Merchant Payments Digest

The Merchant Payments Digest is a regular update from Oliver Wyman to keep merchants apprised of developments in the rapidly shifting payments space.

Oliver Wyman is a global leader in management consulting with offices in 50+ cities across nearly 30 countries. Our Payments practice works with constituents across the payments value chain to deliver insights with real impact, combining deep industry expertise with powerful consulting capabilities. To have a discussion with Oliver Wyman on your payments issues and opportunities, please contact Beth Costa at payments@oliverwyman.com.

PAYMENTS SPOTLIGHT


	Transformational payments solutions:Grab, a ride-hailing company with a market share of 95% in third-party taxi-hailing and 72% in private vehicle hailing across South-East Asia, launched a peer-to-peer (P2P) fund transfer functionality within its mobile app. Grab’s mobile payments offering GrabPay goes beyond ride-hailing; it aims to acquire merchants across the food and beverages, retail and hospitality industries. Merchants who end up using GrabPay can move to cashless payments using QR code functionality and avoid hardware terminals. This is an instance of a merchant opening up its payments infrastructure to other merchants to create an integrated ecosystem for consumers and merchants alike. Source: Grab (https://www.grab.com/sg/press/others/grab-launches-peer-to-peer-fund-transfer-in-grabpay-mobile-wallet-in-singapore/)

	Regulatory landscape:EMVCo, the global body that facilitates the worldwide interoperability and acceptance of secure payment transactions, released two QR code payment specifications – one for merchants and the other for consumers. QR codes aid in Point-of-Sale (POS) mobile payments. The specifications are expected to provide a convenient and consistent payments experience for consumers, and also standardize acceptance for merchants. Source: EMVCo (https://www.emvco.com/wp-content/uploads/2017/07/EMVCo-QR-Code-Specification-Launch-FINAL-v1.pdf)

	Customers’ evolving expectations:Square has opened a brick-and-mortar store in New York targeted at merchants. Square expects the store to serve as an avenue for merchants to get support for their payments requirements and to increase awareness of its hardware and software solutions. Square hopes to differentiate itself from its competitors in the merchant acquiring space such as First Data’s Clover, PayPal Here and others, who do not have physical stores. This move is in keeping with the evolving market landscape where physical and online commerce are becoming more integrated to deliver a consistent Omni-channel experience. Source: Bloomberg (https://www.bloomberg.com/news/articles/2017-08-24/square-opens-first-brick-and-mortar-store-to-lure-more-sellers)

	Data:According to Verizon’s 2017 Payment Security Report, ~45% of the merchants assessed globally (including Fortune 500 and large multinational firms) were non-compliant with the Payment Card Industry (PCI) requirements to protect payments data. Merchants in the retail and hospitality sectors fared the worst, followed by those in the financial services and IT services sectors. The report found a clear link between compliance with payment card security standards and the ability to defend against cyberattacks, highlighting the importance for merchants to invest in ensuring effective compliance. Source: Verizon (http://www.verizon.com/about/news/verizon-2017-payment-security-report-demonstrates-link-between-payment-card-security-standard)

	New providers:Following the launch of Amazon Cash in the U.S., Amazon has introduced a similar offering in the U.K. called Amazon Top Up. Targeted at underbanked customers, the service allows customers to load cash to their Amazon account by obtaining a barcode via the mobile app or online. Subsequently, customers can add cash in the range of £5 to £250 to their Amazon balance by bringing the barcode to any of the different merchants that have partnered with Amazon for this initiative, including grocery stores, convenience stores and gas stations. Source: Techcrunch (https://techcrunch.com/2017/08/25/amazon-brings-its-cash-deposit-service-for-the-underbanked-to-the-uk/)

PARTNERSHIP SPOTLIGHT

Marriott announced a joint venture with Alibaba to embed payments in the customer journey for Chinese consumers
- Under the arrangement, Alibaba’s customers can make payments at Marriott properties across select markets (including those outside of China) using Alipay, Alibaba’s digital payments platform
- The two companies will also collaborate to develop technology to help customers plan and manage all of the activities surrounding their trip

Source: Marriott (http://news.marriott.com/2017/08/alibaba-group-marriott-international-announce-innovative-joint-venture-redefine-travel-experience/)

PayPal has acquired Swift Financial, an online lending company, to expand its merchant financing business
- PayPal currently offers loans of up to $125,000 to smaller merchants who are existing clients
- With this acquisition, PayPal will now offer term loans of up to $500,000 to larger clients and those merchants who are not yet its clients

Source: Reuters (https://www.reuters.com/article/us-paypal-m-a-swiftfinancial/paypal-to-expand-lending-offering-with-acquisition-idUSKBN1AQ1JM)

Xero, the accounting software provider, is partnering with Stripe to offer an online payments solution that provides automatic reconciliation
- Available to merchants who use Stripe, the solution will reconcile transactions to Stripe’s payment statement, with the ability to match multiple transactions to a statement line
- The solution enables faster payments for merchants and reduces the need for additional resources to perform reconciliation

Source: Xero (https://www.xero.com/content/dam/xero/pdf/media-release/xero-partners-with-stripe-to-help-small-businesses-get-paid-faster.pdf)

MERCHANT SPOTLIGHT

KFC debuted biometrics-based payments in China called ‘Smile to Pay’, by partnering with Alipay
- Customers can pay by smiling after placing their order. A customer’s identity is authenticated by a 3D camera, along with an optional phone number verification for added security

Source: CNBC (https://www.cnbc.com/2017/09/04/alibaba-launches-smile-to-pay-facial-recognition-system-at-kfc-china.html)

IAG, the owner of British Airways is launching a new mobile payments offering called ‘Pair and Pay’ on its new airline – ‘Level’
- With this service, customers can browse and select food, drinks, Wi-Fi packages, and duty free products on their seatback screens, and subsequently connect their mobile device to the screens to pay for the selected products

Source: Business Traveller (https://www.businesstraveller.com/business-travel/2017/08/17/level-launches-pair-pay-mobile-payment-option/)

Burger King has entered the cryptocurrency market by launching the ‘WhopperCoin’ in Russia
- Burger King will issue virtual ‘WhopperCoin’ tokens via a digital wallet to its customers who purchase a Whopper Sandwich
- The transactions will be processed on a blockchain platform, with the ability for customers to either exchange them for rewards on burgers, or to trade/transfer them to other buyers on a peer-to-peer exchange

Source: CNBC (https://www.cnbc.com/2017/08/28/burger-king-russia-cryptocurrency-whoppercoin.html)