Payments: Uniting Tomorrow's Future To Today's Reality

By Author: sifip
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In a rapidly changing business environment, owing largely to a global pandemic, it has become ironically clear that, while global commerce and connectivity may have brought this upon us, it is the skill sets we acquired as a result of the need to act globally that serve us well today.

It's a new world of danger, but also of safety in the near and far, in the local versus the global.

Through embracing the digital and contactless world that connects the near and far, we continue to rely on what we know and trust. Many conversations I've had with colleagues and clients over the last few months have taught me that nearly all of us are thinking about this apparent inconsistency.

What has also become clear is that what was once thought to be definitely not suggestive, namely payments operations through an online payment gateway – the belly of the beast – has now clearly become the safe house of the real and virtual business world. Connecting consumers with vendors, vendors with merchants, banks, and payment providers, and those again with global financial infrastructures has become an essential function in ...
... society. Digital has firmly established itself as the dominant mode of operation, particularly in payments.

Four trends that define the future of commerce payments
According to a recent study, four trends will define the future of commerce payments in a digital society: mobile payments and digital wallets, open banking and interoperability, real-time payments (RTP), and crypto. The current fragmented payments landscape stifles innovation, according to all four trends examined.

Running operations across all of those methods in different parts of the world, to different standards, and in compliance with different end user expectations and needs makes it nearly impossible for any PSP, bank, issuer, or acquirer to score on all points. Safety and security, lean and agile, low cost, best fit, and CEX are all important considerations. Meanwhile, their customers, the real economy's businesses, are suffering from inefficient payment processes and service and are in desperate need of rapid optimization.

What do PSPs and banks worry about?
PSPs and banks that must serve those customers – merchants and business owners in both the physical and virtual worlds – are concerned about all of the above, including providing a unique end-user experience that prevents people from abandoning a transaction, whether in store or online. This necessitates a strong focus on innovation and customer trends, culture, and creating a unified experience regardless of payment instrument. That in itself is a challenge, and decisions about what and where to invest first must be made.

Build or Buy?
As a result, they – and, indeed, all of us – are forced to make a choice. Do we invest our capital as a bank or the best online payment gateway provider in purchasing technology and building large tech teams, or do we direct those funds and brains toward business development with our clients? Towards listing to them and fine-tuning our businesses while someone else manages the technology infrastructure and possibly even the processes?

Over time, bureau-based services, as this model was known in the 1980s, earned a bad reputation for providing limited options. The basic options were bronze, silver, or gold, and where do you want the logo to appear on the page? Without being demeaning, this is still the case in many places. Many people believe that the cloud is too far away and intangible, but modern PSPs understand that options can be provided at a reasonable price. However, this requires volume and a dedicated skilled team, but most importantly, passion and focus. PSPs must also choose between running and building as their USP.

Compliance
Another compelling reason to consider moving your payments operation to a white label environment is compliance. Operating in a single jurisdiction is difficult, if not impossible. The regulation will tighten, as will the tolerance for failure. Businesses that are solely concerned with providing a service rather than connecting with end users can afford to be completely compliant. In fact, they cannot afford to be 'too important to fail' in terms of security and compliance.

Open Banking
Open Banking, in particular, opens up many paths to innovation for all ecosystem players, but it cannot be done without first understanding the preferred and supported payment methods, which vary greatly from country to country. And, as overarching initiatives like the European Payments Initiative, in which 16 banks aim to create a unified payment solution for consumers and merchants across Europe, demonstrate, we live in a very different reality today, where running and innovating at the same time is nearly impossible.

As a result, banks, PSPs, acquirers, and issuers who value their customers may want to look for white label environments that are global players with multi-national expertise to provide universal connectivity.
2020 is proving to be an unsettling year for all of us, but the payment system has not failed us, thanks to the collaboration of all ecosystem partners. Let us see what else we can do together, because globalisation is here to stay, digitisation will accelerate, and customer behaviour will change, as we have seen and experienced.

There is so much to do right now, and it can all be done at once, but not by one person. Let us work together to create a more connected world.