Further increase expected for 2014 / what’s coming up for merchants
The payment service provider SIX Payment Services continues to see strong results in traditional card-based transactions at point of sale (POS) – despite innovations such as instantaneous payment of electronic invoices and biometric authentication causing a furore in 2013. So what can be expected for 2014? The importance of online retailing, outsourcing processes in the banking sector and convenient payment options is set to increase, which will in turn also boost the market potential for payment service providers. The Single Euro Payments Area (SEPA), changing consumer demands and legislation means that online merchants and payment service providers will also be required to demonstrate a high level of flexibility. They will need to achieve this in an increasingly complex payment market with new business models and greater competition. Those who keep up to date with the latest developments can, however, take advantage of trends such as peer-to-peer and micro-payments, as well as subscription commerce.
2013 was an exciting year for payments. SIX Payment Services has evaluated the results from the past twelve months. For SIX, the busiest shopping day of the year was December 23, processing 5.3 million transactions with a volume of EUR 420 million. December 21 was even ‘hotter’, with the late afternoon peak reaching almost 13,000 transactions per minute. The total volume transferred in 2013 amounted to approximately EUR 100 billion; physical trade in shops accounted for the largest share of this figure, while the second largest share was accounted for by the high volume of transactions in the growth area of e-commerce.
The most important milestone for SIX Payment Services in 2013 was the acquisition of Austrian PayLife Bank. With this acquisition, SIX was able to almost double its merchant portfolio. The company’s international growth strategy and proximity to its clients was underlined by the introduction of the combined debit and credit card for the Belgian-based Banca Monte Paschi Belgio, which was recognized with the “Highly Commended” FSTech Award 2013.
“The guiding principle for 2014 will still be to make the payment process as simple as possible – for there is an ever increasing number of options. We will support our clients in meeting their customers’ demands in terms of flexibility, convenience and security when making payments,” says Niklaus Santschi, CEO of SIX Payment Services.
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SIX expects that the number of transactions made last year will once again be significantly exceeded in 2014. The entire sector finds itself confronted with challenges, meaning it is high time for merchants to seriously address the issue of payments.
Payment trends for the coming year:
· Peer-to-peer payments via mobile wallet
Alternative payment methods require a critical volume of users in order to gain a foothold. The time now appears ripe for mobile. Mobile wallet solutions, for example, are finding their way into the mainstream payment market. Peer-to-peer payments, i.e. solutions for the direct electronic transfer of money between individuals, are increasingly being integrated. In 2014, we expect to see more start-ups introduce apps to the market with payment service providers also putting their solutions forward. The universal challenge here will be to ensure the security of customer data: mobile transactions must meet the PCI DSS Data Security Standard.
As things stand, micropayments are not yet particularly attractive for e-commerce – the costs for an individual payment transaction can be disproportionately high relative to the value of the good. Until now, no solution has succeeded in becoming widely accepted here. From mobile communication providers to offerings such as ClickandBuy, PayPal and other country-specific solutions, there is a whole range of new micropayment options, at least in the area of online retailing. For retailers, these solutions offer competitive advantages, allowing them to improve their image and increase turnover thanks to spontaneous purchases.
· Biometric authentication
From this year, Apple and MasterCard have been using biometric data for the authentication of payment services. Meanwhile, online payment provider PayPal is currently testing an innovative new method using facial recognition to verify cashless payments. We expect further offers of this kind to appear in 2014, with providers looking to develop these into mass-market solutions.
· Subscription commerce
Subscription commerce offers clear benefits to both online merchants and clients: client loyalty for the former and convenience for the latter. This holds great potential for the food, cosmetics and clothing sectors in particular. The implementation of subscription commerce entails a key technical challenge: ensuring the smooth integration of the shop and inventory management systems and the payment infrastructure. A corresponding solution simplifies the management of the subscriptions, automatically triggering orders and recurring payments. This means the integration of external subscription services into the shop is no longer necessary. The availability of such solutions will lead to more retailers adopting subscription commerce approaches in the coming year.
· State-of-the-art issuing and acquiring processing
In order to ensure a competitive advantage, it is essential for banks to be at the cutting edge in terms of technology. To this end, banks can enter into successful strategic partnerships. Here, there is untapped potential in the areas of both acquiring and issuing processing. Banks which manage their own retailer and card portfolios are often required to handle overly complex processes relative to their size. By working together with processing partners, they can take on board the required knowledge of payment technology, without the need to develop products and solutions themselves ( the costs of which they are unable to pass onto merchants or cardholders.) This will allow them to focus their competitive advantage on their customer relationships with cardholders and merchants which they have been developing over decades. Merchants, in particular, are happy if they can work with a single provider for all their payment requirements. Forward-looking payment processors will respond to this demand and stand out thanks to integrated offerings which meet all payment needs.