EQ Magazine 2014

sharing insights
Equens magazine | 05 | June 2014
Payments 3.0
a new way of
thinking
Laura Cioli, CartaSi
customers want
convenience
omni-channel
From payments to
value creation
Editorial
Payments 3.0: shaping the future
In this issue of EQ Magazine, we would like to take you on a
journey through time. What does the future hold for payments?
What means of payment will we use to pay for our shopping
in 2020? And what does this mean for your and our role in the
payments industry? In short, what will Payments 3.0 have to offer?
One thing we know for sure is that the future calls for new ideas,
a good deal of nerve, and letting go. This is the only way we can
establish new points of departure and develop a new view of
payments.
For Equens, Payments 3.0 means looking beyond the traditional
role of a transaction processor. We will, of course, continue to
process transactions in a secure and reliable way, but we want
to take a broader view. In addition to future developments and
the changing needs of banks, we are considering the needs of
consumers and retailers. Payments 3.0 calls for empathy: thinking
along with the client about matters such as convenience and ease
of payment.
Contents
4 Payments 3.0: making the transition
7 Innovative smart payment platform
Equens SE
Marketing & Communications
[email protected]
11 One stop shop for retailers
A perfect example of payments 3.0
12 Will SEPA be the driver of innovation?
11
16 Innovations are only succesful when
customers benefit
25
19 From payments to value creation
22 E-ID: New opportunities for all
The Netherlands opts for a multi-device strategy
26 Is there a future for SDD B2B?
– Mandate management
4
19
23
EQ Management
Equens SE
Esmée Burger
Marita van Doorn
Stephanie van Gageldonk
Annemieke Lambregts
Editors
SPJ Financiële Communicatie
Siebrand van der Ploeg
Yvette Sprado Communicatie
Translation
TechText bv
28 Why Banks should embrace an open
future
30 How will we do our shopping in 2020?
What should businesses do to keep up with developments
in e- and m-commerce between now and 2020.
colophon
© Equens 2014. All rights
reserved. Neither this publication nor any part of it may be
reproduced, stored in a retrieval
system, or transmitted in any
form by any means, electronic,
mechanical, photocopying,
recording or otherwise, without
prior permission of Equens.
2 17
8 Who is the winner? Fifty years of plastic
EQ Magazine takes us on a journey to the new markets of
e-commerce and m-commerce. Along the way, we visit Sweden,
whose real-time payment system is a good example of how
to meet the needs of consumers and retailers. Additionally,
we explore related fields and show you how the payments
industry can make a valuable contribution to the development of
e-identity. Our aim is to think out of the box and explore a world in
which banks will use an open system whose account information
is also available to other parties.
In this issue of EQ Magazine, we abandon all entrenched ideas. We
hope to inspire you to view the world from an open perspective,
so that you too can help shape the future of payments.
33
34
Challenges are ahead in the payments industry. This
industry needs to change dramatically.
Concept and design
Caplan
Fridie van Loon
Myrthe Bergboer
Photography
Jurriaan Huting
Janita Sassen
Illustrations
Myrthe Bergboer
iStockphoto
Cover photo
Laura Cioli - Cartasi
“The secret to sustained success as a service
provider is to understand both the manifest
and the hidden needs of the new world.”
32 One million users and still counting –
real-time payments in Sweden
34 Key figures Equens
3
by Michael Steinbach, CEO of Equens SE
Payments 3.0:
Making the transition
The fast growth of e- and m-commerce is causing a fundamental change in the
payments industry. Because the end-user is now the primary focus, payment
transactions in themselves are becoming a ‘secondary priority’. Convenience
and ease-of-use are the ultimate goal. This has led to a change in the traditional
business model for the payments industry, where it is predominantly banks
who offer payment services to consumers and merchants, and where there is a
direct, one-on-one, ‘bank2client’ relationship. Disintermediation lies in ambush.
To meet this challenge, the traditional payments industry needs to change
fundamentally. This implies that leading traditional service providers like Equens
need to start thinking differently about innovation in order to turn threats into
opportunities.
“PSPs have been breaking up the
traditional banking relationships”
For the time being, the situation in the B2B segment –
the wholesale business – is looking fairly stable. Here,
the one-on-one relationships between corporate clients
and banks remain strong. Naturally, however, there is
increasing competition between banks, who are striving
to enhance their liquidity and cash management service
offerings. Although SEPA is a key factor in this increased
competition between banks in the wholesale business,
to date it has not led to any fundamental innovations
or widespread reconsideration of the number of
banking relationships. Corporates have so far focused
predominantly on compliance, but changes can be
expected in the near future. Meanwhile, the ongoing
standardisation will lead to further centralisation of
financial activities and a reduction in the number of
banking relationships.
Shopping via any channel
The main challenge lies in the B2C segment, the
retail business. Here, use of mobile devices integrating
shopping, loyalty, supply chains and payment functionality
is clearly on the rise. Shopping can be done 24/7, via
any channel. Thus far, the traditional service providers,
namely the banks, have played a relatively modest role
in e- and m-payments, thereby exposing themselves
to the risk of disintermediation. Meanwhile, payment
service providers (PSPs) like Adyen, Amazon Payments,
eBay’s PayPal, Ingenico’s Ogone and Deutsche Telekom’s
ClickandBuy have shot up like mushrooms and are
expanding their client base rapidly. In doing so, they
5
Michael Steinbach
have been breaking up the traditional direct banking
relationships and offering their services directly to the
banks’ clients: consumers and merchants. Unburdened
by extensive legacy, new players in this virtual world
can afford to apply completely new ways of thinking
to innovations. This trend is reinforced by regulatory
developments like the upcoming legal requirement for
’access to account’, under which banks will have to deliver
specific client information to third parties such as PSPs,
making the service offering of PSPs even more attractive.
Sensitivity of security issues
“Consumers expect their payments to be
processed both securely and reliably”
PSPs are well aware of the fact that payments in themselves
have become a ‘second priority’, and that offering value is
now imperative. In terms of where to shop and make their
purchases, virtual consumers don’t look for a particular
payment scheme; they pick the shop, web portal or
website which is the most convenient and easy to use.
The payment itself is made at the end of the process, and
consumers expect their payments to be processed both
securely and reliably – at no extra cost! Accordingly, this
needs to be a standard part of the service offering. The
sensitivity of the security issue always emerges in the event
of attempted fraud, when it immediately becomes a major
news, publically known within seconds via social media.
This is a strong point of departure for the traditional
service providers – banks and payment processors alike –
who securely and reliably process billions of transactions.
After all, notwithstanding the various criticisms, banks are
widely considered to be the most reliable parties when it
comes to money.
3.0 way of thinking
The secret to sustained success as a service provider –
which is what a bank is, after all – is to understand both
the manifest and the hidden needs of the new world.
Demand for convenience and ease-of-use, and the need
for a secure and reliable environment, have changed
how banks and Equens do their business, making the
transition from the traditional to the new, virtual world.
At Equens, we want to continue to fulfil our supportive
role in the payments value chain, and thereby maintain
our professional way of working. We also want to broaden
our scope to meet the demands of the virtual world and,
in addition to the more general side of our processing
activities, investigate areas not directly or solely related to
payments. For instance, we are already actively involved
in non-payment activities like e-identity. In our role as
a processor and integrator, we are open to new ideas and
ready to collaborate on initiatives. Accordingly, our new
Payments 3.0 way of thinking covers both the payments
and the non-payments value chain. At the same time, as
an established card and payment processor, we are still
part of the traditional trusted, well-regulated financial
infrastructure.
