2. 2/26/2017 Copyright 2016. All rights reserved. 2
Global e-Commerce is Going thru the Roof!
E-commerce
$1.316 trillion
worldwide 2014
China & USA are leaders
55% of global Internet retail sales
3. 2/26/2017 Copyright 2016. All rights reserved. 3
… Providing Boundless Opportunities
Cross-border e-Commerce
sales reached $300 billion
25% is global cross border
e-commerce
Growing in excess
of 45% YoY
US, UK and China
are the most attractive
e-commerce
cross-border destinations
4. Globalization of e-commerce presents a MASSIVE revenue
opportunity for EVERYONE who can give MERCHANTS quick access
to INTERNATIONAL markets
So … How can PSPs maximize this opportunity
… despite PRESSURES from every direction?
2/26/2017 Copyright 2016. All rights reserved. 4
Globalization and the PSP
5. Merchants want it all. Now.
2/26/2017 Copyright 2016. All rights reserved. 5
Payment
Service
Provider
Increasing
Merchant
Demand
PSPs must provide merchants
with innovation:
• Quality: reliable, secure platform; high conversion rates
• Cost: least-cost-routing, domestic processing, transparent pricing
• Sources: cross-channel devices
• Markets: domestic, intra regional and inter regional
• Knowledge: regional, compliance & legislation
• Tools: billing, accounting, logistics, reconciliation, BI
6. 2/26/2017 Copyright 2016. All rights reserved. 6
Back-Office is a Nightmare…
PSPs are expected to handle…
• Multiple Integrations
• Reporting
• Settlement
• Reconciliation
• Multiple Legacy Platforms
• Fraud Services
• Customer Service
7. Complex Reality of Going Global
2/26/2017 Copyright 2016. All rights reserved. 7
30 CountriesPSP
50 Acquirer
Contracts
50 Backend
Integrations
35 Front-end
Integrations
20 Types of
Hardware
8. Front End
(authorisation)
Integration
Support
and account
management
Reporting
harmonisation
On-boarding
and KYC cost
Back Office
(funding and
settlement)
integration
45-150K
per acquirer
6-10 weeks
30-40K
per acquirer
per year
20-100K
per acquirer
per year
2-15K
per retailer
per acquirer
30-60 days
350-500K
per acquirer
6-12 months
HIGH Up-Front Costs Multiple Acquirer Integrations
2/26/2017 Copyright 2016. All rights reserved. 15
Source: Consult Hyperion 2015
9. New Entrants Flooding the Market
2/26/2017 Copyright 2016. All rights reserved. 9
POS
Terminals
Billing
Accounting e-Com
Solution
Providers
Banks
Card
Schemes
Logistics
PSP
Payment Service Provider
11. 3
2
… but PSPs are Facing Dilemmas
How to Maintain & Expand Profitability
when competition is heating up?
How to go Global Quickly
& Cost-Effectively?
How to respond to Merchant Demands
without going broke?
2/26/2017 Copyright 2016. All rights reserved. 11
1
12. Traditional Banks Less Relevant …
New entrants and smaller merchant
acquirers steal merchants away from
traditional bank acquirers
If a traditional acquirer can't deliver,
PSPs will quickly find an acquirer
that can.
Simple as that.
2/26/2017 Copyright 2016. All rights reserved. 12
Source: ETA, Goldman Sachs Global Investment Research 2015
23%
23%
18%
18%
13%
5%
New entrant
Smaller merchant
acquirer
iPOS distributor or
re-seller
Larger merchant
acquirer
Similar size
merchant acquirer
Other
13. … as they Begin Outsourcing Acquiring Services
2/26/2017 Copyright 2016. All rights reserved. 13
• Top 40 European traditional banks that provided inhouse
acquiring shrank from 71% to 58%
• Acquiring is non-core: aim to offer the service, but not
to be the actual provider
• Not interested in investment in product and platform
capabilities
• Europe’s leading traditional banks switch their customers
to external partners that provide acquiring services
PSPs are moving away from traditional banks,
towards partners whose core business is
merchant acquiring
Source: Innovalue 2015
71%
21%
8%
58%
11%
32%
73%
13%
14%
55%
12%
33%
2010 2015
By Number
Of Banks
By Total
Assets
In-house Partnering Referral
14. I may not have the answer, but I’ll find it,
I may not have the time, but I’ll make it.
2/26/2017 Copyright 2015. All rights reserved. 3
Client Advocacy
The iceberg shows different costs for an acquirer integration and the difference in the costs depends on the model of processing, efficiency etc.
So if a Retailer or a PSP wants to cover more than one market they have to integrate to multiple acquires.
Thus they need to multiply the costs on the iceberg by how many acquirers they need and it can run into seven digits in some cases.