22 December 2014

Ward Hagenaar Qhuba Consulting

Ward Hagenaar - Qhuba Consulting

7Posts 39,394Views 11Comments

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

The merchant is misunderstood

27 June 2011  |  6217 views  |  1

In 2010 both MasterCard and Visa purchased major payment service providers like DataCash and Cybersource. As did some payment processors that acquired payment service providers. The e-commerce market now has a solid place in retail activities. Due to the scale and consolidation of the market the PSP´s became international payment processors themselves, often with the particularity that they collected the payments as well, with a lot of opportunities of increasing revenues from that. The only remaining difference with traditional institutional payment processors is the channel itself.

A question that keeps popping up in my mind is that this current thinking in channels, e-commerce, point of sale, MOTO, mobile can´t stay valid. Although I can see the specialism from either bankacquirers for POS and payment service providers for e-commerce and often specific segments like airlines in addition, this is not how a merchant would prefer to work.

The merchant has already choosen, is or will be confronted with consumers that don´t fit in this classic segmentation. The consumer is focussed on a transaction with a merchant, via mobile proximity at the POS, mobile internet with a remote payment, classic internet or in the shop, whatever is most convenient to him.

As this is the case how can a single channel provider be the best advisor to the merchant? These current providers have to many strings in the payment method acquiring to be an independent advisor for the true multi channel retail experience. As the channels merge this brings new opportunities for the merchant with regards to payments. Insight in consumer behaviour is more important than ever and asks for a redesigned payment strategy.

TagsOnline bankingPayments

Comments: (2)

Christian Hammel-Bonten - ClickandBuy Marketing AG - Zug | 28 June, 2011, 11:46

Hi Ward, thank you for starting this discussion. I am not quite sure if the convergence of the sales channels will and must necessarily result in a consolidation of the payment volumes from those channels.

At the first sight we might come to this conclusion but I am also a strong promotor of specialization. So I believe we will have both:

  • payment service providers focussing on delivering payment services for all channels and the advantages out of doing so 
  • payment service providers focussing on a channel in order to deliver the best-services for this particular channel. 
You say "this is not how a merchant would prefer to work". So I disagree in part respectively agree in part. Some merchants will prefer to work with payment service providers of the first category while others will go for a best-in-channel payment service provider.
And finally, we will see big players of the first category and efficient, highly-profitable players (of smaller size probably) in the second category.

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Ward Hagenaar - Qhuba Consulting - Utrecht | 29 June, 2011, 09:20

Hello Christian, thank you for this addition, I can fully agree that both modells will have its place even for multi channel merchants.

It would be very advisable if we where able to authenticate the consumer across these channels. We could design the use of specific payment methods more intelligent around this channels, reducing costs, increasing turnover. It would be interesting to promote low cost debit card payments at the point of delivery where the order has been set and the consumer authenticated via the internet or mobile.

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job title Business Consultant Cards and Payments
location Utrecht
member since 2011
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Payments and cards expert with experience on all perspectives (financial institution, processing, vendor). Up to date knowledge on mobile payments, contactless, cards acquiring, issuing, transaction p...

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