6 ICBPI launches
Innovative Smart Payment platform
In the midst of the grace period between the official SEPA end date of 1 February and the ‘real’
end date of 1 August, the migration of SEPA Credit Transfers in Italy is 95% complete, while SEPA
Direct Debits are at around 55%. “Nevertheless, it has been commonly agreed in the Italian
banking community that the migration of SDDs will also be completed by the end of May”,
asserts Domenico Santececca, Vice Chief Executive Officer of ICBPI. To support this view, and
in line with its innovation strategy, ICBPI has implemented the Smart Payment initiative, a new
SEPA (SCT and SDD) payment platform.
In early May, the situation in Italy
was not very different from the rest
of Europe, although it was slightly
ahead with SCTs and lagging behind
with SDDs. At the European level, the
migration of SCTs was 92% complete,
whereas SDDs were at approximately
72%. However, ICBPI is pulling out
all the stops to ensure a switch from
domestic formats to SEPA formats and,
in doing so, ensure Italian compliance
by 1 August. We asked Domenico
Santececca about the progress being
made.
Where does ICBPI stand three
months after the official end date,
and what innovative services are
you offering?
ICBPI already defined its SEPA
strategies in 2012, and we have
been focusing on our organisation
and operations in order to limit the
impact of the migration and ensure
a high value proposition. We are
doing this in four ways: firstly, by
comprehensively managing clearing
and settlement components; secondly,
by offering greater convenience than
our competitors; thirdly, by offering
lower rates, as we have maintained
our existing pricing despite offering a
considerably enriched product package;
and last but not least, we have added
innovative features by implementing
the Smart Payment initiative, a new
SEPA (SCT and SDD) payment
platform. With this platform, we are
able to offer our clients full SEPA
reachability and innovative features
for value-added services and lower
migration costs.
Could you explain a little more
about these specific features?
Sure. Our new Smart Payment platform
offers several connectivity, settlement
and VAS features that will make our
clients’ lives easier. Firstly, it offers the
connectivity service for client banks
participating directly in the CSM, like
ACH ICBPI/ICCREA and EBA, for
example. The second feature is the
connectivity and settlement service for
client banks participating indirectly in
the CSM. Thirdly, it offers value-added
services, such as Tracking, Treasury
Positioning, File Resubmission and
Reconciliation Reports.
What role did Equens play in
implementing the Smart Payment
platform?
Taking into consideration its strategic
role as Europe’s largest payment
processor, Equens played a key role in
the aforementioned projects. SEPA also
helped strengthen the partnership with
ICBPI that was initiated in 2008 with
the aim of creating synergies between
two operators with a high level of
expertise in domestic and international
payment services and systems.
The ICBPI Smart Payment platform
Intermediation service
ICBPI Access system
Gateway
Direct Bank
For the Banks participating directly in the
ACH that exclusively use the ICBPI technical
infrastructure to securely send and receive
SEPA messages to/from the CSM and the
tracing and resending of the files if the
latter are not received from the CSM or the
Client Banks.
Direct Bank with ICBPI access system
For the Banks participating directly in the
CSM that, in addition to using the ICBPI
technical infrastructure to send/receive
SEPA messages, make use of services
to completely process SEPA messages
in terms of normalisation, diagnostics,
reachability checks, message tracing and
transaction warehousing.
Indirect Bank of ICBPI
For the Banks recognised by the CSM as
Indirect Banks of ICBPI that, in addition
to using the services already provided by
the Direct Bank service, also make use
of the ICBPI for the daily settlement of
transactions.
7
From idea to plastic card (1887 - 1961)
1887
1920
1946
1950
Author Edward Bellamy
uses the term ‘credit
card’ in his book
‘Looking Backward’
(1887).
Several initiatives in
the United States;
local petrol stations
start using cards that
could be considered a
precursor to the credit
card.
John Biggins, a
Brooklyn banker,
introduces the first
bank credit card under
the name Charg-It.
Diners Club introduces
a card accepted by
several retail outlets
and companies, the
so-called closed loop
system.
Fifty years of plastic
Who is the winner?
In 1961, Diners Club introduced the first plastic
credit card. This signalled a revolution in the
world of payments. In the United States, credit
cards were – and have remained – an enormous
success. Although initially hesitant, Europe
eventually embraced the card as well. The
introduction of the debit card meant serious
competition for the credit card. Fifty years of
plastic. Who is the winner? We asked Andy
Makkinje, Executive Adviser to the Board of
Equens.
Credit card prototype up for auction at
Sotheby’s
In December 2012, Sotheby’s put a unique piece of
financial history up for auction: a well-used cardboard
1958
American Express
introduces a card that is
accepted worldwide.
credit card. This item had been the prototype of
the magnetic strip credit card, and had been in
the possession of Jerome Svigals, head of the IBM
research teams that created the card, for fifty years.
1960
1961
8 IBM is the first to
experiment with a
credit card with a
magnetic strip.
Diners Club introduces
the first plastic credit
card.
Lower processing costs and less risk have always been the
main drivers for innovation in payments. Giro collection
forms, authorisations and standing orders were the first
secure and efficient alternatives to cash payments. Pointof-sale payments also changed, first in the sixties, with
credit cards, and later with the introduction of the debit
card.
Credit card glamour
In 1961, the first plastic credit card was introduced in the
market. Initially, it was mostly something for the rich and
famous – a glamour product out of reach for most people.
This changed in the seventies, when ‘ordinary people’
also began carrying credit cards, if only for use during
holidays. However, the number of credit card transactions
in Europe remained limited. What’s more, now that debit
cards offer an increasing range of options – such as paying
online, which was the major advantage of a credit card
– they have also become a means of payment for more
exclusive purchases. Makkinje: “Credit cards are used very
differently in Europe and the United States. In America,
credit cards are an important means of borrowing
money. This is not the case in Europe, although credit
card usage does differ between European countries. For
instance, in Italy credit cards are used more than in the
Netherlands and Germany. Now that European legislation
stipulates that banks may charge only 0.3% for a credit
card payment, instead of the previous 1%, the product
is becoming less attractive for banks in Europe. The
expectation is that they will increasingly focus on further
developing debit cards. There is still a market for credit
card payments, especially for people who travel a lot. But
in general, credit card usage is decreasing.”
The down-to-earth debit card
The debit card has less of a history. It was introduced after
the credit card, the first pilot programme being initiated
by the Bank of Delaware in the United States in 1966.
At that time, we were already familiar with plastic cards,
so that was nothing new. However, consumers initially
did not embrace debit cards, especially where point-ofsale payments were concerned. In the Netherlands, it
was not until one of the large supermarket chains and
a fuel company began offering debit card payments at
their points of sale that consumers truly adopted them.
So the advent of debit cards was not exactly a revolution.
In the meantime, however, a silent revolution was taking
9
place behind the scenes, because as soon as consumers
started paying by debit card en masse, things started
happening fast. According to Andy Makkinje, debit cards
are the future: “Credit cards were always something of
a niche product in the payments market. In Europe, the
debit card has very much taken the lead. Europeans are
practical people: they want to know exactly how much
money they have on their account at all times. We are not
used to managing credit accounts. I don’t see the debit
card disappearing in the next few decennia – instead,
I think there will be many more new possibilities.
Contactless payments are becoming increasingly popular,
and integration with mobile telephones is just around
the corner. Also, functionality for refunding money,
called Refund +, has recently been introduced in the
Netherlands. In 2020, I think the use of credit cards
will keep declining, whereas the use of debit cards will
increase. In Europe, the debit card is the winner – and it
always has been.”
