Quite an ecosystem

A funny thing happened on the way to Merchant Payment Ecosystem in Berlin. Three funny things, actually. I tried to use an app to buy something on the way and I got a message saying “transaction failed”. It didn’t tell me why. I’m sure the service provider didn’t know either, as they just got a decline from the issuer. Some forensic work on my behalf later determined the cause of failure was that the card I’d given the app a couple of years ago had expired. The new card was on my kitchen counter back home, but of course it was my problem to have to go around all the stupid apps on my phone that didn’t use Apple Pay and update update each of them individually.

Then on the plane on the way to Berlin the British Airways cabin crew said that the on-board POS had a problem because it would accept AMEX and Visa cards but not MasterCards. No one knew why. I was desperately hoping that they would put out an emergency call over the public address system “is there a merchant acquiring expert on the plane” (there were about 200 of them by my estimate) but, sadly, they didn’t and so those people prepared to cave into BA’s new policy of making passengers pay for coffee had to struggle by as best they could.

When I got to Berlin I jumped in a taxi at the airport and set off for the hotel where we were going to be discussing all the new stuff going on in the world of merchant payments. We got to the hotel, I took out my card and was actually stunned to hear the driver tell me “I don’t take cards”! Seriously! In a supposedly civilised country and a city that wants to challenge London’s position as fintech hub! So the driver had come into the hotel with me and wait until I checked in so that I could get hold of some cash in order to help him to evade tax.

I drew on these experiences in my opening address to make three main points to the delegates:

1. Electronic payments are not ubiquitous, but that’s not because of the technology. The taxi driver could perfectly well have taken electronic payments if he wanted to, but he didn’t want to. When I went to dinner the following night, I of course used an app

2. Evolution in our sector isn’t really about payments, it’s about identity. Since BA know who I am, and since I had to show a passport to get on board, and I have British Airways Amex card and a BA app on my phone, why are BA messing about with chip and PIN at all? Why not just use my BA app to charge to a token on file?

3. We’re on the edge of the thingternet. Look at IBM’s recent announcement of a partnership with Visa. Everything is becoming a card, everything is becoming a POS. So what happens when I’m driving down the motorway and my card expires and a new one is issued? Does my car stop dead in the business class motorway lane while I have to send a motorcycle courier to fetch the new card from my house so I can type in the new expiry date and the CVV? We’re shoehorning systems into environments they were never designed for so maybe it’s time to rethink and construct a new kind of infrastructure (based on identity, obviously).

While I’m on the topic, by the way, this was my first visit to Merchant Payment Ecosystem despite a number of recommendations from our guys and others, and I have to say that it’s an excellent event. I was genuinely flattered to be asked to chair the first morning and the key panels. The first was with the panel about digital commerce and omnichannel payments with:

• Gijs op de Weegh, COO, Payvision;

• Marc Birkner, Ingenico ePayments;

• June Felix, President Europe, Verifone;

• Simon Black, CEO, PPRO Group;

• Marc-Henri Desportes, General Manager, Worldline.

The discussion was absolutely first-class. Sometimes it can be difficult to get the conversation going on the first panel of a major event but we hit the ground running on this one. As I explained the audience at the time there were no rehearsed questions and no PR scripts to follow. We had a genuine conversation about a wide range of topics and I can see from the feedback that the delegates greatly appreciated hearing smart people speak their minds. I really hate to paraphrase such a fascinating discussion, but if forced to I would say that there is a shift underway from the POS as a device to the POS as a platform and there is a convergence under way but that convergence is towards the virtual rather than the real. In other words, the checkout and payment experience is converging to the app, not the tap (okay, that’s my bumper sticker and not exactly what the participants said but I think it conveys the sense of the discussion!) and the payment experience will be the same whether in-store, on the phone or at a web site.

The second panel  was great too. The organisers did me the great honour of allowing me to cross-examine some of the industry’s most senior people on behalf of the wider audience. The panel was:

• Ron Kalifa, Vice Chairman, Worldpay;

• Diane E. Offereins, Executive Vice President, Payment Services, Discover Global Network;

• Burkhard Ley, CFO, Wirecard;

• Michael Steinbach, CEO, equensWorldline SE;

• Paul Thomalla, SVP Global Corporate Relations and Development, ACI Worldwide.

The panellists allowed me to push them on some of the tough issues facing the acquiring and processing parts of the industry. I made the point that in an environment moving towards instant, push payments the role of acquirers and processors will change substantially. Naturally, since everyone on the panel knew more about this than I did and had already thought of it, they had some great perspectives.  I was particularly interested by their views on future value-added services which, it seemed to me, had a lot to do with data. Hence I was left with the impression that some of the big plays coming in this space are no longer about devices or charging bundles or apps but about big data, analytics and machine learning. I also rather liked the suggestion that emerged from the panel that we need to begin to reframe the acquirer as a merchant service provider (MSP).

All things considered it was a terrific event. My colleague Gary Munro (Consult Hyperion’s principal consultant on the acquiring side), who chaired a couple of excellent sessions at the event, has attended for the last couple of years and he knows a fantastic amount about this business and he always recommended it highly.

This will definitely be a fixture in my calendar from now on – a couple of days very well spent and the whole experience was only slightly undermined by the Berlin airport baggage handlers strike on the final day.