A new dawn for payments

Speak­ers

Karl Mac­Gre­gor (KM) CEO and co-founder, Vyne
Adam Calla­dine (AC) Head of prod­ucts, Kinet­ic
Ben­jamin Cano­va (BC) Glob­al pay­ment man­ag­er, world­wide omnichan­nel lux­u­ry retail­er
Andy Sale (AS) Head of part­ner­ships and alliances, Cell­Point Dig­i­tal
Rus­sell Cur­zon (RC) Vice-pres­i­dent and head of sales, UK and Europe, Nium

How has the pay­ments land­scape evolved in recent years?

RC It has under­gone tremen­dous trans­for­ma­tion, with dig­i­tal pay­ments becom­ing the new nor­mal. The pan­dem­ic has accel­er­at­ed dig­i­tal adop­tion fur­ther, with con­sumers becom­ing used to the ben­e­fits and con­ve­nience brought about by dig­i­tal pay­ments. The key bar­ri­er fac­ing mer­chants is that glob­al pay­ments have been com­plex and dis­con­nect­ed, mak­ing it hard­er and more expen­sive to man­age online pay­ments. Var­i­ous inter­me­di­aries are need­ed to process inter­na­tion­al trans­fers across cur­ren­cies, and chang­ing reg­u­la­tions mean ris­ing card accep­tance fees are also absorbed by mer­chants.

KM User expe­ri­ence and the desire to con­vert more online store browsers into pay­ing ongo­ing cus­tomers is dri­ving a lot of inno­va­tion in alter­na­tive pay­ment meth­ods. Con­sumers have incred­i­ble expe­ri­ences on their mobile phones when con­sum­ing dig­i­tal con­tent and now expect the same when it comes to pur­chas­ing goods and ser­vices, which is increas­ing focus on the pay­ment event and how that can be made super slick as well. Along with huge online growth dur­ing the pan­dem­ic, we also saw con­sumers adopt the use of QR codes when shop­ping, some­thing already pop­u­lar in mar­kets like Chi­na and Japan.

What role is reg­u­la­tion play­ing and how is this impact­ing the ecom­merce sec­tor?

KM Reg­u­la­tion is a sig­nif­i­cant dri­ver of change and has been a huge area of both pain and oppor­tu­ni­ty over the last five years, par­tic­u­lar­ly with respect to PSD2. For ecom­merce busi­ness­es, PSD2 is a mas­sive pain point because it’s intro­duc­ing things like two-fac­tor authen­ti­ca­tion and secure cus­tomer authen­ti­ca­tion for cred­it card trans­ac­tions, which breaks the user expe­ri­ence. For us, it has pro­vid­ed an oppor­tu­ni­ty to cre­ate a faster, sim­pler and fair­er pay­ment method that solves some of the inef­fi­cien­cies that exist around cred­it and deb­it cards, which you could argue are a bad fit for con­sumer expec­ta­tions today.

AC In the high­er edu­ca­tion sec­tor, with­in stu­dent accom­mo­da­tion PSD2 is a prob­lem. We see infre­quent pay­ment sched­ules – three instal­ments a year, rather than month­ly rent – and PSD2 intro­duces a lot more chal­lenges for recur­ring card pay­ments of this type. Direct deb­its are also very admin heavy. We’ve already seen with our Irish cus­tomers, since PSD2 came into force there in Jan­u­ary, a much high­er decline rate on those recur­ring trans­ac­tions because there is not a recog­nis­able pat­tern on the pay­ment. Pay­ment is a huge drop-off point in the book­ing process any­way, par­tic­u­lar­ly in the stu­dent accom­mo­da­tion sec­tor because it’s usu­al­ly mum and dad pay­ing. Our cus­tomers are knock­ing on our door say­ing we need to do some­thing.

How is open bank­ing help­ing to remove the mid­dle­men in pay­ments, enabling a more direct expe­ri­ence?

