Merchant acquiring in the age of Digital Commerce, Credorax
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Merchant Acquiting in the age of Digital Commerce, by samantha jacobs.
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Merchant acquiring in the age of Digital Commerce, Credorax
- 1. MerchantAcquiring in the age of DigitalCommerce
- 2. 2/26/2017 Copyright 2016. All rights reserved. 2 Global e-Commerce is Going thru the Roof! E-commerce $1.316 trillion worldwide 2014 China & USA are leaders 55% of global Internet retail sales
- 3. 2/26/2017 Copyright 2016. All rights reserved. 3 … Providing Boundless Opportunities Cross-border e-Commerce sales reached $300 billion 25% is global cross border e-commerce Growing in excess of 45% YoY US, UK and China are the most attractive e-commerce cross-border destinations
- 4. Globalization of e-commerce presents a MASSIVE revenue opportunity for EVERYONE who can give MERCHANTS quick access to INTERNATIONAL markets So … How can PSPs maximize this opportunity … despite PRESSURES from every direction? 2/26/2017 Copyright 2016. All rights reserved. 4 Globalization and the PSP
- 5. Merchants want it all. Now. 2/26/2017 Copyright 2016. All rights reserved. 5 Payment Service Provider Increasing Merchant Demand PSPs must provide merchants with innovation: • Quality: reliable, secure platform; high conversion rates • Cost: least-cost-routing, domestic processing, transparent pricing • Sources: cross-channel devices • Markets: domestic, intra regional and inter regional • Knowledge: regional, compliance & legislation • Tools: billing, accounting, logistics, reconciliation, BI
- 6. 2/26/2017 Copyright 2016. All rights reserved. 6 Back-Office is a Nightmare… PSPs are expected to handle… • Multiple Integrations • Reporting • Settlement • Reconciliation • Multiple Legacy Platforms • Fraud Services • Customer Service
- 7. Complex Reality of Going Global 2/26/2017 Copyright 2016. All rights reserved. 7 30 CountriesPSP 50 Acquirer Contracts 50 Backend Integrations 35 Front-end Integrations 20 Types of Hardware
- 8. Front End (authorisation) Integration Support and account management Reporting harmonisation On-boarding and KYC cost Back Office (funding and settlement) integration 45-150K per acquirer 6-10 weeks 30-40K per acquirer per year 20-100K per acquirer per year 2-15K per retailer per acquirer 30-60 days 350-500K per acquirer 6-12 months HIGH Up-Front Costs Multiple Acquirer Integrations 2/26/2017 Copyright 2016. All rights reserved. 15 Source: Consult Hyperion 2015
- 9. New Entrants Flooding the Market 2/26/2017 Copyright 2016. All rights reserved. 9 POS Terminals Billing Accounting e-Com Solution Providers Banks Card Schemes Logistics PSP Payment Service Provider
- 10. PSPs Deliver Revenue & EBITDA Growth… 2/26/2017 Copyright 2016. All rights reserved. 10 Source: Innovalue, Payments universe historical operational metrics as of April 15th 2014 0% 10% 20% 30% 40% 50% 60% 70% Revenue Growth CY12-13 EBITDA margin CY12 EBITDA margin CY13 9.8% 10.0% 22.1% 10.1% 11.4% 19.2% 28.9% 9. 6% 32.1% 60.0% 4.2% 20.8% 28.0% 18. 6% 30.0% 61.5% Acceptance Processing PSP/ Online Payments Issuing / Prepaid Schemes
- 11. 3 2 … but PSPs are Facing Dilemmas How to Maintain & Expand Profitability when competition is heating up? How to go Global Quickly & Cost-Effectively? How to respond to Merchant Demands without going broke? 2/26/2017 Copyright 2016. All rights reserved. 11 1
- 12. Traditional Banks Less Relevant … New entrants and smaller merchant acquirers steal merchants away from traditional bank acquirers If a traditional acquirer can't deliver, PSPs will quickly find an acquirer that can. Simple as that. 2/26/2017 Copyright 2016. All rights reserved. 12 Source: ETA, Goldman Sachs Global Investment Research 2015 23% 23% 18% 18% 13% 5% New entrant Smaller merchant acquirer iPOS distributor or re-seller Larger merchant acquirer Similar size merchant acquirer Other
- 13. … as they Begin Outsourcing Acquiring Services 2/26/2017 Copyright 2016. All rights reserved. 13 • Top 40 European traditional banks that provided inhouse acquiring shrank from 71% to 58% • Acquiring is non-core: aim to offer the service, but not to be the actual provider • Not interested in investment in product and platform capabilities • Europe’s leading traditional banks switch their customers to external partners that provide acquiring services PSPs are moving away from traditional banks, towards partners whose core business is merchant acquiring Source: Innovalue 2015 71% 21% 8% 58% 11% 32% 73% 13% 14% 55% 12% 33% 2010 2015 By Number Of Banks By Total Assets In-house Partnering Referral
- 14. I may not have the answer, but I’ll find it, I may not have the time, but I’ll make it. 2/26/2017 Copyright 2015. All rights reserved. 3 Client Advocacy
- 15. Thank You 2/26/2017 Copyright 2016. All rights reserved. 15
Notas do Editor
- The iceberg shows different costs for an acquirer integration and the difference in the costs depends on the model of processing, efficiency etc. So if a Retailer or a PSP wants to cover more than one market they have to integrate to multiple acquires. Thus they need to multiply the costs on the iceberg by how many acquirers they need and it can run into seven digits in some cases.