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
ACI Worldwide announced the launch of ACI Instant Pay, a new real-time payments solution that enables merchants in the U.S. to accept online, mobile, and in-store payments instantly. Once integrated, ACI Instant Pay appears to merchants as an alternative payment method through all major channels. For in-store payments, a QR code displayed on a screen enables customers to initiate and complete payments via their mobile device. ACI expects merchants who use this solution to benefit from instant settlements and elimination of interchange fees and chargebacks.
Rules and standards
The Federal Trade Commission is asking Mastercard to stop forcing merchants to route debit card payments through its payment network and blocking the use of competing debit networks. Mastercard’s current policy requires use of a network token when a cardholder loads a Mastercard-branded debit card into an e-wallet. Since competing networks do not have access to Mastercard’s token vault, merchants are dependent on Mastercard to convert the token to process transactions. This proposed order will require Mastercard to provide token information for transactions processed on a competing network. It comes on the back of the recent updates published by the Federal Reserve to Regulation II to facilitate merchant routing choice for card-not-present debit transactions.
Customers’ evolving expectations
According to a recent report by PYMNTS and FIS, shoppers are increasingly interested in stored credentials solutions. About 4 in 5 shoppers now entrust multiple eCommerce sites and apps with their personal information. However, the research found that over half of these consumers have experienced issues during the process – from data theft to outdated payment information. As a result, credential vaults are gaining in prominence, with 40% of shoppers highly interested in stored credentials solutions in exchange for a frictionless checkout. These solutions transmit payment details securely to merchants at the time of authorization and provide a single source for consumers to safely update their personal information.
Chargebacks in travel are up 50% compared to 2019 due to an increase in travel disruption caused by Covid-19. Given the rise in disputes, some travel companies lack the resources and data insights to handle the process efficiently, with many disputes automatically resulting in favor of the cardholder. It is estimated that fraudulent disputes cost airlines upwards of $1B annually. To alleviate this issue, Amadeus launched Amadeus Chargeback Management, powered by Chargebacks911, to provide airlines with an automated service to better manage chargebacks at scale.
Seven of America’s largest banks including JPMorgan Chase and Bank of America announced plans to join forces to launch their own digital payment wallet that can be used for online purchases. The banks are working with Early Warning Services (EWS), the company that runs their Zelle electronic payment service. The new electronic wallet, which will operate separately from Zelle, is an attempt to regain the banks’ control of purchases currently being made using Apple Pay, PayPal, and similar services. The new digital wallet is due to launch in the second half of 2023, with approximately 150 million Visa and Mastercard credit and debit cards enabled at launch.
Ingenico and Klarna announced a global partnership to provide various payment installment options to physical retailers. The rise of digital commerce has primed consumer expectations around the flexibility, ease, and speed of transacting, and this is now extending to in-store experiences as well. Under this partnership, Klarna will use Ingenico’s cloud payments platform as a service tool (PPaaS) to allow customers to choose from a list of payment methods, and pay later and financing options at point of sale (POS) terminals.
Amazon is extending its “Buy with Prime” feature to allow online merchants outside its platform to use its payment and delivery services for direct-to-consumer (D2C) products. Participating sellers can showcase a “Buy with Prime” button on their eCommerce webpage which directs customers to complete the checkout process using their Amazon account. This feature is expected to help merchants convert shoppers by offering shopping benefits to Prime members such as free same-day / next-day delivery, and free returns, among other features. To add “Buy with Prime” to their ecommerce sites, merchants must accept payments using Amazon Pay.
Similarly, Walmart announced a partnership with Salesforce to provide retailers with access to technologies that enable frictionless local pickup and delivery for shoppers. Under this partnership, third-party retailers can now leverage the same technologies as Walmart by using Walmart’s local stores as fulfillment centers. This solution aims to increase the accuracy, speed, and efficiency of handoffs between employees and customers / third-party delivery drivers by integrated tracking to minimize wait times.
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.