The global acquiring landscape redefined

Fintech start-ups are known for being agile and efficient and they now have their eyes on the banks’ revenue sweet spot. These new entrants, have a well-established online presence, they are targeting merchant services and managing to hold on to them through mobile access.

To stave off this threat, banks need to work with merchants to strengthen their offerings via new and dynamic merchant solutions. Merchants are striving to keep pace of the payments revolution by developing a comprehensive payment strategy offering, some of these include:

Attaining regional/global reach and acceptance

Regional and global giants like Google, Facebook, Amazon, Apple are dominating the industry, putting pressure on subscale players. The primary objective for banks is to meet the increasingly critical demand of merchants for global reach and acceptance, across all geographies and payments types. Merchant solutions are offering cost effective and low maintenance payment forms that include smartphone payments via merchant apps. One example of merchant app use is the ability to allow customers to place their order via the merchant apps for in-store pick-up, these apps can also collect customer data, which can then be used for driving customer loyalty programs.

Become a digital / Omni channel champion

With increasing consumer expectations, and their demand of products and services that can be integrated into their daily lives, the leading merchants (and service providers) understand that payments (the last step in their purchase cycle) can no longer be controlled by the banks. Today more than ever, an integrated and seamless payments experience is a critical part of a customer’s shopping journey. Amazon is a perfect example of this, they have payment related initiatives like amazon cash, prime rewards, amazon pay UPI (real time payment), and amazon lending. These initiatives have not only enhanced the customer experience but increased their market share and profitability.

Lowering fraud rates and knowing which frauds are prevalent in the industry

Partnerships with digital upstarts and innovators can help merchants get access to better and faster technology (such as real-time fraud detection and monitoring) which allows them to improve their back-office processes without building the capabilities in-house.

Turning acquisition into a competitive advantage

Recently a large global acquirer digitized the on boarding journey, reducing time to market from two and a half weeks to less than four hours. While this is impressive, it is still well short of the capabilities of leading tech-savvy acquirers—PayPal, Stripe, and Square. These companies can accomplish the same feat in as little as five minutes.
Banks need to work with payment Start-ups and Fintech companies who have already invested in merchant acquisition technology, and have an established market-share. There is some healthy scepticism between merchants, retailers and payment fintech firms when it comes to payment transactions. However, through strategic partnerships between larger corporates and banks, these merchant acquisitions can become more seamless and help them keep ahead of the payments revolution and in-line with customer expectations

To know more: www.mindgate.us

Overcoming anxiety around mobile payments and digital payments – In the South Asia Pacific

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overcoming-anxiety-around-mobile-payments-compressor

Innovation and technology usually go hand in hand. Therefore, for innovation to be fully realized, the technology that enables the innovation must be adopted as well. During the last 5 years, we have had innovations from Google, Apple, Facebook and Amazon, that include Mobile Banking, Payment Gateways, Mobile Wallets and Real-Time Payments Applications, and yet, none of these innovations were broadly adopted.

It was not until the earlier part of 2016, when the environment started to shift. The effect of government policies for financial inclusion, developments in PSD (Payment Service Directives), demonetization, and collaboration with FinTech enablers for developing Real time platforms started showing in Southern Asia Pacific, prominently in the Indian market.

The growth of platforms like UPI (Unified Payment Interface), mobile wallets and mobile payment services atop UPI became a success story and a great case study for many mobile payment and digital payments industries worldwide. The Indian population accepted these payment channels and methods breaking thru the anxiety around mobile payment solutions. Google Tez (now known as Google Pay) acquired the biggest market share in this shift from traditional and card-based transactions to non-card-based transactions.

While millennials are driving and embracing payments innovation, older generations are also shifting their perspective. The unbanked population is also going digital and mobile to gain access basic financial services. In an interview with a mobile commerce publication, Laurence Cook, the CEO of nanoPay ( a Canada-based digital and mobile payments platform) states the types of fear that revolve around the mobile payments the fear of fraud, privacy loss, identity theft and wrong processing. To combat some of these fears, UPI implemented the use of VPA (Virtual Payment Address) which allows consumers to identify themselves with the payee (institution or person receiving payment), without providing card or account details, thus lowering fraud risk. Additionally, the following technologies were also deployed – tokenization for secure tokenized transactions, two factor authentication process and acceptance of mobile payments from merchants and retailers. The anxiety of mobile payments has dramatically lessened with the implementation of these security measures.

The final step to unlock the customer anxiety was when the merchants accepted mobile payments as a valid payment method at their storefronts.

It is now common to step out of an uber without interacting with the driver, as the taxi fare has been processed from the backend with your linked wallets. Merchants are now implementing cashbacks and discounts programs for mobile payments, which has helped increase the use of digital payments over cash-based payments. There are some creative approaches to drive digital payments; payment apps created games like collecting and sharing stickers, and upon payment milestones, utilities and bill payments are rewarding the milestones. This created an environment of social cohesion, which further helped the consumers adopt to the mobile payments.

