Payments in a changing landscape

Stakeholders met at the Visa office in central Copenhagen to discuss the future of the Danish payment infrastructure, and the future investments in new technology. Visa headed off the meeting with an open invitation to the banks, to point of sale/terminal-providers and retail to intensify the dialogue so future development can be built on co-development. The European Commission’s regulation of interchange fees for card-based payment transactions is a momentous change. Among other, the impact of the regulation will be that 6 -7 billion euros are being handed back to the merchants in operations costs.

“Visa welcome a plain level playing field, but merchants need to join the party. To develop the next generation and be relevant for the merchants, we need the merchants to co-develop with us. Previously, Visa has had a closed point of view, but we are ready to change that. We have reengineered Visa to open up and move from plastic to virtual,” said Executive Director Nordics and Baltics Martin Ten Houten at Visa.

The future will bring new payment solutions, and many of the big companies are introducing new electronic payment methods. Google, Apple and Samsung all present new methods of payment, which will force the whole industry to stay informed and keep up with the new solutions.

“The likes of Apple will force the industry to react. They want to challenge the existing systems, and it has just started. The retailers will need to sit down and discuss the future of the ecosystem – otherwise it will end up in a mess,” said country manager Jens Damgaard, Visa Europe.

Visa presented five predictions at the meeting: Big retail will explicitly favor digital payment, consumer choices will be compromised, scale will matter, small businesses will get more attention and pay for administrative fees, and some unusual collaborations will emerge.

The retail industry acknowledged the first prediction about the future of digital payment. They are looking into cashless stores, which the Danish government has discussed as an opportunity. The new regulation will also mean that the payment situation will be more complex and can be compromised, but the retailers have a great belief, that the open market will secure both more options and lower costs. Scale is important to create cost effectiveness, and retailers are very interested in new disruptive alliances, which could include virtual currency and direct debit, so consumers could get a new scheme with low cost and increased choices.

The big question for all stakeholders was: Who is going to own the consumers, who are key in the years to come. Is it the banks, the merchants, the credit cards, facebook/google or the megabrands?

The winner will be the one with strong relationships to consumers through for instance loyalty schemes. The actual payment is only a minor part. It is the add-on, that will provide competitive advantage. All parties agreed to follow up on the discussion with further dialogue in the months to come.