The payments landscape is rapidly evolving with regulation and technological innovation combining to change consumer and retailer behaviour.
There can be no doubting that Europe's payments eco-system is currently undergoing a major transformation, with financial crises, regulatory enforcement, technological innovation, and changing consumer and retailer behaviour all colliding to form a new payments landscape.
Today, transaction processing services are provided by an increasing number of organisations active within the payments, cards and capital market arenas. The payments landscape is constantly shifting as industry players' position themselves within the payments eco-system to take advantage of emerging market opportunities. Recent consolidations within the industry, including Verifone's acquisition of Point, MasterCard's acquisition of DataCash and ACI's acquisition of S1 may have far reaching implications for consumers, retailers, and existing market players.
Over the last 5 years, the use of non-cash payment instruments has continued to grow exponentially, with annual compound growth rates of about 9%, and more than 15% of all global retail transactions being made using a payment card or other electronic means (World Payments Report 2011). However, there is still a long way to go as MasterCard's CEO Ajay Banga explains, with 85% of all global transactions still being effected using cash, representing an enormous potential market opportunity for non-cash payment forms, see here.
Continuing technological innovation within the payments industry provides consumers and retailers with new and exciting ways of transacting business. Near Field Communication (NFC) technology offers a more simple and convenient tap and pay approach which could help move lower value cash transactions to non-cash payment instruments. The advent of attachable readers for mobile phones from new players such as iZettle and Square, effectively turns the mobile phone into a payment device, creating new business models and allowing smaller, independent, sole-trader businesses to accept electronic card payments, see here.
As industry players position themselves across much of the value chain to take advantage of the changing payments landscape, global payment organisations are starting to emerge. The European Commission's Single Euro Payments Area (SEPA) initiative and its regulatory instrument the Payment Services Directive (PSD) is resulting in payment processing volumes being channelled through pan-European clearing houses with automated cross-border processing capabilities. Whilst this may lead to greater standardisation, and possibly even efficiencies within the payments eco-system, it could also stifle choice for retailers and consumers.
However, the changing payments landscape also affords creative companies like STS the opportunity of planting new seeds, introducing agnostic business models and payment solutions into the changing payments eco-system, providing greater flexibility and choice for retailers and consumers alike, positively contributing to help address any imbalances that may exist within the industry as a whole.