There’s a great deal of innovation within the UK payments landscape – from the emergence of challenger banks, to fintechs driving simplification of infrastructure, to the use of AI in payments processing. We attended PayExpo the UK’s largest payment event this week (8th and 9th October) to hear about the latest trends.
Payment speed, security or a compromise?
Facilitating payments faster, easier and ideally cheaper is what merchants are interested in right now. This was confirmed through our conversations with retailers, payments professionals and fintech companies around the Business Design Centre exhibition hall.
It was also a key theme of the speaker sessions and panel discussions across the event too. Mark McMurtrie, Director of Payments Consultancy told the Retail Payments Theatre: “The payments market is seeing more change now than ever before. Thanks to disruption and increased competition in the payments industry, cost differentials are coming – aiming to make payment models more attractive to merchants. The smartphone is the catalyst for what is changing in consumer payments. We see that Gen Z and Millennials are comfortable to bank and pay through their devices, drawn to the most frictionless experiences possible.”
Open banking, streamlined digital payment functionality through APIs and crypto currencies were all hot topics. Removing friction from payment is what many are gunning for, but does doing so increase the risk of fraud? Conversely, do measures that prevent fraud impact the user experience of ‘the good people’? The key often is partnering with the right fintech providers to help you progress through this changing world by getting the balance between speed and security just right.
PSD2, SCA regulated friction and the retail world
This was a fascinating panel debate that examined what the new directive and the introduction of SCA (Strong Customer Authentication) means for retail. In August the UK’s Financial Conduct Authority (FCA) confirmed an 18-month delay to the introduction of SCA rules for e-commerce transactions, which the panel agreed had removed the immediate pressure. There is still a lot of work to be done it seems, on the practical side and in terms of customer communication when changes are introduced. There are also unanswered questions around biometrics and what role this can play in authentication.
Nealle Page, Product Manager at Ocado said retailers should use the time to get involved in industry groups – particularly the work of the BRC – and to carry out plenty of analysis internally to be sure what is needed for full compliance in the business without disrupting the customer experience too greatly. “It’s actually a chance to review your systems generally, and improve processes elsewhere as part of the compliance journey,” said Page.
The importance of diversifying your checkout
Rapyd, a silver sponsor at PayExpo, operates the world’s largest local payments network. We visited the stand and heard how Rapyd’s ‘fintech-as-a-service’ platform enables any payment type for in-country or cross-border commerce in over 100 countries. It connects to over 2.3 billion consumers, and seamlessly integrates local payment methods – local cards, bank transfers, e-Wallets or cash – over 900 payment types around the world.
Marc Winitz, Chief Marketing Officer at Rapyd explained that companies across ecommerce, the gig economy, and online lending are turning to this service as a cost-effective way to manage the complexity of local payments as they expand globally. Being inclusive – so that no customer is turned away at the point of payment – should be a major concern for ecommerce retailers he said.
With this in mind, Joel Yarbrough, VP Asia Pacific at Rapyd gave a presentation on ‘Diversifying your checkout’. He advocated offering a highly localised user experience. The session aimed to help European businesses understand what it takes to be successful in today’s global economy. With only 6% of the world’s population owning a credit card, there are a host of other ways that shoppers – online and in stores – want to pay. This presents a huge opportunity, and partnering with a payment specialist that can take care of local regulatory and compliance issues, and global settlement and reconciliation arrangements, takes companies closer to meeting local audiences’ needs.
BRC’s call for lower cost to retailers of handling payments
The session explored how the retail and finance sectors could engage better with each other to deliver what customers want. Andrew Cregan, Head of Payments Policy at the British Retail Consortium (pictured) showed the trade body’s latest figures on payment methods. He pointed out how cash, although still used in 38% of all retail payments, is declining by around 3.5% year on year.
BRC is concerned that its members are struggling with the cost of accepting card payments. The organisation wants a cap placed on interchange fees to be extended, because the cost of plastic payments to the industry, and therefore to the consumer, is too high. Last year the industry paid £1.3bn to accept customers’ card-based payments.
The average cost faced by a retailer for a debit card transaction is 6.23p, rising to 18.19p for credit or charge cards, compared with 1.66p for cash, the BRC has revealed.
Cregan said about a third of the cost on cards was the scheme fee charged by card companies such as Visa and Mastercard, and that cost had been rising sharply. He said that government action is needed, or businesses will be put under further pressure and it will be consumers who are forced to pay the price.
Cregan welcomed Mastercard’s recent announcement that it will pay merchants 12p per transactions of cashback – a great incentive to retailers to offer the service, and helping ease the problem of British consumers accessing their cash.
PayExpo took place on the 8th and 9th of October, 2019, at the Business Design Centre in London