Trying to get to the heart of what makes a truly fit for purpose payments solution is complex and challenging. There are endless facets and characteristics that can appear impossible.
Yet despite this difficulty, it is absolutely necessary. Because it is only by getting this understanding that the payments industry can provide the services that merchants, banks, agents and PSPs want and deserve.
In order to achieve this, a holistic view of payments must be taking, avoiding the silo-thinking that, all too often, impedes progress.
By doing this, we are able to see payments as a whole process and get a better understanding of what drives it and what it consists of. This is what we call the Payments Triangle
The Payments Triangle is made of three sides – three characteristics that any payment solution has to have at its core:
These core characteristics should complement each other, working together in harmony to make the payments proposition stronger and better.
However, all too often, the triangle is incomplete, with one side being sacrificed for the sake of others; it is secure and speedy but not simple. It is simple and secure but not speedy. It is simple and speedy but not secure.
If one side of the Payments Triangle is missing then that payment solution is not fit for purpose or might even harm the customer.
The article will explain how the three sides can work together in harmony and why none have to be left out or neglected. Throughout the article, we will refer to two distinct stakeholders – the customer and the consumer. The customer is any business using a payment platform such as a merchant or bank. The consumer is just that – a member of the public making a payment in exchange for goods and services.
The fundamental promise of electronic payments, indeed electronic commerce, is that it is simple. The internet has made retail a truly global proposition and has revolutionised how we shop and do business.
Yet the plethora of global currencies and payment methods can add a huge level of complication to this landscape. Combined with the fact that many of the payment solutions used to navigate this landscape are, themselves, complex, payments can seem far from simple.
For the customer, this simplicity has to be threefold – simple to integrate, simple to manage and simple to use.
Integration is an absolutely critical period. Businesses cannot afford any down time, any time when payments cannot be accepted. If a payments platform is not easy to integrate then it is going to fall down at the very first step.
Use is vital too. On a day to day basis, any payment platform has to run smoothly and with minimal customer user interface.
This is equally true of management. The customers need to be able to get what they need from the payment platform to allow them to manage their business in a simple and straightforward way. From processing to transaction reconciliation and account management, the good payment platform has to do it all and in a simple way. This requires high quality, easy to analyse data being produced by the system.
For the consumer, simplicity is equally key. The payment provider they are using should be easy to use in regards to accepting payments in multiple currencies, multiple channels and multiple devices. This might mean that the back end is complex, but that should not be a concern of the consumer.
It is an old cliché but it is true – time is money. So, for the customer, any payment platform needs to have speed as a key feature. Payments should happen swiftly and money should move swiftly. Underpinning all of this should be low latency and reliability.
For the consumer time is also critical. Abandonment, where shoppers do not complete online transactions, is the scourge of internet retail. Figures vary as to its true extent, but findings from 2014 suggest that only three in ten online transactions are completed.
One of the key drivers of abandonment is the time it takes to complete a purchase or a transaction. No bricks and mortar retailer would make their customers wait in lengthy queues to make purchases and the same should be true online. If the payment provider isn’t speedy, it is pushing consumers out of the door.
To achieve this speed, the payment solution needs high performance and high availability. High performance to make sure that the processes are carried out swiftly and high availability to ensure that there is little or no downtime. Underpinning this has to be scalability to allow technical processing.
Security is critical. A security breach in a payment platform can cost money, reputation and business. No one can afford one.
So security can never be compromised in the slightest. The payment solution must be PCI DSS compliant, it must offer end to end encryption and must comply with EMV protocols for POS support. Not only this, but it must also comply with the laws and regulations of each territory it operates in.
For the consumer, it isn’t enough for the payment provider to be safe, it has to look and feel safe too. It is critical that the payment solution looks and feels familiar and trustworthy.
On the customer side, it is not enough that the system is secure, it has to add to the overall security of the business. With specific data being available the payment platform can guard against chargebacks and fraudulent transactions and do this automatically, saving time and saving money.
Three characteristics, three critical components, three sides to the payment solution that is fit for purpose and will solve problems rather than create them.
The well designed payment platform will have these three sides working in harmony together, not against each other. Because there is no reason that any have to be sacrificed to maximise the others.
