Boost your business with our key insights from the UK’s biggest payments conference
On 8th October 2019, the payments industry’s head honchos descended upon Islington’s Business Design Centre in their droves. The CEOs and CCOs of the world’s most ambitious fintech innovators and high street banks came together for the UK’s largest and most influential card and payments event…
Over the course of two days and over 70 illuminating talks, more than 120 speakers stood up to grapple with the leading issues facing the modern payments industry. What challenges are posed by the recent PSD2 (Payment Services Directive 2) and SCA (Strong Customer Authentication) legislation? Is the UK really headed towards a cashless society? And does cash still have a role to play in ecommerce payments?
More importantly, what does this all mean for you – and for your business?
I wanted to find out. That’s why I went along – not just to rub shoulders with Revolut or make eyes at Monzo, but to cut through the noise and find out just what kind of impact the industry’s rumblings, innovations, and hype might have on you, as a merchant.
Interested? Read on for a whirlwind, whistle-stop tour of the biggest topics you need to know about from PayExpo2019.
PayExpo 2019, as seen on the first morning. If you look closely, you can see me by the coffee machine
What's the state of retail payments in the UK?
In the first retail-focussed talk of the conference, Andrew Cregan (pictured) of the British Retail Consortium (BRC) shared some research around the UK payments scene. Taking a sample of 34% of the entire UK retail industry, the BRC unearthed a few details about the state of UK payments. So, how are things looking?
Well, as it turns out, British business is booming. Total retail sales in the UK rose by 4.1% in 2018, to reach a total of £381 billion. Debit cards accounted for 46.5% of these, for an upswing of 3% from 2017. Meanwhile, cash is going the other way, dropping 3.5% to account for 38% of total retail payments.
It’s clear, then, that UK merchants need to be accepting card, as it’s already the country’s preferred method of paying. But, though many of the speakers at PayExpo 2019 highlighted the extent to which cash is on the wane, the big question remains…
Is cash really dying?
Not according to Ron Delnevo (pictured). In the first day’s final (and highly engaging) talk, the Executive Director of the ATM Industry Association produced a passionate counterpoint to the dominant discourse espousing the death of cash.
His proof? Every adult spends £4,000 in cash every year – and there’s a total of $6 trillion in cash currently circulating in the world. Even Sweden (widely accepted as being the country closest to going completely cashless) isn’t immune to at least some reliance on cash, Delnevo claims; 87% of Swedes still use ATMS at least once a month.
And in one of the conference’s more shocking reveals, Delnevo directly challenged the BRC’s research, which suggests the decline of cash. Drawing data from UK Finance, Delnevo claimed the BRC’s research failed to account for around £120 billion in cash payments – and his calculations look pretty solid.
Shots fired. But what do you think? Are ATMs really heading for extinction, or will cash always have pride of place in the hearts and minds of the British public? Drop me a line at email@example.com to continue the conversation.
The role of cash in ecommerce payments
…and financial inclusion
Speaker Alana Kazykhan of Paysafe shared Delnevo’s views, highlighting the 7.8% yearly growth of cash circulation. Kazykhan also stressed the importance of remaining financially inclusive – being mindful of those with less access to alternative payment methods, such as students or the elderly.
Yet, despite 1.2 million Britons not having a bank account, buying things online is still an important part of people’s lives. So what’s the solution?
According to Paysafe, it’s to introduce the ability to pay with cash for ecommerce transactions. This can look like a ‘click and collect’ option, where customers order goods online and then pick them up (and pay, importantly, with cash) in-store, the following day.
Do you sell online? If so, does your ecommerce setup allow customers to pay with cash? If not, you could be missing out on a crucial slice of business – those without direct access to bank accounts, or those who simply don’t want them. Plus, the more choice of payment channels you can give your customers online or at the point of sale, the more likely they are to come back for more.
Read more: Omni-channel payments
PSD2 and SCA: are you prepared?
Another topical discussion point at PayExpo 2019 was that of the PSD2 (Payments Services Directive 2) and SCA (Strong Customer Authentication). And fair enough, too – the deadline for PSD2 was just over a month ago, and many banks and payment service providers are still scrambling to get to grips with it all.