Fighting the black economy
Industries where undeclared funds were
common were not very pleased with the
advent of the debit card. But when consumers
became accustomed to being able to pay for
almost everything with their debit cards, these
industries had to move with the times. In this
way, the debit card has played an important role
in fighting the black economy.
One-stop shop for retailers
Karl Marx looks down on MasterCard
In the city of Chemnitz, located in the former East
Germany, customers of one bank could choose an
image to be printed on the credit card. Even in 2012,
a large portion of the city’s population chose an
image of Karl Marx. His photo is positioned in such a
way that he appears to be looking at the MasterCard
logo. Chemnitz has the reputation of being a socialist
city, whose center boasts a seven-metre-high bust
of Marx.
A perfect example of payments 3.0
Retailers are operating in multiple channels: in the domestic
and foreign markets, e-commerce and m-commerce, debit and
credit. What they need is a one-stop shop where all payment
flows meet. What they need is Payments 3.0. Huib Klarenbeek,
Managing Director of PaySquare SE, shares his view of the
changing payments market that is the point of departure for
retailers.
White-label acquiring for
bank
An approach focused on
integration is also beneficial
for banks. Thanks to the
integration of montrada,
PaySquare is able to offer
banks white-label acquiring
Still thinking in terms of systems
PaySquare sees opportunities,
but thinks it is important to focus
on the differences. The keyword
should be integration rather than
standardisation. This is a fresh
approach in a market that thinks
standardisation is the solution for
everything. Huib thinks it is a logical
step in client orientation. The focus
should not be on the system, but on
the client’s needs. Huib Klarenbeek:
payment flows from the various sales
channels into a single summary. This
is what client orientation is about.”
for a broader range of cards.
Retailers want to manage
payment flows
highly extensive range of
Consumers want to be able to shop
24/7, in shops and online, using any
available means of payment. Whilst
consumers notice little difference,
the differences for retailers are
considerable. Huib Klarenbeek:
The merger with montrada
has broadened an already
credit card licences.
“We need to think from the perspective of the
client. Consumers want a simplification of the
current multitude of means of payment.”
“We are still accustomed to thinking
in terms of the products and services
of the payments industry, for example
the difference between payments
and cards. I believe that, from the
perspective of the user – the consumer
– these differences will ultimately
disappear. We need to think from
the perspective of the client, which
is not going to be easy. Consumers
want a simplification of the current
multitude of means of payment.
Retailers want a system that merges
10 “For each flow, retailers have to
manage a separate channel, which
is complicated. We think it is
important for retailers to be able to
control all of these channels, from
both a distribution and payments
perspective. Reconciliation will
bring the two together. Ideally, all
flows should be merged by Equens.
That is the situation we are aiming
for, but we have not yet achieved it.
We should keep this in mind while
we are developing our e-commerce
and m-commerce service offering. For
businesses operating in more than one
country, the situation is even more
complex. The differences between
countries are considerable. We need
to be aware that each country has its
own payment systems, its own payment
preferences, and its own processing
methods. We cannot simply impose a
standard. This is another reason why
integration of payment flows is the most
client-oriented solution.”
11
Will SEPA be the driver for
innovation?
As an expert payment processing partner, Equens is committed to
understanding the market and the needs of our clients and their customers.
This led to our initiative to investigate the needs and expectations of the
corporate customers of our bank clients. To ensure objectivity and benefit from
external expertise, Equens teamed up with Ernst & Young (EY). Equens and EY
collected input from European corporates in order to discuss their challenges,
expectations and experiences in connection with the SEPA migration. The
objective was to gain an understanding of their future needs and expectations,
and share this information with the outside world. The research was
performed by means of an online survey, followed by qualitative interviews
with several European corporates. This article presents the preliminary findings
from the survey and interviews.
■■ Standardised reconciliation information
Businesses require standardised messages in which invoicing data can be
integrated for the purpose of automated reconciliation. The SEPA XML
standard was introduced for this purpose, but the differences between the
domestic versions of XML are stalling development.
■■ (E-)mandate management
Both corporates and governments require an effective mandate management
system in order to be able to process SDDs as efficiently as possible, preferably
STP (straight-through processing). This requires mandate information to enter
the payment chain at the earliest possible stage. For example, mandates could
be made available to all stakeholders electronically on a central hosting system.
■■ E-invoicing
Better use of SEPA standards may give e-invoicing a boost. The differences
between the many, usually small, providers in the various countries is slowing
down e-invoicing initiatives.
■■ Real-time payments
For instant services such as the topping up of prepaid mobile contracts,
corporate real-time payments will lead to better service and lower costs.
Depending on requirements, several implementation options are possible, such
as notification only, payment guarantees by means of clearing, or immediate
liquidity availability through settlement.
What has been achieved so far
As the SEPA deadline is approaching, it is time to assess where we stand and
what has been achieved so far. The promises of SEPA to corporates were
clear: to increase competition between banks, leading to lower costs and
higher efficiency; to simplify administrative processes and systems; and to pay
throughout Europe with less banks and bank accounts. Unfortunately, these
promises have not yet been fulfilled. To most companies, the implementation
of SEPA may have appeared primarily compliance-driven. Only a few large
international enterprises considered it a step in the right direction, towards
centralised and standardised processes – a transition they had already started
making. They, too, have yet to fully benefit from the advantages of SEPA.
Improving the payments channel
If the promises of SEPA towards corporates are to be fulfilled, a number of
improvements will have to be made. The point of departure for this is better
standardisation or, where this is lacking, the integration of the different
interpretations of the SEPA standard that currently coexist. Then, through
the introduction of a number of additional services, SEPA’s promises can
gradually become reality. The fact that SEPA has failed at this point may
be the biggest single hindrance to innovative breakthroughs. Furthermore,
businesses require innovation because it is a prerequisite for the development
of new, widely available services. Several integrators now specialise in bridging
the gap between the different standards. In doing so, they are facilitating the
development of comprehensive solutions for corporates and their clients. A few
obvious solutions are listed below:
12 Pay throughout Europe with less banks and bank accounts
When will SEPA
promises for
corporates be
fulfilled?
Simplified administrative processes and systems
■ not fulfilled
■ fulfilled
What does it take
to fulfill or even
exceed them?
Competition leads to lower costs and higher efficiency
2014
2016
2018
1. Comply
2. Improve
3. Benefit
Project control
No consolidation
of accounts
■Limited
standardization
■SDD brings new
challenges
■No innovations
■
■
Standard
reconciliation
■E-mandates
■Multi stakeholder
mandate
management
■E-invoicing
■Real time payments
■
Payment supports
corporate’s
proposition /
customer profile
■Risk management
/Supply chain
financing
■Omni-payments
■Bank as trusted
partner
■
13
■■ Omni-channel
Merchants are faced with the challenge of keeping payments both manageable
and user-friendly, in physical as well as virtual shops that are open 24/7, where
customers will want to order, collect, return and pay for items in all kinds
of ways. An omni-channel solution, or single transparent payment channel,
provides merchants with a clear overview and efficient administrative options.
In addition, 24/7 service provision – also for payments – is guaranteed.
Benefits: finance meets business
Once SEPA’s promises have been fulfilled and new, widely available services
have been introduced, we can all start to truly benefit.