Making sure that the payment solution you choose to adopt gets the right equilibrium between speed, security and simplicity is key to business success.
UK seeks G7 consensus on digital competition after Facebook blackout
LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.
Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.
“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.
“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”
Dowden said recent events had strengthened his view that digital markets did not currently function properly.
He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.
“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.
Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.
“Nick strongly agreed with the Secretary of Stateâ€™s (Dowden’s) assertion that the governmentâ€™s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.
Britain will host a meeting of G7 leaders in June.
It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.
The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.
Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.
(Reporting by William James; Editing by Gareth Jones and John Stonestreet)
Britain to offer fast-track visas to bolster fintechs after Brexit
By Huw Jones
LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.
Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.
“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.
Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.
Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.
The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.
“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.
Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.
The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.
It also recommends more flexible listing rules for fintechs to catch up with New York.
“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.
“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”
Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.
“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.
A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.
“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.
The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).
“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.
($1 = 0.7064 pounds)
(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)
G20 to show united front on support for global economic recovery, cash for IMF
By Michael Nienaber and Andrea Shalal
BERLIN/WASHINGTON/ROME (Reuters) – The world’s financial leaders are expected on Friday to agree to continue supportive measures for the global economy and look to boost the International Monetary Fund’s resources so it can help poorer countries fight off the effects of the pandemic.
Finance ministers and central bank governors of the world’s top 20 economies, called the G20, held a video-conference on Friday. The global response to the economic havoc wreaked by the coronavirus was at top of the agenda.
In the first comments by a participating policymaker, the European Union’s economics commissioner Paolo Gentiloni said the meeting had been “good”, with consensus on the need for a common effort on global COVID vaccinations.
“Avoid premature withdrawal of supportive fiscal policy” and “progress towards agreement on digital and minimal taxation” he said in a Tweet, signalling other areas of apparent accord.
A news conference by Italy, which holds the annual G20 presidency, is scheduled for 17.15 (1615 GMT)
The meeting comes as the United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies going despite COVID-19 lockdowns.
But despite the large sums, problems with the global rollout of vaccines and the emergence of new variants of the coronavirus mean the future of the recovery remains uncertain.
German Finance Minister Olaf Scholz warned earlier on Friday that recovery was taking longer than expected and it was too early to roll back support.
“Contrary to what had been hoped for, we cannot speak of a full recovery yet. For us in the G20 talks, the central task remains to lead our countries through the severe crisis,” Scholz told reporters ahead of the virtual meeting.
“We must not scale back the support programmes too early and too quickly. That’s what I’m also going to campaign for among my G20 colleagues today,” he said.
Hopes for constructive discussions at the meeting are high among G20 countries because it is the first since Joe Biden, who vowed to rebuild cooperation in international bodies, became U.S. president.
While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.
The recovery is fragile elsewhere too – factory activity in China grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, and in Japan fourth quarter growth slowed from the previous quarter with new lockdowns clouding the outlook.
“The initially hoped-for V-shaped recovery is now increasingly looking rather more like a long U-shaped recovery. That is why the stabilization measures in almost all G20 states have to be maintained in order to continue supporting the economy,” a G20 official said.
But while the richest economies can afford to stimulate an economic recovery by borrowing more on the market, poorer ones would benefit from being able to tap credit lines from the IMF — the global lender of last resort.
To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by then U.S. President Donald Trump.
Scholz said the change of administration in Washington on Jan. 20 improved the prospects for more IMF resources. He pointed to a letter sent by U.S. Treasury Secretary Janet Yellen to G20 colleagues on Thursday, which he described as a positive sign also for efforts to reform global tax rules.
Civil society groups, religious leaders and some Democratic lawmakers in the U.S. Congress have called for a much larger allocation of IMF resources, of $3 trillion, but sources familiar with the matter said they viewed such a large move as unlikely for now.
The G20 may also agree to extend a suspension of debt servicing for poorest countries by another six months.
($1 = 0.8254 euros)
(Reporting by Michael Nienaber in Berlin, Jan Strupczewski in Brussels and Gavin Jones in Rome; Andrea Shalal and David Lawder in Washington; Editing by Daniel Wallis, Susan Fenton and Crispian Balmer)
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