Innovations in PaymentsGeoffrey BarracloughEVO Payments International

15 September 2016

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About EVO• One of world’s largest merchant acquirers

– $100b payments processed each year– 600.000 merchant locations

• Domestic operations in USA, Mexico, Ireland, Poland, Spain, Germany and Czechia

• Cross-border customers include C&A, Opodo• Setting up in the UK, closely aligned with retail

POS/ecom developers• Easy integration methodology

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Why are Payments Important

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Annual cost of Interchange to UK retailers - BRC

Payments CostsThe Peak-End Rule

£1b

Mobile Matters

Q4 2015 conversion rates - Monetate

Desktop Tablet Mobile0%1%2%3%4%5%6%

Shopper journeys getting longer and more complex

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Marketing Visit Shop Make Purchase

After Sale Service

Leading to more complex shopper journeys

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Marketing Visit Shop Make Purchase

After Sale Service

Download App

Visit Website

Visit Shopping

MallCustomise Product

Respond to Marketing

Geo Message Sent to Mobile

Research Product

Search Reccomendations Read

Reviews

iBeacon Message

Share on Facebook Loyalty

Points

Post Review

Each retail sector is changing at its own pace

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White goods

Researchedpurchase

Habitual purchase

Impulse purchase

Fashion Grocery Fast food Petrol Rapid transit

Indicative graph only

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Payments and shopping…

…is best understood

through behavioural economics

Reflex PayHow easy is it to break into

long standing payment habits?

Speed is relativeShoppers and the payment

industry have different concepts of time

Shoppers are easily discouragedThe first transaction has to be good

ConfirmationNeeds to be clear and

consistent

There’s a strong pessimism bias with smartphone paymentsApple Pay may overcome this

Our research showed…

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…five behavioural factors determining

the speed of adoption of new ways of paying

Retailers

Payment

industry

Successful payment innovation requires the needs of all stakeholders to be aligned

SpeedSimplicityStrategic alignment

Cost

It’s a complex business…

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Shoppers

How well did these do?

…with multiple stakeholders. All need to be satisfied…

Get me in/Out quickKiosks and self-service | Contactless

Retail as TheatreMobile point of sale | Visual merchandising

But forms part of the future of retail

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…retailers are focused on transformation programmes delivering a much broader and enriched Omni-channel customer experience.

Four main questions…

How do I make it easier to take money on a

mobile phone - website or app?

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How can I help my customers use their

phone to purchase in my stores?

How can I join up digital and store channels to

serve customers better?

How can I use digital to grow sales outside

my home market?

…retailers need to answer

…and how do I do this securely?

Contactless - a rare, popular payment innovation

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18% of all POS purchasesUp 200% y-o-yATV = £8.60

Mar-14

May-14

Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

May-15

Jul-15

Sep-15

Nov-15

Jan-16

Mar-16

May-16

£0£200£400£600£800

£1,000£1,200£1,400£1,600£1,800£2,000

Value of contactless transactions. UK £m

Source: Payments UK

Customer experience innovation

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Making mobile payment easier.It’s buttons underpinned with the -Pays.

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Improving Plastic

Improving payments

Removing Payments

The Pays are a valuable underpinning technology layer but retailers need to build the CX

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In-store

Online

What of the CX?Is it (finally) time for app payments in-store?

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Retailer Apps Bank AppsMulti-retailer apps

Ability to pay on your mobile is not enough to get consumers to use mobile payments. Need to create a great customer experience.

If we’re trying to reduce friction, what future for the terminal?

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SmartPOS bundle Single unit with appstore

If we’re trying to reduce friction, what future for 3DS?

• Annoying shoppers and retailers since 2002

• Schemes working on 3DS 2.0 linked to PSD2

• Likely to feature two factor authentication

– one time passcode

– Biometrics

– social graph verification

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Future of payments is that you won’t notice payments

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Payments ceases to be a separate business process

EU MIF has been a qualified success

Credit/debit fees have reduced across EU but watch out for:

• Your acquirer not passing on the reductions

• Schemes introducing new fees

• Shoppers switching to Amex

• Shoppers switch to corporate cards21

Will you block this card?

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Brexit questions

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Does MIF still

apply?

Will my suppliers need different licenses?Where is my

data?