■■ B2C: Enhancing the retail customer’s experience
There are many opportunities to create value in the payment chain with
marketing support. Some large retailers have been using payment data to
enhance their relationship with their customers for some time. In this case,
however, it’s all about the relationship between individual merchants and their
customers. Until now, privacy concerns have been the main impediment to
such use of payment data from multiple sources. The revised Payment Services
Directive (PSD2) contains proposals for enabling access to payment accounts.
Together with the right privacy legislation, this could clear the way for the
development of apps that facilitate direct communication between merchants
and consumers. (See also the article ‘From payments to value creation’
elsewhere in this edition of EQ Magazine).
■■ B2B: Risk management and supply chain financing
In the B2B market, more efficient use of payment data can improve the
relationship between businesses and between businesses and their banks.
Currently, a bank only becomes aware of payment transaction when the
originator submits it for processing. If parties were to agree to share their
payment data at an earlier stage, this would create possibilities for improved
risk management and supply chain financing/working capital financing.
Who will provide true added value?
With such innovations, payments will become more than merely a commodity
whose price needs to be as low as possible. The current stage will determine
who will ultimately be able to offer true added value: the integrators (PSPs,
service agencies) or the established financial parties (banking service providers
and their shared services partners, such as payment processors). More details
and arguments to support these visions of the future will be provided in a soonto-be-published whitepaper by Equens and EY. This paper will also contain
the results of a series of interviews with European corporates.
14 15
Laura Cioli, Chief Executive Officer at CartaSi:
‘Innovations are only
successful when customers
benefit’
“I think that developing services that are technologically
at the forefront is important, but it is absolutely
necessary that these services offer customers real
benefits”, says Laura Cioli, Chief Executive Officer at
CartaSi, summarising CartaSi’s innovation philosophy.
“In relation to electronic payments, these benefits are
convenience and the availability of tools that support
the interaction between the consumer and the
merchant and/or bank. Secure transactions are just a
sine qua non.”
Innovation philosophy?
“Mobile payments are no longer an
experiment, but a widespread reality”
When we talk about the future, we never have complete
certainty. At CartaSi, we therefore have to be open and
willing to experiment in areas where our stakeholders
expect us to. At the moment, it is important for us to
operate in the channels that are most popular with
our customers, and where technology offers new
opportunities. In this sense, innovations linked to mobile
phones are particularly relevant for us. In Italy, more
than 20 million of the approximately 50 million mobile
phones are smartphones. Applying technology to such
a widespread device makes it possible to make new
payment methods available to a large number of people,
and offer them tools that facilitate transactions that change
shopping experiences. Mobile payments are no longer an
experiment, but a widespread reality.
Promising areas for innovation?
Mobile phones and the web are the two channels that
people expect innovative solutions from. When it comes
to payments, the web offers many opportunities for new
services. I am not only talking about e-commerce or
smart commerce, which are definitely interesting areas
where we see opportunities for ourselves. At CartaSi,
we are also keen on developing web-based services our
cardholders and merchants can benefit from, because
17
Laura Cioli
these new services enhance convenience in daily life.
Take consulting your card account, tracking your recent
transactions, setting up your bank statements online, and
recharging your mobile, for example – all services that
make life easier and are changing consumer habits.
Products and services?
We are investing in payments via smartphones. In this
area, we have already developed several services with
leading telecommunications companies; others will be
introduced in the future. We are also focusing on the web
channel, which has already enabled us to offer the services
listed above. In the next few months, we will make
considerable investments with the aim of offering webbased payment solutions. Another product we believe in
is the mobile POS: this is a device that, thanks to wireless
connectivity, can be connected to a smartphone, and thus
becomes a true and proper POS, capable of accepting
payments. This is a useful service for the self-employed,
and for people who manage small ‘mobile’ enterprises,
like doctors, craftsmen and street vendors. We are also
investing in contactless solutions, because we believe they
are a convenient and secure alternative for cash. For us, the
social networks are indispensable in keeping us close to
our customers.
How to ‘live’ innovation?
CartaSi is part of the Gruppo ICBPI,
and the Italian market leader in card
services. Annually, the company
processes more than 2 billion card
transactions. It has 13 million credit
cards (plus prepaid cards) and 29
million debit cards in circulation, and
is connected to 600,000 merchants.
In addition, CartaSi supports its client
banks with products and services
that enable them to do business via
innovative channels like e-commerce,
NFC, and mobile and contactless
payments.
18 Innovation isn’t really possible if you are not willing
to employ a new approach in your organisation. That’s
why we ‘live’ innovation in a positive way on a daily
basis, above all positioning ourselves as true and proper
partners of our customers. Innovation also means change.
It is therefore imperative that we re-examine choices we
made in the past. Naturally, we also need to experiment
with the most promising development, with an attitude
of wanting to learn from our mistakes. We also try to
distinguish ourselves from our competitors in the way we
communicate with our stakeholders. The goal we have
set for ourselves is to – through innovation – position
ourselves as a system brand, as the Italian payments
specialist and the leading player in making Italy a ‘smart
country’. We now also have an additional tool to help
us achieve this goal: social media. CartaSi only recently
established itself on Facebook, LinkedIn and Twitter. This
allows us to expand our ability to communicate with card
holders, tradespeople, banks and the business community,
and utilise the assets that make us stand out from the
crowd.
Developing an omni-channel proposition
From payments to value creation
Retailers nowadays have to manage a complex ecosystem.
Customers buy in their shop, or online, or via the call center.
They collect their goods themselves, or have them delivered at
home. After that, they might want to return an item to the shop
and do some more shopping there. Because of the multiple
touchpoints involved, gathering the necessary information to
create a proper overview of the customers, their behaviour
and preferences is no easy task. Many years ago, a shopkeeper
would actually know all of their customers, but in today’s mass
economy of self-service supermarkets and online stores this
is impossible. Technology for connecting the data from the
physical and the virtual world can be helpful, but it remains a
difficult task with which retailers could use some help. For this
reason, Equens is developing an omni-channel solution that
provides added value to retailers, enabling them to extend their
offering to cater to a wider range of consumers, enhance the
customer experience and, in doing so, grow their business.
“We’re not only thinking about
payments, but also about data and
value”, says Mike Jones, financial
innovations expert and adviser to
Equens’ Board of Directors. “What
we are about to start delivering to
retailers will help them to interact
differently with their customers
and assist them in managing their
business. The retail sector is very
much aware of the fact that consumers
are at the heart of the ecosystem,
and many payment service providers
(PSPs) with a major digital presence
are now assessing how to wrap the
consumer experience around this.
They are changing the way payments
are used and very close to becoming
the primary innovative force in this
domain. It’s therefore only logical that
Equens should want to position itself
among them.”
Draw customers back to the store
“We want to come up with a solution
that works in the virtual world,
but also very much in the physical
world”, adds Tom Nijenhuis, Head of
Strategy & Corporate Development at
Equens. “Something that hasn’t been
created before. In the virtual domain,
we have seen PSPs very successfully
claim a role for themselves in
e- and m-commerce. This is creating
demand for omni-channel solutions.
PSPs are utilising their strong virtual
position to achieve this, but are
facing competition from parties that
are physically strongly positioned.
Equens already has a strong position
in the physical world, but we now
need to make the omni-channel step.
Obviously, a retailer needs to be able
to make payments securely, but we
are also able to provide them with
other functionalities that will help
19
them draw their customers back to
their store. We want to strengthen our
innovative capabilities by partnering
with people who are already
successfully deploying the technology
that is used in the virtual world. We
won’t be a first mover, but a close
follower, leveraging on other peoples
experiences and mistakes.”
