Digital as the Key to Embrace Unlimited Global Opportunities
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While the payment process plays a crucial role in connecting the merchant with its customer, today’s digital connectivity enables consumers to access goods sold at the other side of the world in just a few clicks. If technological developments facilitate exposure to new markets, merchants in quest of global outreach require robust and adapted payment infrastructures to increase sales conversion in the international marketplace. Through this session, our expert will discuss on a conceptual level what opportunities and challenges the digital payments ecosystem brings to merchants, PSPs, technology providers and other players. Our speaker will invite the audience to join the conversation and focus on three key aspects to consider in order to unleash the potential of digital trade by: - Discussing the impact of local markets regulations and reinforcing the practicalities and limitations of geo-localization for international compliance best practices. - Boosting customer experiences via smart payments strategies to increase acceptance globally while maintaining relevance locally. - Sharing perspectives and how to leverage technology in order to turn the payment function from a costly cluster into an integrated unit generating added value.
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Digital as the Key to Embrace Unlimited Global Opportunities
- 1. DIGITAL The key to limitless global opportunities Charles Cassar Head of Legal
- 6. Net revenue - $2.4 billion, a 14% increase An increase in processed transactions of 14%, to 12.6 billion A 13% increase in gross dollar volume, on a local currency basis, to $1.1 trillion MasterCard – 1Q FY16 (comparison with same period 2015, source MasterCard Inc)
- 7. Visa Inc – 3Q FY16 (comparison with same period 2015, source Visa Inc) Net revenue - $3.6 billion, a 6% increase An increase in processed transactions of 10%, to 19.8 billion A 10% increase in gross dollar volume, on a gross dollar basis, to $1.3 trillion
- 8. Fintech startups hit 4,000 globally in 2015 Source: The Paypers Total estimated venture capital investment rising from about USD 2.4 billion in 2011 to more than USD 19 billion in 2015
- 10. Payment Institutions Processors AcquirersBanks IssuersCard Scheme Consumers Merchants The Digital Payments Ecosystem Driving our industry forward, potentially…
- 11. Digital Co-opetition China UnionPay (CUP) and Visa Inc. signed a Memorandum of Understanding (MOU) … with both parties agreeing to collaborate on payments security, innovation and financial inclusion. “Visa is delighted to be working together on innovation as digital payments transform commerce, resulting in safer, faster and more convenient ways for consumers to pay…. The global payments industry will benefit from these efforts.” Charlie Scharf, CEO of Visa Inc.
- 12. Digital Perspectives Geographic Customer Experience Technology Ecommerce influenced consumer and merchant Greater expectations whilst pressure to reduce costs In-house, outsourced or combination
- 13. Digital Perspectives Opportunities New markets Accelerated growth M&A Challenges Compliance / Regulatory KYC / fraud prevention Finance / taxation Geographic Ecommerce influenced consumer and merchant
- 14. Digital Perspectives Geographic Ecommerce influenced consumer and merchant Opportunities Consistency across channels Engage, support 24/7 Dynamically optimized customer journey Challenges Immediacy expectation Social media Eliminating friction Customer Experience Greater expectations whilst pressure to reduce costs
- 15. Digital Perspectives Opportunities Internet of things (IoT) Mobile commerce Electronic ID verification and biometrics Challenges Legacy architecture Disparate systems Control, visibility and confidence in development Customer Experience Greater expectations whilst pressure to reduce costs Technology In-house, outsourced or combination
- 16. To summarise Digital fueling industry growth Geographic Customer Experience Technology Driving industry forward Creating opportunities and challenges
- 17. DIGITAL is the key to unlimited global opportunities
- 18. DIGITAL The key to limitless global opportunities Charles Cassar Head of Legal charles.cassar@credorax.com
Notas del editor
- This is a presentation by Charles Cassar, Head of Legal at Credorax – a new breed of acquirer that is bringing acquiring into the 21st century for our partners and merchants. He shares thoughts thoughts on ‘Digital’.
