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4 focus pillars of PSPs

Today customers expect cashless tools to pay, work nonstop and everywhere and at minimum to no cost at all. PSP's take a leading role in delivering this.

Tomasz Pawlowicz / July 21, 2021

Developments in the way people pay have accelerated over the years.

Who still remembers cheques in retail sales or cards with just a magnetic stripe ever so easy to skim?

Today customers expect cashless tools to pay, to worki nonstop and everywhere and at minimum to no cost at all. One can say: the bar is high. 

Payment Service Providers (PSPs) are bringing payments to the next level, often separating them from their historical or traditional locations: banks. As User Experience (UX) always prevails, PSPs are applying the newest technologies to provide never before seen UX solutions. Recent Visa and Mastercard news and updates show that customers increase electronic payment tools usage every year.

I would risk a hypothesis that future of payments lies in answering questions in 4 areas: eCommerce, instant payments, cross-border and domestic vs international schemes. Let us go through them one by one:

  1. eCommerce – the importance of remote channels of sales has been growing steadily for many years. Pandemic, however, accelerated the growth becoming almost the only way of retail puchase. After realizing the simplicity of such purchases, we see it stays at “pandemic level” in many markets or even continues growing. Noteworthy to mention -  modern solutions do not use card rails to complete such transaction at all. Each PSP must be conscious about consequences of supporting one way of eCommerce payments over another.

  2. Instant Payments – electronic payments started with batch processing having authorization initiated online. The world has now progressed and today customers expect their funds to move between accounts in real time. Central banks as well as PSPs around the globe, are investing their time, effort and resources in developing possibilities to build a system that is capable of moving funds instantly. We already see successful implementations in many markets, but we will see much more in coming years. PSPs must have its strategy regarding instant payments.

  3. Cross border – Traditionally card issuers positioned currency conversions as a source of significant revenue. The competitive situation started changing together with success of FinTechs offering lower costs of the conversion. Today cross border electronic payment do not necessarily mean card transaction and the topic is much broader with aspects related to currency conversions, obviously, but also to speed of fund movement, UX used of wallet top-up and fraud prevention.

  4. Domestic vs international schemes – we see more and more players in payments market in general. Two decades ago, we all believed market consolidation will only progress. FinTechs and the more adaptive retail banks are making payments even more convenient and cheaper. Many of them are domestic, at the market level, but we see they have started their journey towards becoming international. Previously domestic schemes are becoming more and more international building their ecosystem between the markets.

What makes a strong PSP strategy even more complicated is the fact the areas I listed are interconnected. To illustrate it, it is enough to say cross-border is often eCommerce transaction paid with a domestic scheme with funds often moving instantly. PSPs and banks in particular, require support of experts who are able to combine all 4 domains in their recommendations. Moreover, modern systems servicing payments, take all those areas into account building competetive user experience. In order to stay relevant in the modern marketplace of payments, PSPs must wisely distribute investments between eCommerce, speed of funds movement, cross border and potential scheme used.

Projects we are engaged in now are exactly touching all those points. It is indeed complex but satisfactory to build a puzzle that brings success.

 

 

 

 

 

 

 

 

 

Tomasz Pawlowicz
Lead Business Consultant

Payment expert and manager with 20 years’ experience in the Financial Services sector. Faceted to address complex client needs and provide tailored product solutions, ensuring first class customer journey management

Author

Tomasz Pawlowicz

Lead Business Consultant

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