In a recent article by Finextra, it is understood that the Covid crisis had a significant impact in the payments industry during 2020 and this is expected to continue ahead. 74% of consumers are likely to consider switching to competing payment solutions. This is precisely why payment service providers have a coveted position in the market currently. To comment on these developments and what to expect, we spoke to Bishwajit Choudhary.

Bishwajit is currently the Executive Vice President at Zwipe, a provider of biometric payment cards platform, pioneering the next generation of contactless payment. He formerly served as Senior Vice President of Strategy at Nets Group, leading provider of payment services in Europe. Bishwajit has two decades of payments experience where he led many new business initiatives notably within Digital-ID, Open banking, Customer advisory and International expansion.

Responding to our query about the challenges the industry faces, Bishwajit highlights that the fall in in-store payment volumes will impact the revenues of processors and issuers. In addition, due to macroeconomic uncertainties, new deals & innovation are currently stalled. Bishwajit categorically mentions that interest in biometric payments will continue to rise due to increasing worries among consumers on in-store payment hygiene and concerns related to touching of the POS in shops. “The merchant segments mostly hit by COVID-19 (e.g., hotel, travel, hospitality, luxury retail) are going to do anything and everything to cut down their expenses. Fintechs, neo-banks and new generation processors born out of the PSD-II storm should target the adversely affected merchant segments and deliver value propositions targeted to driving retention and new customer acquisition through deeper insights in customer spending, targeted marketing, campaign management and more seamless e-commerce”, said Bishwajit.

According to Bishwajit, going forward, as more people take greater control of their financials and outgoing payments, one must expect a stronger market reception for micropayment solutions where one pays for the value consumed for example; pay-per-view, pay-per article, pay-per-stream. Content providers see this as a smart way to attract consumers who may want to discontinue their “flat subscriptions” and take more control of their finances. For payment providers, getting a deeper understanding of these priorities will be very important. “We can expect a more open mindset from financial institutions and retailers to diversify and shift from costly card payments to Account-to-Account (A2A) platforms, which are also fast transforming into real-time payments. How are these verticals preparing to reduce the costs of payment handling? How do they assess a potential shift from Cards to A2A platforms and what are their biggest concerns? Understanding these insights ahead of proposing solutions for these retailers would greatly help payment processors and issuers to act as helpful partners”, said Bishwajit.

 

 

In November 2020, the Italian company Nexi formulated an offer to merge with its Danish competitor, Nets. Earlier in the same year, Ingenico Group was bought by Worldline. This led to European players competing with other top performers – a space dominated by American companies, i.e. Fiserv, FIS and Global Payments. According to Bishwajit, the payments market, particularly the processing sector, is marked by overcapacity. New payment volumes are becoming harder to capture. Consequently, M&As and consolidation allow these players to drive efficiencies on the back-end platforms and release commercial value (read margins) as the price pressures continue to pile up. Bishwajit also expects major payment processors to acquire (or partner with) FinTechs to drive differentiation and innovation. Supporting alternative payment methods, strengthening KYC / security and improving user experience are the areas to watch out.

On European and American processors, Bishwajit says, “For the large players, the battle will not be in each other’s markets (USA or Europe) but Asia and LATAM. Both these regions offer massive volumes, high growth potentials and big potential to drive cash-to-card / A2A payments”.

To wrap up our discussions, we asked Bishwajit about his insights on global tech giants, i.e. GAFAM (Google, Apple, Facebook, Amazon, Microsoft) and also China inspired BATX (Baidu, Alibaba, Tencent, Xiaomi), being the main challengers in the payment industry. He concluded, “Most of these players continue to use the existing card platforms and indirectly “feed volumes” to the processors mentioned above. As long as these tech giants do not proactively in-house payment processing, the impact on the “old world processors” will remain limited. Most of these players prefer to play “at a higher level in the value chain” focusing on data play and user experience while reusing the KYC / payments infrastructure created by issuers”.

We would like to thank Bishwajit for his valuable time to speak with us on this subject. His expert inputs, supported by his extensive experience in this space, has helped us better understand where the payments industry is headed.