What’s Slowing The Payments Industry?

We spoke to attendees at Money 20/20 to ask them their views on payment trends, predictions for the coming year and what the ideal payments ecosystem looks like.

Here’s our interaction with Tobias Schweiger, CFO and COO at PAY.ON AG.

Top 3 Trends in Payments Industry

1. Mobile payments will mostly drive the payments industry in the future, fueled by a rise in the number of transactions — more specifically in the U.S. than in Europe, Schweiger predicted.

2. Apple Pay: From the European side, the industry has expected a little bit more, but the card in the mobile setup will certainly be one of the things moving the industry into the future.

3. APMs from the European side of things — Alternative payments is one of the drivers for the European businesses and even for the American market. We see a lot of demand for equipping players with APM capabilities to expand into the Europe using APMs. “Credit cards can only get you so far,” he said.

Challenges Ahead

“I think, more in the U.S. than in the Europe, payment service providers are having trouble providing connectivity and are having trouble integrating from a checkout perspective for the consumer in the end,” he said. “We believe that the challenge would really be a technical one.”

As cross-border trade grows, for a business to be able to deal with various currencies, different payment flows and consumers with different needs, and to have such services readily available is going to be the biggest challenge ahead,” Schweiger predicted.

Predictions for 2016

For companies like PAY.ON, it will be increasingly necessary to make available a choice in terms of different fraud protection and risk management to all kinds of businesses out there. The drive for EMV will make sure that platforms not only provide connectivity for payment methods; on top of that, we will be extending our reach in terms of risk management and fraud management, globally, as an answer to challenge.

Preparing

To make sure that the technology is standardized so it can deal with different payment methods, fraud management provides all kinds of different things without causing a huge hurdle for somebody to integrate for using us as a platform. For different countries’ different payment methods, you will have different players for a specialist.

The ideal payments system 

“That’s a big question. It has two angles to it,” Schweiger said. “From the consumer perspective, trust is the first thing if we are to believe there will be a shift towards mobile and more mobile. And the standing that Apple Pay is a standard replacement for the card is certainly something those players will have to sort out with the consumer.”

“From the technology or B2B side, more and more will be partnerships,” he said. “To be able to internationalize payments business and be successful outside of the original footprint of the payments business, which is what we focus on.”

“So my ideal payments business is one that has a standardized interface, that is open, that is from a technology perspective always ready to partner with businesses for the fraud problem and payments problem in the country. I think this openness must be there because the legacy at the moment is huge in cards. Once that has been overcome, I think, the ideal payment business will be much closer.”

But for the ideal payments system to become a reality someday, Schweiger says, it’s the economic reality and cost per transaction that will drive change. “If you had the opportunity to switch merchant/transaction from country to country, it is something merchants don’t focus on. Over time they will as cost pressure starts to grow. With that, I believe, they want to switch faster. It’s a little bit of time and merchant pressure that will drive change,” he added.

Tobias Schweiger is a senior manager, currently working as Chief Financial and Operating Officer (CFO/COO) at PAY.ON AG.

Prior to his current role Tobias worked in Finance and Strategy at ProSiebenSat.1 Media AG and advised clients in Operations and Strategy at Roland Berger Strategy Consultants. Before that, he spent six years at Telefonica O2 Germany.