But what exactly is the PSD2? Does SCA give you a headache? I won’t go into all that in too much detail here (I do it much better in this article), but these are the key points:
- The PSD2 is European legislation that impacts all banks, merchants, and payment service providers within the European Economic Area (EEA)
- Its aim is to introduce more secure payments (through the improved authentication of electronic transactions), as well as better customer rights
- PSD2 also enables open banking, mandating banks to create a sharing economy over their customers’ details
- Don’t be alarmed – your details will only be shared (with your explicit consent) with the payment providers you choose to help manage your money, and make payments for goods and services
▶ Read more: Read more: PSD2 – what’ll happen after Brexit?
SCA is the new set of standards that banks and payment processors are having to introduce as part of the PSD2’s broad, sweeping changes. As a customer, you’ve probably already noticed it (if you’ve had to confirm a transaction on your Monzo app after tapping your contactless card at the supermarket, for example).
And as a merchant, you’ll almost certainly have heard the term being bandied around. But what does it mean?
Under SCA, your customers will need to provide two of the following three forms of ID to make a payment:
- Possession: Something only they have (a phone, or a credit or debit card)
- Knowledge: Something only they know (a PIN number or password)
- Inherence: Something only they are (a fingerprint or facial feature will suffice)
Banks initially had a deadline of September 14th, 2019 to be SCA compliant, but this has been extended another 18 months to give them time. Hence, it’s still a topic at the forefront of the minds of the world’s payment industry pros.
Speaking of pros… what did they have to say about the PSD2 and SCA at PayExpo 2019 – and what should you do as a merchant?
Panel discussion: the PSD2, SCA regulated friction, and the retail world
A panel of retail and finance’s prominent brains got together to chew the PSD2-related fat. I was there, and have paraphrased their pertinent comments below:
Nealle Page, Product Manager, Ocado: Merchants need to get familiar with the new regulations as soon as possible. Get your payment service provider involved, and ask your lawyer if you get stuck!
You should also map out your transactions – go through your current online payment process as if you were a customer, and assess whether each step is PSD2-compliant. On top of that, is the user journey a friendly one, and are you reducing the risk of basket abandonment?
Mardi MacGregor, Senior Associate, Fox Williams LLP: It’s crucial to understand which SCA exemptions apply to you. It’s also vital to become SCA-compliant sooner, rather than later. Your customers might become suspicious, and fraudsters might target you if you haven’t tightened up the security of your online payments.
David Song, Head of EU Personal Finance Policy, UK Finance: Merchants will need to ensure that their card terminals (whether hardware or software) are updated to facilitate a ‘soft decline’* if a customer reaches the SCA-exempt transaction limit of 150 euros per day.
March 14th, 2021: The new deadline for merchants and banks to be PSD2 and SCA compliant
A hard decline, on the other hand, is when the issuing bank straight up declines the payment. This is usually for reasons such as a lost or stolen card, or if an account has been closed or is invalid.
Opening up… to open banking
Ah, open banking. PayExpo 2019’s hot (if not hottest) topic permeated almost all of the talks across the two-day conference. Why? Because, alongside the PSD2, open banking stands to completely change the way the world pays.
Open banking essentially refers to a series of reforms to how banks control their customers’ financial data. Via open API (application programming interface) integration, all UK-regulated banks need to allow you to share your information (such as your regular payments and spending habits) with third party companies.
Open Banking stands to revolutionise the world of ecommerce
With your explicit consent, these third party providers (or TPPs, in industry parlance) connect to your bank directly, letting you access financial services through separate mobile apps. These apps offer budgeting assistance, and let you make payments quickly and simply.
So, should you be accepting open banking payments as a merchant?
According to Brian Hanrahan, CCO of third party financial services provider Nuapay, yes. Yes you should. But how will it benefit your business?
Well, as just mentioned, it’s fast and easy – not just for your customer, but for you, too. It’s also cost-effective, with no interchange or scheme fees, and no chargebacks to worry about. On top of all this, it’s secure – completely SCA-friendly, and free of PCI DSS compliance obligations.
Open banking payments made on a mobile app offer your buyer a journey that’s largely fast, seamless, and compatible with biometrics. That means these payments are free of manual data entry, and thus help drive a better customer experience (and, hopefully, more customer conversions!).
And, according to Hanrahan, 28% of UK merchants are already implementing open banking for their online stores, while 46% are in the planning stages. On top of this, open banking payments have already taken off in high risk industries, with 89% of airlines and subscription economy merchants primed for it.