To summarize, mobile payment services are growing exponentially in South East Asia, but it is still in its infancy. We expect the rest of the world will shortly follow suit, especially when they consider and adopt all the research being conducted in this domain. One example of a recent research paper on user challenges and successes with Mobile Payment Services, who stated the following “The potential to enhance users experience with faster and more useful transactions is possible with improved user experience ‘designing around users’ routines and behaviours, trust mechanism development, and supporting gamification and social cohesion.”

To know more: www.mindgate.us

Top 5 Digital Banking Myths: Community Banks Need to Abandon

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top-5-digital-banking-myths-compressor

Digital payments are already here, whether we are ready for it or not. With every passing day, there are FinTech companies continually pushing the digital payment envelope. New ideas and services are created all the time. We also see non-traditional FinTech companies enter the digital payments space, examples are Facebook and Apple (just to name a couple).

WhatsApp, a Facebook company, is currently providing digital payments in various regions around the globe leveraging their social media networks. Apple has partnered with Goldman Sachs to provide a digital wallet here in the U.S. Venmo and Zelle are also popular digital payment platforms for P2P payments in the U.S. As you can see, digital payments are already here, and you can expect it to grow exponentially with continued adoption and newer solutions.

So, why is this market segment growing so rapidly? There are three simple reasons: Firstly, people love using their digital devices; secondly, people also love conveniences; and, thirdly people love the idea of accomplishing tasks quickly. We can all relate to the sense of accomplishment we get when sitting down enjoying a cup of coffee while paying bills and/or making purchases – how convenient and quick! It simply allows us to have more time for other interests.

Thus, with such wide appeal, it is no wonder that digital banking will be the way forward for all financial institutions (small community banks or large global banks). In order to stay relevant, financial institutions will need to evolve to an institution that welcomes the digital | mobile platform with open arms. It is especially crucial for community banks/credit unions to adapt, as this will provide unique growth opportunities.

Below are some myths that community banks/credit unions need to abandon:

Myth 1: Digital payment platforms are more suited for national and global banks

The digital payment platform provides an opportunity to reach consumers in new settings by providing an easy and convenient mode of connecting with customers. The advanced medium is quite fulfilling in building rich and omnichannel brand experiences. Going digital is almost a necessity for small regional banks. Typically, regional banks provide solutions specifically designed to support their community. For example, let’s say you are a community bank that primarily support farmers and have built financial solutions to address their unique needs. Would it not be great if you can take these unique financial products to other farmers around the world? Well, now that we are in the digital world, it is very possible to do just that. Therefore, regional/smaller banks have an opportunity to increase their revenue in the niche markets they serve at a global level.

Along with being technologically forward, what remains necessary is to enhance and enrich the customer experience.

Myth 2: Digital payments platforms are too complex and expensive

Digital Payment Platform does not have to be complex or expensive. There are many digital payment platform providers that offer solutions in the cloud, thereby eliminating the complexity of hosting and maintaining these platforms. Additionally, these cloud solutions are usually priced by services, which allows you to pick and choose which services you need to support your client base. This approach allows you to adopt digital services at the same rate that your business grows. For many banks, digital payment platforms are a new source of revenue and not considered an infrastructure upgrade with no return of investment.

Myth 3: Digital payments are for the younger generation

The rise of smartphones has been astounding far more than anyone predicted in the past decade. With the network speeds exponentially increasing from 3G to 5G, a host of new mobile applications and services are now available through the device. Making many tasks convenient and fast, be it e-commerce or banking, the mobile services are transforming the lives of all people, the usage of smartphones is no longer limited to the younger generations.

Financial Institutions have noticed it is just not the younger generation that is attracted to the benefits and convenience of digital devices. They have observed an uptick in usage from customers belonging to the 40 – 50 age group, it appears they also like to manage their money via mobile devices, i.e. smartphone, tablet.

Myth 4: Digital payments Increase a Consumers’ Chance of Fraud

Digital payment methods include payments carried on via electronic devices and channels. The most common methods of making electronic payments include credit/debit cards, mobile payment gateways and mobile payment apps. Due to preconceived notions, merchants and customers have hesitated to adopt the latest, digital payment systems. The misconception in their mind that digital payments are prone to frauds, doesn’t hold much value. These e-wallets and digital payment gateways are equipped with robust security features like data encryption, address verification system and Payment Card Industry Data Security Standards (PCI DSS) that make them a safe medium for transferring cash.

In summary, community banks/credit unions need not be concerned and should feel confident about adopting new digital payment platforms. Especially, digital platforms that integrate merchants and customers through a single platform making the process of transferring and receiving cash both contactless and seamless.

Myth 5: Digital payments and Local Payment Methods (LPMs) make global payments riskier

Digital payment technologies and global payment networks are armed with security features like multi-factor authentication that are linked to the specific banks that the individual customers belong to. These payment features can help the U.S.-based online retailers reach the global market. U.S. retailers should no longer restrict their market and continue to root in traditional payment methods.

Conclusion

Thus, by embracing digital technologies, regional banks/credit unions can widen their reach and expand their client base across varied geographical locations. In addition, they can help support their clients’ global aspirations as well. Digital technology is indeed advantageous for community banks/credit unions, which increases their scope and their chances of success.

To know more: www.mindgate.us