Presentation to Retail Week's "Innovation in Payments" conference in London on 15 September 2015. Covers key trends in omni-channel payments and related technology.

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Geoffrey Barraclough
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PAYMENT INNOVATION
WHAT RETAILERS NEED TO KNOW

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About
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Marketing & strategy consultants
o Specialising in retail technology & payments
o Expert in matching vendor capability and client demand
Geoffrey Barraclough
o 16 years experience in B2B marketing and product strategy
o Formerly, director of strategy, products & marketing at BT
Expedite & VP propositions & marketing at WorldPay
Geoff has great ability to balance a good grasp
of data with high level thinking which enables
him to deliver powerful insights and actionable
recommendations…and has strong consulting
skills that enabled him to collaborate effectively
with my team.
Simon Black, CEO, Sage Pay.

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Why is payments important
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Annual cost of Interchange to UK
retailers - BRC
Payments costsThe peak-end rule
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
Desktop Tablet Mobile
£1b
Mobile matters
Q2 2015 conversion rates - Comscore

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Shopper journeys getting longer and more
complex
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Marketing Visit Shop
Make
Purchase
After Sale
Service

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Leading to more complex shopper journeys
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Marketing Visit Shop
Make
Purchase
After Sale
Service
Download
App
Visit
Website
Visit
Shopping
Mall
Customise
Product
Respond to
Marketing
Geo
Message
Sent to
Mobile
Research
Product
Search
Reccomendations Read
Reviews
iBeacon
Message
Share on
Facebook
Loyalty Points
Post
Review

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Each retail sector is changing at its own pace
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White goods
Researched
purchase
Habitual
purchase
Impulse
purchase
Fashion Grocery Fast food Petrol Rapid
transit
Indicative graph only.
Source: Barraclough & Co

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Cash is no longer king but alternative
payments remain marginal
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24.00%
25.00%
26.00%
27.00%
28.00%
29.00%
30.00%
31.00%
32.00%
33.00%
2011 2012 2013 2014
Cash as % of total retail sales value
Source: BRC payments survey
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
2011 2012 2013 2014
Alternative payments % of total retail sales value

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Merchant Payments Ecosystem, February 18-20, Berlin
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Payments and shopping…
…is best
understood
through
behavioural
economics

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Merchant Payments Ecosystem, February 18-20, Berlin
Reflex Pay
How easy is it to break into long
standing payment habits?
Speed is relative
Shoppers and the payment industry
have different concepts of time
Shoppers are easily discouraged
The first transaction has to be good
Confirmation
Needs to be clear and
consistent
There’s a strong pessimism bias with
smartphone payments
Apple Pay may overcome this
Our research showed…
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…five behavioural
factors determining the
speed of adoption of
new ways of paying

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Retailers
Payment
industry
Successful payment innovation requires the
needs of all stakeholders to be aligned
Speed
Simplicity
Strategic
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…

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Contactless has broken through
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Volume of contactless transactions
Source: UK Cards
More cards
More places
to pay
Better
proposition

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Merchant Payments Ecosystem, February 18-20, Berlin
Get me in/Out quick
Kiosks and self-service | Contactless
Retail as Theatre
Mobile point of sale | Visual merchandising
And 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.

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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

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Make it easier…
Remember my card from last time
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…to buy on a mobile website or app
Wrap a card in a wallet with
a better UX
Push a payment from a mobile
banking app

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Help my customers use their phone to
purchase in-store
Apple Pay legitimises NFC
But the iWatch makes it magic
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The revolution begins in casual dining
In-store app payments begin here

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What role for the terminal?
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From this To this Or this?
Terminals increasingly sold as part of bundle with gateway and ePOS
software and related hardware.

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Joining up the channels
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Tokenisation
MI
Online Offline
Consistent
returns/refu
nds
Consistent
payment
types

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No lack of investment in finding answers
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54% of 2014 Fintech fundraising is in payments - CB Insights
$300m raised at $1.4b valuation
$76m raised at $2.7b valuation
$40m raised at $200m valuation
$150m raised at $6b valuation
$300m raised at $6b valuation
$250m raised at $1.5b valuation
Largest payments related fundraisings in last 12 months

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But winners will be those that deliver real value
No of transactions
Revenue
Operating income
Rev per transaction
Revenue %
Company value
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Source: 2014 reports and accounts, Techcrunch, Barraclough & Co analysis
11.5b
£3.7b
£125m
32p
1.0%
£6.0b
4.0b
£5.1b
£1.2b
£1.28
3.3%
£29.3b
0.1b
£0.2b
£8m
£1.80
3.2%
£1.5b

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And finally… check your bill
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EU regulations will cut core Interchange
but watch out for:
Refunds
Authorisations
Chargebacks
Etc
And
American Express

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Strategy | Proposition Development | Insight
Experts in Retail Technology & Payments
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Thank You
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