It’s my first time at MPE and you have to hand it to Empiria, the organisers. The hall is packed, the exhbition full and the seniority level impressive. Pretty much anyone who matters in European payments is here. Unless they work for Visa.
The principle of the event is to bring together the acceptance end of the payments world – acquirers, processors, payment service providers and ancilliary functions such as fraud screening, with the merchants who use their products to take money from their customers.
It’s a three day event so here’s just a flavour of the key points from day one.
Payments is still hot. If you own a payments business, now is the time to sell. The buyer will probably be a private equity house looking for stable, non-cyclical profits. If you want to buy a payments business for strategic reasons, you’ll probably be out-bid by the private equity guys. So sell instead.
Merchants. There was only one merchant speaking today. Auchan, the French supermarket chain, has built its own pan-European payment infrastructure which allows transactions to be dynamically routed to the lowest cost acquirer. And it recognises the card’s nationality to print out a receipt in the shopper’s home language. All quite cool. Auchan complained that there was no single vendor it could use for its requirements across the continent. “That’s because the businesses that want a single European provider won’t pay for it,” fumed one vendor during the coffee break.
Crypto-currencies. Nothing new today except one start-up (confusingly called Pay Cash) pitched the ability to accept Bitcoins on a standard payment terminal using QR codes. A bit niche, I’d say. Of course, Bitcoin is a volatile asset class, not a currency, and has no place in retail.
Apple Pay. This changes everything. But you probably knew that. There wasn’t anything new revealed today except that (1) Carte Bancaire is in negotiation with Apple and (2) Carte Bancaire won’t be paying anything like the 0.15% that the US issuers have inexplicably agreed to donate to Apple. Meanwhile, the CEO of one acquirer confided to me that mobile payments would finally make his investement in contactless point of sale terminals worthwhile.
Paypal. A spirited presentation from Luke Olbrich outlined the most credible strategy from any of the established players. I’m a sucker for a list of new products accompanied with screenshots. To his credit he also admitted that PayPal Here is a “me too” product.
Zapp. No new information and still no confirmed launch date. Should we be worried? I do like Zapp and wish them well but their roadmap and go live dates are hostage to the UK retail banks’ IT development plans. The same goes for Visa Checkout.
Consolidation. Much agreement that there are too many acquirers and that consolidation is inevitable as banks assess whether they really to keep up the necessary invesment. On the otherhand, payments is capital-lite and an easy upsell to corporate banking relationships so I’m not sure it’s that clear cut. Anyway, if you have decided to sell, both Six Pay‘s Nickaus Santschi and WorldPay’s Ron Kalifa both claimed to be in the market to buy. The rationale for consolidation is primarily that in an undifferentiated industry, scale brings cost leadership.
Interchange regulation. A few speakers addressed the implications of the proposed reductions in credit and debit interchange. One unexpected consequence is that some German retailers have been opting to process dual branded Maestro/Giro cards as cross-border Maestro transactions. The German banks are responding by removing the dual branding and doing a deal with Total so that Germans can buy petrol in France with their domestic Giro cards.
More interesting to my mind is the impact on innovation. It’s going to be hard to produce a new payment instrument that’s cheaper than cards so new successful ideas will need to be pitched at enhancing the customer experience. This sets Europe and the USA in opposition. Across the pond, with credit interchange still hovering at 1.5%, there is a ready reception for anything that gives retailers some relief.
Biometrics. There’s some very welcome thinking on ways to eliminate the PINs and passwords that plague the payment industry. Carte Bancaire are close to launching fingerprint recognition which they claim 58% of French people would prefer to a PIN code. Biometrics are also useful online tools in France as they inhabitants implacably refuse to use 3D Secure.
Biometrics would also has the advantage of differentiating Carte Bancaire from Visa/Mastercard at a time when, accoridng to Gilbert Arira, the EU would like to see domestic schemes closed down. Or maybe merged. How about Giro/Carte Bancaire/Mister Cash as a third pan-European payment scheme?
A signature based biometric authentication tool won the innovation competition by a country mile. Sign2pay allows you to sign your name on a smartphone (landscape not portrait, natch) to validate online local debit transactions. I can’t see millenials going for this but the German delegates were quite excited and there must be an application in the US now that our American friends seem set on chip and signature.
In-store commerce platform. The payment industry can sometimes be guilty of confusing a card machine with an EPOS system but there was some evidence that the vendors are finally reviewing their thinking. Ron Kalifa said that WorldPay was planning to sell a bundle of in-store technologies to SME’s but gave no detail. Verifone’s Julie Felix seemed to be heading in the same direction but First Data (not presenting) are miles ahead with their Clover product.
Tangibly on view today, and impressive too, was Tiller – a restaurant EPOS designed and built by a team with a strong hospitality background. It includes an app store with links to Just Eat, Guest Online and other useful services.
M-POS. iZettle announced that its card reader would now be free. This underlines how similar the SME payments business is getting to mobile phones. It would be nice if free devices and transparent pricing plans were the norm not the exception.