Peter HallManaging Partner

Intuition International Limited

Context The Acquirer perspective The Merchant perspective Open Forum

▪ What is important to merchants?

▪ What are the cardholder attitudes?

▪ What are the barriers?

Scale• Number and mix of merchant customers / sectors

Technology• Flexible, fast, absolutely reliable

Data• Processing, management and analysis

Execution excellence• Product specification / delivery, service,

relationships

Merchants want better products and serviceMerchants always want lower prices

Margins are tight, scale is criticalCompliance is never ending (i.e. Scheme Rules)

Keeping up to date is expensiveTechnology investment is significantControl cannot be wholly centralYou need the right people and processIts tougher than Issuing!

Does that argument hold true?

Business Area Best Practice

Strategy ATM vs. POS, Issuer influence

Debit targets Define by opportunity and nature of product

Business Fit Develop competency & edge to match targets

Sales Channels Clarify role of sales, branches & corporate banking

Sales Method Define pro-active and reactive methods

Training Multi level, multi channel (F-F & remote)

Revenue/Pricing Model Factor in transaction mix, risk, dispute & incentives

Technology management POS v ECR integration, new applications: PayWave

Merchant Comms Balance statement, direct mail, e-mail and web site

Merchant Promotion Drive usage, offer incentives, analyse data

Merchant Feedback Market research, mystery shopper + sales force feedback

Comparison to cashLower value transactionsHigher transaction frequencyLoyalty to the productConnection to necessity Its my moneyFit to immediate consumptionRegular, habitual payments

Is this what you need from Issuers?

• No need to visit an ATM• Better control of finances• Ability to make a reservation• Pay bills on time• Be safer• Take advantage of promotions and

rewards• Faster transaction• No need to write a cheque

Would this help?

The Basics: fair price, fast payment, technology that works Understanding my business needs Tell me what is new: products, ideas and rules Tell me how I could do better – don’t wait for me to ask Provide help when I need it: reaching someone with

competence/authority Planning for change, i.e. compliance: why, how, what, when,

how much? Information: available, informative, meaningful, actionable Self service: reporting, problem solving, FAQ, training tools Value: performance review, matrix of penalties/ incentives

MarginVolumeThroughputTechnologyAuthorisation QualityService QualityMerchant/Consumer Education

MOST SAFE

Payment on Web Unfamiliar

places

In places (i.e. cafés), where card is taken away

ATM cashIn well-known upscale shops & branded gasoline

Overseas

LEAST SAFE

•“you can’t pay for bus tickets; or in small shops if you don’t have cash with you”

“It’s complicated and takes a long time to pay with it”

“Sometimes payments do not work, even when you have enough money on your card”

“You can’t use it in a taxi or for movies so I always take cash”

The challenge

Cardholder • Withdraw most cash soon after being paid• Unsure when, where how to use cards

Merchant • Locations and merchants that fit Debit are limited • Not convinced of card benefits

Acquirer • Merchant resistance• Transaction quality• Business case clarity• Infrastructure

Issuer• Don’t track debit revenue• Cash Cost unknown• Limited marketing and inefficient returns

Good news: Card spend can be 5 x higher than cash Consumers like debit for making purchases

without carrying excess cash and without having to borrow

And most target merchants: would like to reduce cash because of the risk of

robbery typically have manual acceptance processes with

high labour costs

However some merchants: are reluctant to promote card acceptance because

they lack confidence in POS infrastructure (Deloitte Research)

New customers New business Higher transaction amounts Reduced business cost Faster payment cycle Security Staff safety Payment guarantee

Management information

Access to account balance

Incremental sales Faster throughput Automation International

businessIs the argument strong enough, or is the challenge in selling it?

Business case for merchants:

Problem Solution

Visibility Signage: clean, recent, prominent, available, audited

Training Toolkit, not a manualSpecific, not generic

POS Device Maintain, update, refresh

Authorisation Speed & reliability

Knowledge Cost and risk of cash

Price Education, promotion & performance incentives

Sell benefits, not process Less risk, more business, happy customers

Strategic clarity (i.e. ATM vs. POS priority)

“No brainer” business caseSolutions that fit the sectors

Plug & Play technology Simple processes On tap assistance

Consistent marketing messages