Presentation to the Payments Knowledge Forum, October 2016
Discusses various models of international retail expansion and which need to be supported by global acquiring partners. Also includes discussion on the best models by which acquirers can expand internationally.
2. NetworkValue
* Direct operations in 7 countries with processing capabilities in 50 countries.
EVO Snapshot
2
Global Player
Countries
Currencies Authorized
Transactions Processed
SettledVolume
Merchants Served
InternationalNorth America
64% 36%
Revenue Mix 2016
50
>130
>1.5B
~$80B
437,000
Top 4
4. Strong Global Presence
4
#6USA
Office locations
Headquarters Direct market presence
Pan European acquiring license
#4Spain NEWIreland #5Europe #1Poland #2Mexico
5. Every market is different
5
Belgium
Bulgaria
Czech
Denmark
Germany
Estonia
Ireland
Greece
Spain
France
CroatiaItaly
Cyprus
Latvia
Lithuania
Luxembourg
Hungary
Malta
Netherlands
Austria
Poland
Portual
Romania
Slovenia
Slovakia
Finland
Sweden
UK
0
2
4
6
8
10
12
14
0 50 100 150 200 250 300
Averagenumberoftransactionsperpointofsalepaymentterminal
(000)
Average number of transactions per head (2013)
Usage of payment cards in the EU (2013)
Size of bubble indicates relative value of total payment card transactions at points of sale
6. The world’s a big place and shopper
behaviour is different in each country
6Source: PWC Total Retail Global Report
62% 24%
CHINA CHILE
I shop online
because it’s cheap
63%36%
CHINA CHILE
I shop online because
it’s convenient
7. Cross-border e-commerce set to grow
Between 2014 and 2020
• Xborder share of e-
commerce grows from
15% to 29%
• Shoppers who buy x-
border grow from
25% to 45%
7Source: Accenture
9. There are a variety of strategies
9
Retailers can grow internationally or online or bothDomesticInternational
Pure Online Store focused
GraphicFootprint
10. Three use cases
10
Domestic Multi-national store focused X-border e-commerce
Landscape
Domestic technology
deployment
Simple payment needs
Typically buys from bank
International technology deployment
Uses integrators for standardized solutions
Strong HQ functions
Strong export focus
Localisation of web content
Payments Challenges PCI
Domestic debit
Managing multiple protocols
Standardising service
PCI
Managing dozens of APs
Acceptance rates
Fraud
Cost of x-border Interchange
Decision maker Finance Director or treasurer Treasurer / CIO Head of payments
Value of Global
Acquirers?
None Yes – economies of scale
Yes – offer domestic
Interchange, higher
authorisation levels
11. Retailer needs
11
Domestic Multi-national POS based X-border e-commerce
Terminal Anything that works
Standardised international deployment (reality
may be rather different)
n/a
Payment acceptance Local debit + international schemes Local debit + international schemes All relevant
VAS
Market specific eg installments,
DCC, TFS
Market specific eg installments + standard
deployment of DCC, TFS
n/a
Service Local language
Terminals – integrated to local market IT
helpdesks in local language
Settlements – to HQ
To HQ teams in home langauge
Billing Local language Consolidated bill to HQ Single bill in local language
Management
Information
n/a
Comprehensive reporting suite, configurable by
country/site/hierarchy
Comprehensive reporting suite
Settlement
To local bank account in local
currency according to local
convention (T+?)
Single settlement to HQ bank account in home
currency (T+?)
Single settlement to HQ bank
account in home currency (T+?)
12. The value proposition
Save money, improve operational efficiency and offer better customer service by
implementing a single payment service for all your international operations
12
• Save up to €500 pa per POS
• Buy in bulk
• Rationalise supplier contracts
• Consolidate cash management
• Open new markets faster
• one ePOS interface
• one payment terminal
• one PSP
• one telecom supplier
• one acquirer
13. How to become a global acquirer
• Get aVisa/MasterCard licence
• Get a Payment Institution licence (or equivalent)
• Join local debit scheme (directly or via partnership)
• Open local bank account
• Settle in local currency (at reasonable cost) which
may involve joining local settlement scheme
13
Do this for each country in the world
• Certify local terminal and protocols,
recruit logistics partner
• Establish local service centre
• Write (and keep updated) local
contracts in local law
14. The EEA is a single market…. but
EuropeanVisa/MCI
licences cover all EEA
PI licences can be
passported to all countries
SEPA payments makeT+1
possible for eurozone
14
• Local debit schemes persist
• Visa/MCI regions are not contiguous
• Visa/MCI charge extra fees for new markets
• Not all European countries are in the EEA - Monaco, San
Marino, Channel Islands etc
• Local bank accounts needed to makeT+1 elsewhere
• Multiple terminal protocols persist
• Local contracts needed de facto if not de jure
• 14 currencies & 24 languages used in the EEA
16. Buy vs build - strategies to become a global acquirer
16
Strategy Detail For Against
Build
Set up capability from
scratch
No legacy systems
High risk – investment is made before
customers signed.
Getting to scale is difficult - proposition likely to
be only attractive to x-border merchants
Partner
Refer transactions to a
local acquirer in return
for commission
Low risk
Quick
No differentiation
Risk of disintermediation
Acquisition
Buy a local acquiring
business
Brings all capability you
need in a single transaction
Gives scale in-market
Slow and only addresses one market at a time
Likely to bring legacy technology