- And why we think it is the key…
- …to limitless global opportunities The word ‘digital’ is often used in our industry, but its application and interpretation are quite diverse. I’m not going to attempt to create a definition of ‘digital’ today – instead I’d like to provoke thought around how ‘digital’ has, is, and will continue to influence our industry, and, why exactly it holds the key to unlimited global opportunities
- The ‘size of the prize’ in the digital space continues to grow for all of us.
- Just looking at some of the more traditional players in the market that were never created to operate in a digital space anyway but are greatly benefiting from it, you can see a double digit increase in gross dollar volume for MasterCard in Q1 2015 compared to the same quarter in 2016. This growth pattern continued through the whole 2016 year, compared to 2015.
- And the same is true for Visa…
- The prize is even bigger when you look at the fintech space, which has had massive growth in recent years and only has had the tiniest slowdown in 2016, judging by the investments made into this sector. If we go by the Fintech book, the term fintech was really coined when the financial crisis coincided with the Payment Services Directive in 2007-2009 and was embraced by consumers who lost their faith in the traditional financial institutions and therefore started to turn to Fintech innovation. In fact, if it hadn’t been for the first PSD, Credorax wouldn’t exist as it enabled us as a technology company to obtain a licence and become principal members of Visa & MasterCard.
- Of course Fintech doesn’t only include Payment Technology but many other types of financial services. For the purposes of this talk, I’d like to focus more on the payment end of the fintech spectrum though as that’s what Credorax specialise in. I’m sure many of you will have seen this periodic table of payments. It shows that even within payments, there are many different flavours of payment services from processing to POS to virtual currency & money transfer – creating huge opportunities for companies operating in this market. Credorax also has an honorary mention using the chemical symbol for Chromium. According to the source of all wisdom – Wikipedia – Chromium is a lustrous metal that takes high polish, resists tarnishing and has a high melting point. I think we’ve done well there, I take it, thank you very much!
- We have a ‘digital’ ecosystem – acquirers, processors, issuers, card schemes, payment institutions, banks, and in our view the ‘customer’ – whoever that is for you: merchant/consumer or provider – should always be at the centre. ‘Digital’ is here and driving our industry forward, creating potentially limitless opportunities depending on how you approach it and if you get it right…
- Lately we have seen a variety of ways players in the payments space choose to stay competitive – multiple M&A is only one clear example. What is interesting to see though is that has the payment ecosystem evolves, there are times when players in the space need to co-opete to stay competitive. Co-opetition? – some of you may ask what is that? It essentially means cooperating with your competition. At Credorax we currently take the neutral approach, providing only pure play acquiring, which avoids any conflict of interest with our customers – the PSPs, PFs etc of this world, who may previously have had issues with the earlier explained scenarios.
- After this vast introduction and philosophy about digital, I’d like to share Credorax’s – one of the few digital acquirers – view on what opportunities we see in this digital environment, and how we suggest to cope with the challenges it brings. Let’s consider ‘digital’ from three perspectives:- Geographic - the growth of Ecommerce has had a major impact on where and how consumers shop, and therefore where merchants want to sell their goods and services Customer experience – expectations are greater than ever before whilst there’s increased pressure to take costs out of serving the customer. After all free deliveries and free returns are expected by many consumers nowadays, however create a huge cost for retailers. Technology – companies wanting to succeed in the digital space need to make decisions whether to run in-house development, outsourced managed services, or a combination of both Naturally, each offer opportunities and challenges You’ll see as I go through them that some opportunities could also be seen as challenges and vice versa. It really depends on how a company goes about tackling them. I stand open to be corrected of course. As I already said, everybody has different clients: consumers, merchants or in our case other providers so again some of the opps and challenges relate to different scenarios.
- In summary… We know that digital influences our industry and is fuelling growth The digital payments ecosystem – with the customer or merchant or provider, depending on who your client is, at its heart – is driving the industry forward The digital influences on the geographic, customer experience, and technology perspectives shows many opportunities, together with some of the challenges we face
- So, if you and we get it right, digital really does hold the key to unlimited global opportunities. Thank you