.


As post-COVID shopping habits start to normalize, Visa is seeing higher levels of in-person fraud. Although digital channels still account for ~75% of fraud and data breaches, Visa witnessed a doubling of the use of physical skimming devices to capture cardholder information – correlated with an increase in in-person activity (in-store sales have grown faster than digital sales this year). To counter this trend, Visa has indicated that merchants are buying additional services such as tokenization, and artificial intelligence and enhanced authorization tools.

Source: Visa and Payments Dive

New providers

Elon Musk who recently took Twitter private has outlined his plans for the social media company’s foray into payments. Supporting P2P payments, stored value balances, and potentially offering a high-yield bank account to Twitter users are some of the offerings that he has indicated. Twitter has also filed registration paperwork with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to process payments. Musk’s stated ambition is to create a super app called X, and views Twitter as being an integral component of the path to get there.

Source: TechCrunch

Partnership spotlight

Mastercard announced a partnership with JPMorgan Chase (JPMC) to offer Pay-by-Bank as a payment method to U.S. based billers and merchants. Pay-by-Bank is an ACH-based offering that leverages Open Banking to securely authenticate a customer (using their existing bank credentials) and then sharing the bank account information with JPMC to complete the payment. The partnership is aimed at offering greater payments choice to both consumers and billers/merchants, in addition to the traditional cards and wallets. The service is being piloted at a small-scale this year, with plans to expand further in 2023.

Source: Mastercard

Merchant spotlight

Tesco is expanding the trial of its GetGo stores which facilitate a checkout-less experience in-store, to now offer greater choice to customers of utilizing a self-service or attended checkout. The GetGo stores in their original form are similar to Amazon Go outlets that enable a customer to shop in-store using an app, without explicitly scanning products or checking out. With this move to a hybrid format, Tesco hopes to cater to a wider base of customers who do not have the Tesco app on hand, but still prefer a faster checkout experience.

Source: Tesco

Oliver Wyman is a global leader in management consulting with offices in 70 cities across 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, Rob Mau, or Rick Oxenhandler at payments@oliverwyman.com.