KM Open bank­ing gives us the tools to build a solu­tion that sim­pli­fies the flow and reduces a lot of the risk. It gives us the abil­i­ty to cre­ate a push pay­ment. A con­sumer buy­ing some­thing from a web­site or in a store can go to their bank account in one click or scan of a QR code and push the mon­ey direct­ly to the mer­chant. That moves every­body out of the mid­dle, sup­port­ed by a tech­nol­o­gy solu­tion like Vyne which wraps it up with all the fea­tures and func­tion­al­i­ty that a busi­ness needs to make it viable. Con­sumers get greater trans­paren­cy and reduced risk because a bad actor can’t steal their card details. For mer­chants, there’s no charge­back risk, the costs are much low­er and they only have to deal with one par­ty.

AS They also get paid right away, which is par­tic­u­lar­ly impor­tant for sec­tors like trav­el where the risk that’s built into card pay­ments means busi­ness­es are some­times hav­ing to wait weeks or even months to get their mon­ey. There are some hor­ror sto­ries dur­ing the pan­dem­ic of very rep­utable trav­el busi­ness­es that have been either switched off alto­geth­er by their card acquir­ers because they don’t fit a new revised risk pro­file or have had very strin­gent terms and con­di­tions forced onto them, includ­ing hold­ing onto all mon­ey until a flight has flown. It has a dra­mat­ic effect on their cash flow.

BC With instant pay­ments, no per­son­al data is han­dled, so that’s anoth­er risk elim­i­nat­ed. It’s also cheap­er, there is no fric­tion for the cus­tomer and we have the funds imme­di­ate­ly. It makes a lot of sense. In the past year, Apple Pay has increased, Pay­Pal has explod­ed and the instal­ment pay­ment enablers are get­ting stronger and stronger. We start­ed using new alter­na­tive pay­ment meth­ods in spe­cif­ic coun­tries and, with­in two days, 20% of all of our busi­ness with­in these coun­tries was going through it. There are ben­e­fits across the full chain so it’s very easy to get val­i­da­tion here.

Does instant pay­ments, pow­ered by open bank­ing, sig­nal the end of cred­it cards?

AS I don’t think cards will be replaced entire­ly but the move towards non-card-based pay­ment meth­ods is inex­orable. One size does not fit all pay­ments. Whether that’s a type of pay­ment or an indi­vid­ual pay­ment provider, the days of sup­port­ing a glob­al busi­ness with just one provider and just sup­port­ing cards are well and tru­ly gone. You need to have the flex­i­bil­i­ty to con­tract with who you want, get paid where you want to get paid in what­ev­er cur­ren­cy you want, and sup­port the pay­ment meth­ods that your cus­tomers real­ly want.

AC Cards were invent­ed before the inter­net and it’s impor­tant to remem­ber they have been adapt­ed to use online. I don’t think they’re the best solu­tion for online pay­ments any­more. The cus­tomers we speak to want to offer a much wider choice of pay­ment. It’s not just fraud that stops card pay­ments, it’s the num­ber of peo­ple in the mix. You’re going through the gate­way, the acquir­ers, the issu­ing bank, and then you’ve got the 3D Secure ele­ment in an iFrame in the mid­dle. I spend a long time on the phone, on behalf of cus­tomers, try­ing to work out where it broke down and I get sent round in cir­cles from the bank to the acquir­er to the 3D secure provider. In the end the answer is always to just tell them to try again, which I don’t think is accept­able in this day and age.

BC We don’t need the cus­tomer to type in their cred­it card cre­den­tials. We don’t need the cus­tomer to have to go to their smart­phone to enter a code or any­thing. We don’t need authen­ti­ca­tion drop-offs. We don’t need a lot of dropouts due to fraud checks or due to issuer declines. We don’t want to have charge­backs either, we just want a direct rela­tion­ship with a cus­tomer, han­dling any inci­dents direct­ly, and if we can have nobody in the mid­dle then that’s a bonus for every­one.

For more infor­ma­tion please vis­it payvyne.com

Pro­mot­ed by Vyne