Customer experience and omni-channel payments
These days, there are more ways to accept payments and move money around than ever before. Chances are, though, that your business also has more competitors than ever before, too. So how do you not only attract new customers, but get lifetime value out of them, too?
Let’s take a look at what PayExpo 2019’s customer experience (CX) experts had to say.
Omni-channel payments: is your business doing them right?
Another hot Pay Expo 2019 topic, omni-channel payments attracted several speakers from the top echelons of the payments industry. Meirav Peled of Riskified (pictured, left) spoke about the importance of omnichannel for the customer, while Masha Cilliers (pictured, right) of iBe TSE discussed the wider omnichannel strategies, and the possibilities they present.
Wait… omni-channel? Let’s explain. Omnichannel (meaning multiple channels) refers to the ability to accept payments in a variety of ways, without any noticeable disparity in customer experience.
These channels basically refer to anywhere customers can and will pay. Over the phone, in-store, online, or via recurring billing methods. It’s imperative that your business both understands and offers these – 67% of European consumers buy cross-channel, while 40% refuse to do business with companies that don’t offer their favourite way to pay.
As Cilliers pointed out, though, it isn’t just payment channels your business needs to consider. Think of all the other ‘channels’ involved before your customer reaches a decision to buy (or ignore) your product:
- Google: It’s generally the first place your customers go to learn more about your product. Can they find it? Is your site well optimised to appear in Google, and in other search engines?
- Social media: Many users head to Facebook to ask for recommendations from friends, or to YouTube for product demos. Are you active on social media, or utilising social listening tools to understand how your brand is perceived?
- Review sites: 88% of consumers trust online reviews as much as personal recommendations. Do you know what your customers are saying about you, and are you responding appropriately on review sites like Trustpilot?
- In-store: Some customers will prefer to call your store up, or visit it in person to speak to an agent. Is your customer service congruous with your company’s core values, and is the experience a smooth one for the consumer?
Whether you’re taking payments online, over the phone, or with a card reader, an omnichannel solution means there’s a consistent brand experience throughout. A consistent experience makes for a happy customer, and a happy customer is a returning one.
The importance of customer experience
“The customer is always right” is a slogan older than time itself. For a more contemporary take on the importance of customer experience (CX) in taking payments, though, I chatted to CX and ecommerce expert Hidai Degani (pictured) after his participation in Day One’s lunchtime panel:
“CX is one of the key factors for every business, and is proven to increase KPIs (such as conversion and retention rates) as well as revenues, profits, and branding.
“The ideal CX allows the customer a smooth journey end-to-end – from the ad they saw, to the website, to the physical shop, to the payment. And the journey doesn’t stop there – the delivery and packaging of the product and its usage are both core parts of CX, as is your customer recommending it to a friend.
“Specifically in the context of PayExpo 2019, the payment part is critical, as after all the marketing money is spent on the customers, they are finally ready to buy. Thus, the process has to be as quick and as easy as possible, with enough different choices, and supported on multiple devices – mobile, desktop and in store.
“The challenge, then, is to actually implement improvements in CX, as it usually requires an understanding of where the issues are, cross-functional work from various teams to solve them, and some tech investment, too.”
Lessons from the startup world
Tom Morgan (pictured), Director of Digital at popular politics and culture magazine The Spectator, also had a few tips for SMEs up his satirical sleeve. How do you keep up with the trends that are dragging the world even further into the age of digital?
He shared his top three tips from his experience of driving The Spectator’s ecommerce growth:
1. Focus on the basics
Get your website right by doing the basics well. Here’s how:
- Work with an expert to reduce the loading time of your pages – 53% of mobile users will leave a site that takes longer than three seconds to load
- Keep your online checkout process clean and simple – you want the user to buy, not to have to think too hard
- Don’t force users to log in to make a purchase – they probably won’t do it!
- Don’t ask for more of the customer’s details than you need at the checkout – it’s not only annoying for them to fill in, but potentially isn’t GDPR-compliant, either
2. Know the brand
This one’s pretty self-explanatory. Why? Because if you don’t know your own brand – who you are, and what you stand for – then neither will your customer. 50% of the world’s consumers are belief-driven buyers – they’re more likely to buy from a brand that shares their values.
What are yours? According to Morgan, there’s only one way to find out…
3. Do your user research
Analyse your customer lifecycle, from the moment they discover your brand to the instant they make a purchase from your website. What works? What doesn’t?