“We’re not only thinking about payments, but
also about data and value”
Sensitive about the use of data
“Our solution will help retailers
to develop a better understanding
of their customers, but without
frightening their customers with a
big-brother phantom”, stresses Jones.
“Being a European company and
knowing how sensitive our home
markets are about the use of data,
we understand that this is a very fine
line. Our proposition will drive value
as a capability that we extend to the
retail sector. We can add value as a
processor and a payments company, in
the name of the bank or on our own.”
Enhancing customer experience
“Compared to large retailers
with their legacy, it’s interesting
to see that smaller retailers and
other shopkeepers are in a more
advantageous position because
adopting smartphone or tablet-based
technology is much easier for them”,
Jones observes. “Let me give an
example: ‘Click ‘n collect’. It’s four
o’clock on a Saturday afternoon,
and you have planned to go to a
football match. Suddenly, the weather
forecast worsens and you have no
raincoat. But there is a shop where
you know you can find one. Via your
smartphone, you look up whether
the product is available in your size.
It is! You then place the order, make
the payment, get the confirmation,
confirm the collection time and send
your photo with it. At the store, the
raincoat is picked and packed, your
photo and name are linked with the
order and shown to the staff. Ten
minutes before closing time, you
run in and are greeted: ‘Hello, Mike.
Here’s your jacket!’ You enjoy a rich
user experience, thanks to integrated
channels and good stock control,
which even a small retailer can
deliver. Another example: a restaurant
has built the capability for its guests
to make a reservation online. You
can send information concerning
how many people you will be
coming with, at what time, and
where you would like to sit. Again,
it enables you to send your photo
with the reservation. In addition,
the restaurateur has stored some
information from your previous visits,
and knows you have a nut allergy.
They also know that you haven’t been
in for some time, so they wonder
whether you were satisfied. Whatever
the situation, they have every reason
to give you a special experience this
time!”
Changing paradigm
Jones: “These are just two examples
of the changing paradigm of
interaction between retailers and
customers, adding value on both
sides. Also, nobody feels that data is
being abused. On the one hand, this
data has nothing to do with payments,
but on the other, it has everything to
do with payments, because payments
are at the core of all this. Nobody
wants to pay for payments, but every
retailer has budgets for maintaining
customer relationships and
marketing.” Nijenhuis: “If you take
this story to a CFO, he will realise
this is going to improve his bottom
line. So our proposition is a real value
proposition!”
20 Tom Nijenhuis & Mike Jones
The Netherlands opts for a multi-device strategy
eID: new opportunities for all
The Dutch government intends to replace the current digital login
system, DigiD, with a new system: eID. This comes as a result of
DigiD’s failure to meet the government’s high security requirements.
Additionally, the government has a preference for a multi-device
strategy, whereby citizens can log in to government websites using a
variety of devices, such as their mobile phone, debit card or a special
login card. This way, logging in to a government website is just as easy
as logging in to a web shop or, for instance, the website of an insurer or
sports club. Equens sees opportunities in this area, both at the domestic
and European level, not only for consumers, but also for suppliers of
online services and the government itself, because this subject, which
is currently in the headlines in the Netherlands, is also an issue in other
European countries.
Continued digitisation of government services
“Nobody wants yet another ID card in
their wallet”
Ronald Plasterk, Minister of the Interior and Kingdom
Relations of the Netherlands, announced last year that the
cabinet intends to have an operational electronic identity
system by 2015, and that national government bodies will
be fully digital by 2017. The minister advocates digital
government services for matters such as applications
for permits, citizen involvement, and communication
concerning tax, benefits and allowances. Handling
these matters digitally will create annual savings of
between 300 and 350 million euros. Whilst this is a lot
of money, successful implementation is dependent on the
safeguarding of citizens’ security and privacy. With this
multi-device strategy, the government intends to make its
websites more user-friendly for consumers.
Citizens demand privacy and security
The government has expressed its wish to allow all citizens
of the Netherlands to use a means of authentication of
their choice to log in to government websites, websites
of insurers and sports clubs, and web shops and social
media. Some websites, such as Facebook, offer the option
of logging in using other devices. However, this method
has proved unpopular among consumers (only 1.6% are
in favour), with 60 percent wanting to be able to reuse
existing login methods to log in to third-party websites.
For instance, these consumers would like to be able to
23
Inge de Ruijter
What do consumers want?
Consumers want a new means
of logging in. Research shows
that 40% want to log in via an
independent agency, while
60% would prefer existing login
methods to be reused. It is clear
that consumers are often careless
when using their login details.
use their debit card to log in to the website of the Tax and
Customs Administration or an insurer, or a web shop.
It is important to consumers that they retain control
over their personal details, and are able to decide what
information is made available to the other party. Issues
that have emerged recently concerning the privacy of
citizens have highlighted the importance of this matter.
Naturally, personal details need to be properly protected
in order to minimise the risk of identity theft. How can
the online party be certain that you are the person you
claim to be? Marlies van Elst, General Manager of Market
Management at Equens: “A lot is happening in Europe
in this respect. European regulations are forcing us to
switch to Stork 3, a security level that requires a face-toface ID check when an identification document is issued.
Banks, but also notaries and lawyers, are already using this
process. Thanks to Stork 3, the authentication of a person’s
identity will be more thorough.”
Not only for government agencies
eID serves a number of different interests: the
government’s need for a secure means of authentication for
citizens; the consumers’ need for a solution for the everincreasing number of usernames and passwords, as well
as the reuse of existing login methods; and the demand
from organisations such as web shops, travel agencies
and insurers for an easy and reliable login method.
Online identification is currently the responsibility of all
organisations that offer online services. For some time,
web shops have been looking for a univocal method of
identification for consumers. They want logging in to be
as easy as possible in order to facilitate easy shopping and
payment. This enhanced convenience will lead to more
online transactions. In this way, eID lowers the threshold
for consumers, while the risk is reduced considerably for
web shops. Van Elst: “Choosing devices that can be used
by the government, as well as by businesses, will increase
ease of use. Shopping 2020, the action programme in the
Netherlands which is based on a vision of the future of
online shopping, shows that there is high demand among
consumers and suppliers for greater ease of use with online
payments.”
eID in other European countries
Belgium and Germany introduced an e-identity card.
According to Inge de Ruijter, Product Manager at
Equens’ Business Center Cards, the adoption rate has been
low: “It was yet another card in your wallet that cannot be
used for any other purpose.” In Scandinavian countries,
a bankID is used for electronic identification, and has
proved highly popular. “The bankID is issued after the
holder of the debit card has identified themself by means of
a passport or a driving licence”, de Ruijter explains. “This
ensures that the bankID is issued to the right person,
making it an ideal device for use in an eID system. I don’t
see any reason why this model could not be implemented
in the Netherlands.”
Collaboration for commercial opportunities
The ambitions of the government to handle more matters
digitally calls for a platform that supports this. In the
Netherlands, initial steps have already been taken. De
Ruijter: “An eID system platform has been initiated.
Private parties such as the Chamber of Commerce and
the Dutch Association of Insurers, as well as public parties
such as ministries, are involved, as is Equens. Cooperation
is essential in order to create broad support for the
provisioning of digital services and ensure a successful
roll-out and acceptance of eID.” Collaboration on an eID
system has already been approved by the signing of a letter
of intent.
