Cross Border Acquiring and POS Standards

Transcription

1 Cross Border Acquiring and POS Standards Is it the last missing bit to complete paneuropean card acceptance? Christian Bucheli PSE Annual Acquiring Conference, London 27th of November 2014 Classification: public

2 Content The journey The analogy The needs The obstacles The recommendation 2

3 The journey 3

4 Bill Bradley said: Ambition is the path to success. Persistence is the vehicle you arrive in. 4

5 The stairway to cross border acquiring heaven During the last 20 years step by step the way was paved towards harmonized cross border acquiring through a mixture of technology and regulation initiatives. Progress was slow and often times only a part of the set objectives could be achieved. TCP/IP Pervasive Internet EMV SEPA & SCF PSD I MIF harmonization PSD II Europ. POS standard Towards the end of this long journey the definition and implementation of pan-european standards for POS devices and communication protocols are key technical requirements for large multinational merchants to eventually profit from the benefits the previous measures or steps climbed on this stairway. 5

6 The analogy 6

7 Mobile phone market in Europe 1990 Analogue communication technology Various domestics standards (APMS, TACS, MNT) Different frequency communication bands No international roaming Low market penetration (0.20 Billion User Globally) Prohibitive cost for hardware Prohibitive cost for communication Product innovation limited 7

8 POS device market 2014 IP based communication technology Various domestic EMV standards (ep2, CTAP, APACS, CB2A, ABI, ZVT.) Usage outside of domestic markets restricted Various national certifications required Standard market penetration Significant cost for hardware Decreasing cost for acceptance Product innovation limited but challenged (mpos) 8

9 Mobile phone market in Europe 2014 Digital communication technology 1 standard in its 4 th generation (GSM LTE) Standardized international frequency bands Global roaming Very high market penetration (6 235 Billion Users Globally) Affordable cost for hardware Low cost for communication Product innovation explosion 9

10 POS device market in Europe 2034 And will the pan-european POS standards prevail if they really fulfil all the needs of large multinational merchants? 10

11 The needs Merchants 11

12 What multinational merchants need During the course of the last 6 years we have seen these needs to be crucial in most RFPs sent out by large multinational merchants: A single point of contact for managed payment services Inexpensive processing costs Interesting merchant service charges Convergent payment solutions Intelligent currency and cash management Consolidated payment flows and reporting Integration with their ERP systems Low purchase prices for POS solutions and cash register infrastructure by using the same devices in all countries Low costs to run the technical POS and cash register infrastructure Acceptance of all relevant cards 12

13 What multinational merchants today can get Today these needs can be fulfilled to a large degree: A single point of contact for managed payment services Available thanks to existence of pan-european Payment Service Providers offering Acquiring and POS solutions Inexpensive processing costs Possible thanks to economies of scale realized through market consolidation in acquiring and processing Interesting merchant service charges Obtainable now and even more through MIF harmonization initiated through the regulators Consolidated payment flows and reporting Available thanks to modern acquiring processing platforms Integration with their ERP systems Available thanks to modern acquiring processing platforms Intelligent currency and cash management Possibile thanks to modern platforms and packaging of corporate banking services with acquiring. 13

14 What multinational merchants will get thanks to POS standards Once a pan-european POS standard will be specified, available and rolled out merchants wishing to do cross border acquiring will be able to cover the following needs. Low purchase prices for POS solutions and cash register infrastructure by using the same devices in all countries Possible since one standard will allow economies in scale in POS production. In addition cash register and terminal management protocols will be a part of the standards suite. Low costs to run the technical POS and cash register infrastructure Realizable since cost to manage less variants of POS and Cash register devices will allow efficiencies in logistics, spare parts, training etc. Acceptance of all relevant cards Available because the new standards foresee the acceptance of international and local payment cards across Europe on the same devices, but it needs the collaboration of all schemes, international and local, to ensure this. Convergent payment solutions Partially available but the focus today in POS standardization is more on card present transactions. Plus new payment methods are not really in scope. 14

15 The obstacles 15

16 Remaining obstacles The following obstacles will remain because they cannot get technically resolved through a pan-european POS standard. Three party card schemes with territorial exclusivity Country specific legislations 16

17 Remaining obstacles American Express and Diners Club International operate still in most countries as a third party scheme with 1 acquirer per country having the sole right to acquirer transactions in this country. Very large merchants like airlines or petrol chains are dealt with on a global basis. But for the majority of multinational merchants this is out of reach. They need to have individual acquiring contracts for every country. Settlement and reporting therefore remain on a country level. One pan-european POS standard might at least take off the burden to use country specific terminals to process Amex and Diners transactions in each country. In addition the current MIF discussion in the EU could result in Amex and Diners being considered a 4 party model as well. This could force them to adapt their territorial exclusivity business model and pave the way forward for cross border acquiring. 17

18 Country specific legislations The PSD I was in important step towards a plain level field in acquiring and the PSD II should hopefully allow to go further in this direction. Yet payment service provides based on their location do still not have the possibility to offer homogenous services and conditions to merchants due to the following: The implementation of the PSD varies from country to country Certain countries require foreign acquirers to participate in the local domestic clearing system KYC and AML legislation differ between countries Certain countries require the fiscalisation of cash register printers VAT rules on acquiring differ in many countries The legal harmonization does only cover the EU/EEAA 18

19 The recommendation 19

20 The recommendations To merchants: 1. Start profiting from Cross Border Acquiring now 2. Embrace pan-european standard POS solutions 3. Try to use standards as well for convergent payments 4. Lobby in the industry to eliminate last obstacles 5. Lobby with regulators to eliminate last obstacles To industry: 1. Keep the momentum in standardization 2. Go for the greater good 3. Better disrupt yourself than being disrupted 4. Lobby in the industry the eliminate last obstacles 5. Lobby with regulators to eliminate last obstacles 20

21 Thank you for your attention. Christian Bucheli Executive Director Head of Strategy SIX Payment Services