14 Jun 5 Answers – Why Payment is still no commodity
I would like to reflect on my latest projects where I supported clients in partnering with new payment providers and optimizing existing payment infrastructures. Regularly flicking and reading through the various payment newsletters, I have the belief that developments during the last years increased transparency and lead to new innovation throughout the industry, such as:
- The European Commission is doing a great job in putting the pressure on card schemes to cut card fees and enabling more competition in the financial service industry
- Fintechs, supported by large investors, compete against established providers and banks, leading to more competition and smarter solutions
- Initiatives such as SEPA or PSD2 lead to more transparency and scalability throughout the industry
- Acquisitions result in a consolidated industry and
- Global payment acceptance is easier than before and offered by most service providers.
So I did run RFPs, having numerous meetings and calls to achieve the desired outcomes. My personal outcome was different than expected and contrary to what the news made me believe even if targets were achieved.
- IC++ pricing stands for increased transparency, nevertheless additional costs are hidden within multiple items such as wire fees, scheme fees, fx-markups avoiding the ability to compare apples with apples.
- Fintechs have created a great hype, but the majority of these companies focusses only on user interfaces, while still using out-of-date and slow core platforms avoiding true end to end efficiency.
- The offering of SEPA products is bringing a great opportunity to enter larger markets with one interface avoiding the efforts to implement each domestic payment scheme. But a wide adoption is currently not in sight and I doubt that banks will currently focus on pushing SEPA while they need to restructure their businesses first.
- Numerous acquisitions did take place during the last years and more activities are in sight for the next years. While the strategic decision certainly makes sense for existing and new customers, this leads to large challenges as the organizations are busy with themselves re-organizing, re-branding and re-structuring their businesses instead of focusing on Merchants.
And then the last „fun“ topic: Global Acceptance. Everybody is announcing „global“ expertise, but if you discuss this in detail, your selected partner might not offer the required solution or knowledge resulting in additional efforts to achieve the desired results
What are the learnings from the current developments? Have a Cappuccino first as the world is not changing as fast we might think and then let’s focus on introducing innovation while increasing transparency to make payments a commodity.
Have a great day and see you soon