Equens believes there are opportunities for banks and
other parties that issue means of identification, as well
as for the Equens organisation as a broker. Van Elst:
“We have extensive experience as an intermediary for
message flows. To us, it makes no difference whether a
message is a payment or something else.” Inge de Ruijter
adds: “As a payment processor, we are familiar with the
required verification methods, we have the necessary
relationships in place with retailers and banks, and we
are used to thinking and acting on the basis of rules and
“Cooperation is essential in order to
create broad support. The solution can be
realised fairly easily and quickly.”
regulations. Delivering Stork level 3 authentication is no
problem for us. Equens therefore believes it can assist the
market with the introduction of eID, both in and outside
of the Netherlands. Equens has a large market share in
Europe, and eID needs a player with sufficient scale to
facilitate successful implementation of a standard. We are
used to working within a framework of agreements, and
have many years of experience in authenticating large
transaction volumes, for cards as well as online payments.
Equens is therefore a viable party for marketing eID.”
Storage of passwords
and login names
I memorise all of my login
details and passwords.
52%
I write them down
somewhere.
The internet browser I use
stores these details for me.
I use a separate password
program on my computer.
I keep an unsecured list on
my computer.
Other, namely:
31%
11%
9%
6%
5%
© GFK 2013 | Hoe shopt de consument in 2020
| 25 november 2013
Marlies van Elst
24 25
Mandate Management
Is there a future for SDD
B2B?
Businesses are struggling with the transition to SEPA Direct Debit (SDD),
especially in the B2B market. For corporates , choosing the B2B scheme
seems to be the best option. However, whilst suppliers are enthusiastic,
the clients are reluctant. Or should they choose the Core scheme,
which is easier to migrate to, easier to manage but comes with the
uncertainties of a longer revocation term? And what about mandate
management?
“Given the varying paces at which
SEPA is implemented throughout Europe,
local solutions would seem the
most obvious way to go. But the ultimate
goal, complete harmonisation,
should not be forgotten.”
“The B2B scheme is an excellent
product for businesses, because it
offers certain risk mitigators,” says
Paul Geerts, Associate Director of
Financial Services at KPMG Advisory
in Amsterdam. “However, local
companies are reluctant to use it
because of the complex and lengthy
implementation, and because debtors
are uncomfortable with the idea of
giving out blank cheques without the
option of revoking them. European
businesses are also reluctant to use
it, as in spite of the international
standard, there are simply too many
differences between the various
countries.”
Impending marginalisation of SDD
B2B
Geerts: “In some countries, business
direct debits were widely used,
but this is decreasing rapidly. SDD
B2B runs the risk of becoming
a marginalised product because
businesses are switching to SDD Core
en masse. But with the revocation
term of 56 days, the businesses will be
running new risks. Of course, they
are free to use SDD Core; however,
we would advise businesses to assess
which clients are high-risk, and
demand that they use SDD B2B in
order to effectively manage the debtor
risks.”
Mandate information as part of
core data
Most debtors have arranged their
SDD mandate management
themselves, despite the fact that
there are several service providers
that offer high-quality solutions.
Geerts: “The majority of businesses
feel that mandate information is
part of their core data.” This might
change in the future with the
introduction of e-mandates. Geerts
does see considerable demand for
an e-mandate solution that would
facilitate easy online mandate
checks and routing of the mandate
forms: “In this digital era, it seems
odd that we are still legally required
to use ‘wet’ signatures. That feels
like a step backwards, especially
with SDD B2B where most debtor
banks require a paper version of the
mandate.”
Widely supported solution
European solution. Given the varying
paces at which SEPA is implemented
throughout Europe, local solutions
would seem the most obvious way to
go. But the ultimate goal, complete
harmonisation, should not be
forgotten.”
International businesses are
justifiably concerned
The latter issue is a serious cause for
concern at international corporations.
Geerts: “They’re not convinced
it’s going to work – and rightly
so. The European legislation and
rulebooks leave too much room for
national ‘tastes’ and interpretation by
individual banks. This is detrimental
disastrous for international
enterprises. For now, SEPA has the
dubious reputation of not having set
a real standard. It’s high time for us to
jointly work towards a truly unified
solution.”
Regarding what it would take
to realise a single e-mandate
solution, Paul Geerts makes two
specific suggestions: “Develop a
service that is supported by the
market, including debtors. I would
call upon banks to be open to
ideas, and not only consider their
own circumstances. Second, it is
important to develop a long-term
27
Paul Geerts
Why banks should
embrace an open future
There is a history of success of open versus closed systems in industries
such as IT and telecoms. It is now the banks’ turn to open up. Open
access to bank accounts has the potential to lead to an explosion of
potentially disruptive innovation, competition and new services. New
revenue streams will evolve and the banks themselves could even be
the main beneficiaries from this dynamic development. Yet banks need
to position themselves proactively in this new environment.
Dr Michael G. Salmony is
Executive Adviser at Equens.
He represents national
geographies, banking consortia
and international industry
sectors within such bodies as
the European Commission, the
European Payments Council
and the European Association
of Cooperative Banks.
From the latest regulation it is a
legal requirement that the banks
open payment accounts to third
parties. One can now wait and
pray - or actively embrace and shape
this change. Since it is better to
disrupt yourself rather than letting
others disrupt you, we propose new
“Controlled Access to Payment
Services” (CAPS) to ensure that the
new third parties enter our space in
a safe, secure, regulated and fair way
using a standard interface. The recent
PSD2 regulation proposal provides
some of the necessary prerequisites of
such an approach.
The fight is not lost to anybody
Looking into the current e- and
m-commerce space, we already see
strong alternative payment solutions
such as PayPal or Amazon Payments.
Indeed, with view of the success of
PayPal some already think the fight
in online is lost. However, despite 15
years of active market development,
good growth rates and huge media
attention, PayPal’s processed volume
still only represents under 0.05% of
global non-cash transactions and is
thus really putting no dent at all into
banks’ business. The fight in online
payments is thus not lost to anybody,
but all players – especially banks –
face significant opportunities that
should now be addressed.
28 New actors in the payment space
The PSD2 defines new actors in
the payment space, the third party
providers (“TPPs”), that are to offer
payment information and initiation
services to consumers and merchants
and includes these TPPs in its
regulatory scope. These TPPs will
thus need to become licensed and
registered and underlie security and
consumer protection requirements
similar to banks. This is an important
step towards a safe and level playing
field in payments and will thus put an
end to unregulated and potentially
insecure third party models in the
market. In general, the PSD is now
extended to cover all transactions
made through IT devices (mobile,
internet etc.) which were previously
exempted. All this is good for
everybody.
Controlled Access
If bank accounts and online payment
services are to be opened up to
third parties, this must happen in a
controlled, secure, trusted, safe and
fair way. Especially in payments one
particularly critical issue is security:
no consumer or bank would endorse
a situation where unregulated third
parties would be granted uncontrolled
access to users’ accounts. This is
why CAPS is needed, in contrast to
current practices where the users’ full
“The fight in online payments is not lost
to anybody, but all players face significant
opportunities that should now be addressed”
online banking credentials are passed
on to third parties allowing them
potentially full access to everything
on the account. Third parties
need to be certified and regulated.
There needs to be a common legal
framework which TPPs, banks and
merchants adhere to, in order to
clarify the liability partitions and
ensure a seamlessly joined up system
with user communication, dispute
resolution etcetera. The system
needs to be secure, handling access
to accounts in a controlled way with
authentication being given only for
very specific accesses. Transactions
need to be entirely controlled by
consumers to avoid a situation where
consumer account data is exploited
without permission. And last but not
least, there needs to be a fee attractive
enough for all parties to provide the
infrastructure, develop innovative
services and provide customer
support.
