The payments space has always been fluid and ever-changing as consumer habits and technology have evolved over time, but there’s no doubt that it has seen a significant shift in the last few years. Now more than ever, consumers are demanding more seamless, convenient experiences; technology provides opportunities for businesses to innovate; and competition and regulations increasingly dictate how the game is played.
In a period of such transformative change, it will be hard for some players to keep up. Many legacy payment systems and processes are now outdated, with new trends emerging that favour, speed, security and service above all.
The world of payments will continue to evolve over the coming years and it will be important for financial incumbents to move with the times so as to not get left behind with a lacklustre offering that doesn’t match the market.
There are a number of factors influencing the payments industry right now and we’ve outlined some of the key drivers of change in the market.
The shift to omnichannel
Merchant payments is rapidly shifting from in-store and online to omnichannel and this has only been accelerated since the COVID-19 pandemic. Omnichannel payments are becoming the new normal and demand is driven by both consumers and merchants—almost half of all consumer purchasing decisions begin in one channel and finish in another. Customers expect to be able to make payments at any time and through any channel thus creating complexity for merchants.
While businesses are tasked with providing a seamless payments experience to compete and grow their business, this also means they need to deal with different payment providers to enable consumer choice with reporting, reconciliation & cashflow management becoming increasingly complex.
Many of today’s acquirers are single channel focussed, with large e-commerce players such as Stripe and Paypal lacking in-store expertise while bricks and mortar merchants struggle to deal with multiple integrations to unify their online and physical presence.
More and more businesses will value integration simplicity, and offerings that deliver a one-stop shop for payments will ultimately win out. Fintechs with global scale are solving these pain-points and disrupting banks & acquirers.
Many new players such as Square and Adyen have entered the payments game, armed with a host of innovative solutions that give the modern consumer the types of experiences they need.
Increasingly, online and in-store experiences are being brought together through POS, card, app and digital wallet innovation that will see the omnichannel payments experience become more prevalent.
The new wave of payment disruption
Disruptors are solving for merchant needs around commerce and payments by developing innovative front-end solutions for channels while today’s banks & acquirers fail to catch up.
In online and eCommerce, payment disruptors such as Stripe, Braintree and Adyen are developing simple payment solutions pre-integrated into shopping carts, making it really quick and simple for retailers to take payments online.
In addition, the COVID-19 pandemic has only accelerated the demand for online order ahead as we see many in the hospitality industry shift their business model from dine-in to takeaway and food delivery businesses, thus posing a risk to revenue and customer retention for banks & acquirers who depend on their in-store network.
Furthermore, the emergence of smart terminals is also transforming the in-store experience, enabling merchants to replace bulky PIN pad devices with small card readers, increasing the number of acceptance points and opening up substantial screen real-estate for processing payments in-store.
Disruptors like Square have also developed superior integrated solutions between Point-of-Sale and payment terminals, offering a complete multi-channel out-of-the-box POS and payment acceptance solution that can be set up in minutes.
The latest battleground for disruptors is to offer value-added capabilities around these payment solutions to anchor merchant relationships. The increasing demand for omnichannel payment methods has created new merchant pain points as they struggle with varied settlement times and uncertain cash flow, lack of access to a consolidated view of transactions through non-integrated payments solutions and manual reconciliation of payments from different channels.
By offering services such as consolidated dashboards, actionable analytics, cash flow lending and loyalty solutions, disruptors are offering complete payment ecosystems that help merchants save time and grow sales. This direction also poses a threat to incumbents as disruptors enter traditional banking markets, diversifying their revenue from just payments.
Implications for banks & acquirers
These payments trends have a number of significant implications for banks & acquirers, who are at risk of playing a reduced role in the payment ecosystem as these trends become more mainstream.
In order to compete, acquirers must be able to provide services beyond ‘hygiene’ payment needs and develop holistic merchant payment and value-add propositions that rival fintech disruptors.
Increasingly, in addition to a complete multi-channel payments ecosystem, merchants will demand a simple integration and onboarding experience with easy self-installation and immediate payments acceptance.
While many of today’s banks & acquirers are shackled by legacy infrastructure and processes that can slow down innovation, they also can thrive in a disruptive world when armed with the right capabilities.
Their existing in-store capability and established brand and customer network can be complemented and augmented with the right payments partner who can help navigate the complexity and provide the capabilities needed to compete in a disruptive world. Now is the time for banks & acquirers to elevate their payments solutions to remain competitive in this ever-changing landscape.
How mx51 can help
We believe banks and acquirers globally have the balance sheet and capital to prevail and are only held back by legacy infrastructure and cost prohibitive internal processes. In order to thrive in a disruptive world, mx51 offers a modern, end-to-end Payments-as-Service platform that can enable the key capabilities banks and acquirers need to remain relevant in today’s payments landscape.
By partnering with mx51, we can offer:
A true partnership; offering a white-label bank-grade platform that holds PII data
Innovative front-end multichannel payment capabilities that rival fintech disruptors to enable merchants with seamless acceptance across in-store and online
Value-added services that address merchant needs beyond ‘hygiene’ payment needs such as consolidated transaction dashboards and integration into practice management software
A simple, single integration that enables fast, seamless onboarding that can turn any point of sale system into a complete commerce ecosystem
Modern cloud-based infrastructure with bank-grade security that can enhance existing in-store infrastructure without significant capital investment (via partnership).
Servicing capabilities that monitor terminal health and help proactively manage payment processing issues to ensure a seamless merchant experience
A fintech with deep knowledge of banking and merchant acquiring that has the ability to work with our partners to rapidly innovate and launch new front-end capabilities
At mx51, we empower banks and acquirers to be merchant obsessed. By arming them with the right capabilities to provide omnichannel payments solutions and value-added services through a single merchant offering, we enable our partners to thrive in a disruptive world.
Get in touch to find out more about how we can help your business address future payment needs.