Bring your customers in and have a chat to them – it’s a great way to learn who your customers are, and – crucially – exactly why they like you. The same goes for your own staff. Understand the people you employ – what are their workflows and processes like? Could you make their jobs easier? What insights can they offer to help you streamline the way you run your business?
The rule of three: Morgan’s top tips for small businesses, visualised by PayExpo’s resident cartoonist
Retailer tip: buy now, pay later
Buy now, pay later.
Sounds good, right? Your customer thinks so too.
Offering your customers the ability to buy a product in the present (but pay in future instalments) could help boost your conversion rate by up to 25%, believes speaker Federica Foldes, Gift Card International Coordinator at Decathlon.
Adding this feature to your ecommerce setup helps accelerate sales by easing the burden on the buyer’s cash flow, and helping them to convert at the first point of touch.
The future of payments
What do we think about when we think about the future of payments? According to the dominant discourse at PayExpo 2019, we should be focussing our attention on two emerging payment methods: cryptocurrency and biometrics.
Blockchain, blended biometrics… PayExpo introduced us to the busy ‘Bs’ of the industry’s future
Whether you’re a merchant, an investor, a tech addict, or all three, the chances are you’ll be at least a bit interested in cryptocurrency. It’s basically a decentralised, digital currency that uses cryptography to ensure the security of financial transactions. Famous examples include Bitcoin (pictured) and Ethereum.
So, why should you care?
Well, the last decade has seen a proliferation in cryptocurrency payments – as of April 2019, over 400 million Bitcoin transactions had been made. And if PayExpo 2019 told us anything, it’s that the payments industry is changing – and as a merchant, you’ll need to adapt to it.
How? By accepting crypto payments. PayExpo 2019-featured companies like Utrust and BitPay let you facilitate cryptocurrency directly on your website, for as little as a flat 1% fee per transaction.
Protecting you from chargebacks and payment fraud, crypto payments are a safe way of accepting money – and could be what your business needs to stay with the times.
The first coins were minted around 600 years before the birth of Jesus. Since then, we’ve moved through notes and cards to see contactless now dominate, with new innovations like wearable payment technology gaining traction.
So what’s next? Well, if almost everyone I met at PayExpo 2019 is to be believed, it’s biometric solutions. Yep – the future of payments is, quite literally, you. Technology built to let your customers pay with fingerprints, vein patterns, irises, and faces already exists, and is only going to become more prominent in the payments landscape.
But it’s not just the future – biometric payment technology is already a staple in many a consumer’s life right here in the present. Mobile wallets (like Apple Pay or Android Pay over here, or WeChat Pay in China) allow consumers to pay with fingerprint or face ID from their own phone. And they’re only getting more popular.
Mobile wallet payments now account for more than a third of all payments at the point of sale in China, and the total number of both mobile wallet users and average mobile wallet spend is increasing.
What’s more – and as the experts at PayExpo 2019 stressed – biometric payments help satisfy your security obligations under SCA. Arming your point of sale with the ability to accept biometric payment methods will thus help reduce friction at the checkout, and help you get through those hordes of customers with speed and security.
The key takeaway here is that biometric payments will only become more of a thing. As a merchant, you need to chat to your payment service provider to ensure that your card machines are equipped to accept mobile wallets in-store. If you don’t allow your customers to pay with biometrics, they’ll go somewhere that will.
And so, the PayExpo 2019 came to a close for another year. As a stream of delegates, speakers, and retailers began to file out of the venue, I was left reflecting on the state of the payments industry – and on our future.
The PSD2 and measures to bring about full-scale open banking don't just have huge implications for how we manage our money and pay for services. Through a wider lens, these measures are also paving the way towards a future characterised by open data.
Today, data is an insight – mined and utilised by banks, payment service providers, and the internet giants we interact with every day. Tomorrow, data is a product. And with the banks’ monopoly on customer data having crumbled to dust, we’re faced with an exciting, evolving payments industry, pregnant with possibilities.
Yes, the opportunities that PSD2, crypto, and biometric payments all present are indeed thrilling. But they also provide us with a warning about the usage of our personal and business data by corporations. Data is the most valuable commodity in the world. Who’s selling yours?
Let’s finish on a more lighthearted note, though. Because, while PayExpo 2019 had plenty of speakers espousing the downfall of cash, what it also had was a healthy dose of irony. Because the cloakroom cost £1 to use… and it was cash only.