The future is already happening
Although controlled access to
payment accounts by third parties
may sound very disruptive and
futuristic, there are already some
examples from the payments industry
that today demonstrate this potential
of open innovation. PayPal already
has opened its system via APIs to
several hundred partners and is
known to be in talks with Google,
Facebook and large internet and
mobile players to allow their services
to be linked to PayPal. Even some
banks are already actively opening
up to third parties. A regulated
and open system across all banks
such as CAPS will then allow for
secure and convenient use across
Europe. Consumers could simply
get a screen like “Approve €24 for 2
tickets to Hamlet at Court Theatre
on 24 Jan 2014 at 8 pm?”, click
“Pay”, and that’s it (subject to bank
authentication) – regardless where
they are buying and where their bank
is. And there are many more services
one can think of (identity check, age
verification, automated form filling
etc.) that provide valuable services to
merchants and solve many problems
in current e- and m-commerce.
A wealth of opportunities
Contrast this direct communication
between the user and his bank with
the current situation: overlay services
building on bank infrastructure
has led to a very layered online
payments landscape. Several overlay
service layers have driven a wedge
between the consumer and the bank,
sometimes easing the way consumers
pay, but often confusing them with
multiple virtual accounts, wallets,
passwords etcetera. They use banks’
infrastructures, KYC and security
mechanisms etcetera mostly without
contracting a bank and without
paying for these assets. Banks are
thus clearly being disintermediated
in online payments and need to act.
Providing a standardised controlled
access to the bank account can
help reduce the multiple layers and
provide new value to both banks
and alternative providers. The value
creation potential is seen across the
board. Merchants have been looking
forward to this and demanding it
unequivocally. Consumers need not
pass their banking credentials or card
details on to merchants any more, the
amazing resilience of cash even in
modern economies can be reduced
and many advantages more. Given
that we already witness over 300
e-payment mechanisms in Europe
today, innovation and competition
will likely explode thanks to CAPS
in the years to come. New revenue
streams will evolve and, given the
past history of open systems, it can
be expected that banks may be the
main beneficiaries from this dynamic
environment – if they position
themselves in a timely and proactive
manner.
Extract from the article by Dr.
Michael Salmony in JPSS
Journal of Payments Strategy &
Systems, Vol 8 No 2, May 2014
Systems, Vol 8 No 2, May 2014
29
How will we do our shopping
in 2020?
It’s hard to predict how
payments will be handled
in 2020. For one, we have
no idea what technology
we will have available
by then. So, is it at all
possible to outline the
advancements that will
have been made by
2020 based on current
trends? “It’s never fact,
but we take a kind of
snapshot of the future in
order to determine the
direction we’re moving
in”, says Eric van Vuuren,
Business Developer at
Equens, explaining the
Dutch research project
Shopping2020. “In this
report, we examine
what businesses
need to do to keep up
with developments
in m-commerce and
e-commerce between
now and 2020.”
Trend 6: Conversion of channels
There is no e-commerce or m-commerce, but only the customer’s wish to buy a
product from any location. People can switch between channels (the actual shop,
the web shop or their phone) as the need arises, forcing the retailer to capture the
payments across all channels.. This amongst other things affects the delivery of
goods: ordering online and collection from the shop.
Shopping2020 involves 460 specialists divided between nineteen expert groups who
address the question “How will consumers do their physical and online shopping
in 2020, and what action needs to be taken to enable the B2C business to respond
accordingly, both domestically and internationally?” Each expert group outlines
its vision of shopping in the future on the Shopping2020 website. Eric van Vuuren
represented Equens in the Transactions group, which has published a sub-report
entitled ‘How Do the Dutch Pay in 2020’.
Trend 7: Consumers in control
According to the Transaction expert group, people in the Netherlands currently
pay either by debit card or in cash in almost all shops. At present, iDEAL is the
most popular means of payment for online transactions. Eric van Vuuren: “E- and
m-commerce offers more possibilities than we are currently using. The internet
connection ratio is high and the infrastructure is good. The majority of people have
an internet connection, but we are lagging behind the rest of Europe when it comes
to the average amount spent on line.”
The preconditions for generating more e-commerce and m-commerce are in place,
but how do we make the most of it? It helps to know the direction in which the
market is moving. In order to assess the different aspects of payments in 2020, the
Transaction expert group has identified nine current trends that are affecting the
development of payments in retail.
Traditionally, payments are handled using a four-corner model: the buyer, the seller,
the buyer’s bank, and the seller’s bank. New models use a three-corner model or
decentralised trust networks, reducing the number of links in the chain and thereby
lowering the costs. Payment services are no longer restricted to the traditional
parties. Examples are Bitcoin and Ripple.
Trend 1: Digital identity
Currently, the buyer’s identity is requested and authenticated multiple times during
an online transaction, which is a nuisance to the buyer. It would be much simpler if
an individual was identified once only by means of a digital identity check.
Trend 2: Mobile shopping
Mobile phones have become a part of everyday life. They are used as a portal to the
internet, where purchases can be made. An example of a new trend is showrooming:
people visit a shop to view a product, which they then buy on the internet using their
phone.
Trend 3: Digital wallets
Storing payment credentials or currencies in a Digital Wallet (such as PayPal or
Equens ’Snel en Simpel Betalen’) is currently used as a way to disconnect the
initiation of a payment from the actual means of payment. This allows the payment
to be woven into the overall shopping experience better and creating a lower
threshold for payments.
Trend 4: Changing point-of-sale (POS) interaction
This trend also builds on trend 3: when an individual wants to pay with an
innovative means of payment, the checkout needs to be compatible. It must be able
to read the NFC chip or be equipped with a fingerprint scanning terminal.
Compared to the current developments, this is a countertrend that is seeing large
amounts of data disclosed for the sole benefit of convenience. A lot of customer data
is distributed on the internet, giving rise to a desire to control personal data. The
buyer wants to determine what data they disclose to whom and how it is used. There
is an increased awareness of privacy.
Trend 8: Peer-to-peer (P2P) payments
Trend 9: Increased regulation
New regulations implemented by the European Commission are increasingly
focusing on supporting innovation. In the proposed new Payment Services
Directive, third parties (non-banks) are permitted to offer informational and
transactional services to end-users (consumers and retailers). This means that trusted
banking services may be linked to the innovative power of new players. For more
information, see the article ‘Why Banks Should Embrace an Open Future’ in this
magazine.
Together, the nine trends form the point of departure for four scenarios
that outline the handling of payments in 2020.
Scenario 1: In Control
Buyers value their privacy and want to control what data is provided to whom and
when. They will choose the payment option that meets their needs at a particular
time.
Scenario 2: Consumer-Driven
Of the many payment options available, the consumer chooses the one that offers
the best ease of use. Having to share personal data is not a problem if it simplifies the
shopping process.
Scenario 3: Back to the Trust
Consumers have full control over their data and the way it is used, and are satisfied
with a limited number of payment means that facilitate this.
Scenario 4: Big Brands, Big Data
Consumers trust a limited set of payment providers with their data in order to
provide ease of use when paying..
Trend 5: Changing checkout
30 Automation is changing the in-store interaction. The introduction of smart devices
(such as tablets) at shops is changing the role of the checkout. Instead of using an
expensive checkout system, sales agents can get close to the consumer and do cross
and upselling. Also stock levels of a particular product in the warehouse can be
checked and ordered for the customer directly from the tablet. This way, retailers can
sell a product even if it is not available at their shop.
Download the report ‘How Do the Dutch Pay in 2020’ from:
www.equens.com
The expert group thinks
the fourth scenario is
the most likely on the
longer run. Currently,
the market is dominated
by a small group of
financial institutions.
High investments and
the introduction of new
technologies are creating
a high threshold for
new entrants. Current
developments in the field
of ease of payment and
use of personal data in
retail make this the most
likely scenario. Eric van
Vuuren: “In this scenario,
consumers are looking for
ease of use being offered
by trusted providers
of payment services,
thereby also ensuring a
safeguarded system which
is reliable and secure.”
31
Real-time payments in Sweden
One million users and still
counting
Real time is real time, according to Bankgirot, the clearing house
responsible for the introduction of a real-time payment platform
in Sweden. ‘Real-time payment’ refers to the money leaving
one account in real time, appearing on the other account at the
same time, being settled in real time, and then processed on the
account statement in real time. The first service to be connected
to the real-time payment platform was Swish, an app owned
by six Swedish banks, allowing consumers to make real-time
payments using their mobile phone. The app is popular, with one
million users and still counting. Carina Olsson, CIO of Bankgirot,
tells EQ Magazine about the importance and future of real-time
payments.
Are you developing real-time payment services for business-to-business
as well?
I’m confident new services will be developed in the future, as the advantages
are numerous. However, as yet no specific plans have been made for B2B.
We have to keep in mind the higher complexity of systems and the major
differences between ERP (enterprise resource planning) systems, which
require a more complex solution.
The UK already has a real-time payment platform. Other countries are
considering it. How about developing a European platform?
Rules and regulation differ, systems differ, and even the wishes of consumers
and businesses can vary from country to country. It would be too difficult an
undertaking. I think it would be more realistic for countries to develop their
own platform and then connect to each other’s systems.
“The new real-time
payment platform will
be available 24/7/365,
and it will be able to
provide access across
various bank payment
channels: internet,
mobile and telephone
banking, and bank
branches”
Why is paying in real time so important?
Sweden’s central bank, the Riksbank, has declared its intention for Sweden to
be a cashless society by 2020. Real-time payments are one way of achieving
this goal. Equally important is the increasing pace of society in general.
Payments have to keep up with that pace. The new generation wants to receive
the money in their account straight away. For banks, real-time payments are an
important service when it comes to preserving customer satisfaction. They are
also vital in reducing costs, as cash is expensive for banks.
Swish only came onto the market in November 2012, and already one
million people have downloaded the app. Why has it become so popular
so quickly?
With real-time payments, we have delivered a solution for small commerce
between individuals. For sellers, they eliminate the issue of having to sell their
goods first and then wait for the money, while purchasers no longer have to
pay first and worry about when the goods will be delivered. Everything is
done at the same time. The service is not limited to small amounts, either. For
example, I sold my car using the Swish application.
Which new services do you expect will connect to Swish in the near
future?
After the summer, Swish will be introducing a consumer-to-business solution
for real-time payments. This new solution will enable consumers to make
payments to small businesses and organisations, like charity organisations. The
real-time payment platform will be available 24/7/365, and with its generic
setup it will be able to provide access across various bank payment channels,
such as internet, mobile and telephone banking, and at bank branches.
32 Carina Olssen
About Bankgirot
Bankgirot is the only clearing
house for mass payments
in Sweden. It has a central
role in the Swedish payment
infrastructure. Every
hour, more than 125,000
transactions flow between
payers and payees. Bankgirot’s
operations were founded in
1959, and today the company
employs approximately
240 people. Bankgirot is
owned by SEB, Swedbank,
Handelsbanken, Nordea,
Danske Bank, Skandiabanken
and Länsförsäkringar Bank.
33
Equens Key Figures 2013
Payment services
■■
■■
■■
■■
Catering for all payment processing services
SEPA services including Value Added Services, e.g. Corporate Payment Services
Interbank (CSM) and intrabank (BPO) payment processing
Global Payment Services based on International Payments Framework (IPF)
Cards services
■■
■■
■■
■■
Equens SE - Leading the market for future
proof payment and card solutions
Flexible acquiring services for POS and ATM
Complete range of switching, clearing and issuing services including facility management and life cycle
Prepaid card services, a secure and cashless payment solution
Brand-independent and EMV-compliant
Next-generation payments
■■
■■
■■
■■
Biometric payments
Contactless payments
E-commerce payments
M-commerce payments
Subsidiaries (all fully owned)
■■
■■
■■
Equens is one of the largest
payment processors in
Europe. With an annual
processing volume of billions
of payments, POS and ATM
transactions, we currently
have a European market
share of more than 12.5%
payment and card solutions.
34 The European payments market is rapidly evolving. This results
in considerable challenges for banks and financial institutions in
terms of compliance, increased complexity and cost pressure.
We recognise these market demands, and are fully geared
to support our clients in the challenges they are facing. We
provide a modular portfolio consisting of a complete service
range for payments and cards, e.g. issuing and acquiring
processing, clearing and settlement, as well as solutions for
mobile, contactless and biometric payments. The development
of a Single Euro Payments Area (SEPA) calls for payment and
card processors with a pan-European vision. With offices in
five countries – the Netherlands, Germany, Italy, Finland and
the United Kingdom – Equens understands European and local
market needs better than anyone. We offer European market
coverage and have clients and partnerships in multiple European
countries. Our strategy is geared towards further growth and
economies of scale, with the aim of providing sustainable
financial benefits to our clients – now and in the future.
PaySquare SE provides a complete solution for terminal delivery and maintenance, card acceptance
and network services for domestic and international brands (Girocard, ELV, Maestro, V PAY, MasterCard,
Visa, JCB, UnionPay, Discover and Diners Club). The company is headquartered in Utrecht, The
Netherlands, and has additional local branches in Frankfurt, Germany, and Warsaw, Poland.
In the Netherlands: InterEGI B.V. issues Prepaid Chipknip cards in the Netherlands.
In Germany: DZ Service GmbH is a service provider for payment transactions and document
processing. Providing transaction and business process outsourcing services to more than 400 banks,
DZ Service is one of the major service providers in this segment.
Key Figures 2013
Transaction volumes (in billions)
Number of payments processed: Number of ATM and POS transactions: 10.6
4.7
ATMs, POS terminals and Card base
ATMs connected to the Equens network as of 31 December 2013
POS terminals connected to the Equens network as of 31 December 2013 Credit and debit cards under management as of 31 December 2013 20,600
907,000
65 million
Consolidated key figures in thousands of euro
Revenue Results from operating activities
Net profit from continuing operations Total assets as of 31 December 2013
Total equity as of 31 December 2013 Staff (full-time equivalents in absolute numbers as on 31 December 2013) 355,099
12,838
9,331
547,135
339,400
1,495
E [email protected] • T +31 (0)88 385 60 20
www.equens.com • www.linkedin.com/company/equens • www.twitter.com/equens
35
smart sourcing
Outsourcing the right processes at the right time
Organising your business efficiently means using your resources
in the most profitable way. Thus: outsourcing activities that are
not part of your core business. Your card and payment processing
could certainly be part of this strategy. The question is: which parts
can best be outsourced? In what pace? And to whom? Obviously,
you want to rely on a trustworthy partner with a proven track
Sound solutions, solid results
record. Equens can advise and support you in this process. With
over forty years of experience in the cards and payments industry, a
complete service portfolio, expertise in the interbank and intrabank
environment, local and European expertise and clients throughout
Europe, we can be that smart sourcing partner. Smart sourcing:
where your needs and our expertise in payment processing meet.
www.equens.com