Merchant Payments Digest

The Merchant Payments Digest is a regular update from Oliver Wyman to keep merchants apprised of developments in the rapidly shifting payments space.

PAYMENTS SPOTLIGHT


	Transformational payments solutions:SwayPay, a mobile platform that enables online and mobile purchases, seeks to reduce the average checkout time for customers from 2-3 minutes to 12 seconds. A study conducted by the Baymard Institute found that ~69% of online carts are abandoned due to long checkout processes and security concerns. This translates to approximately $4 trillion in missed sales in the US. Customers who use SwayPay first input shipping and payment information and then shop at merchants who accept SwayPay. At checkout, customers click ‘Pay with SwayPay’ and confirm the purchase with biometrics to secure the transaction. SwayPay is garnering interest from several hotel chains and eCommerce players. Source: Forbes (https://www.forbes.com/sites/amitchowdhry/2018/03/02/swaypay/#5f732c926a0a)

	Regulatory landscape:American Express, Visa, Mastercard, and Discover now have all announced that credit card signatures will no longer be required for purchases. This was implemented starting April 14th primarily in the US and Canadian markets, and is a response to merchants’ desire to streamline the checkout experience for customers. The introduction of EMV chip cards has made signatures obsolete, as the chip creates unique transaction codes to limit fraud. Since introducing the chip, Visa reported a 66% decline in fraud occurrences over the past two years. Several merchants, including restaurants that add tips, may still require signatures as they have specific operational constraints to solve for prior to moving to a no-signature model. Source: USA Today (https://www.usatoday.com/story/money/business/2018/03/30/credit-card-companies-you-can-soon-skip-signing-receipts-most-card-purchases/472380002/)

	Customers’ evolving expectations: Affirm, a digital point-of-sale financing start-up, is expanding into the brick and mortar space by offering its POS financing solution for in-store payments. This is in response to customers’ expectations to have a seamless payments experience for both online and in-store purchases. Affirm has partnered with Apple Pay to enable in-store payments. Prior to this announcement, Affirm’s business model targeted eCommerce customers for large ticket items. By increasing its presence in-store, Affirm hopes to expand its customer base and offer customers a seamless experience regardless of where they shop (online or in-store). Affirm is currently accepted by more than 1,000 merchants. Source: Bloomberg (https://www.bloomberg.com/news/articles/2018-03-19/startup-affirm-creates-apple-pay-credit-card-without-the-plastic)

	Data:In the past month, several leading merchants have experienced data breaches involving customer payments data. Saks and Lord & Taylor, have identified a data security issue affecting 5 million cardholders who paid in-store. Other merchants, including Sears, Delta Airlines, and Best Buy, also experienced a similar data breach exposing customer payment data, due to a breach in their customer service chat provider [24]7.ai. These breaches are the latest in large cyber fraud thefts to occur, which are also affecting other categories of merchants, including, internet service providers (Yahoo! and AOL) and credit reporting agencies (Equifax). Source: USA Today (https://www.usatoday.com/story/money/2018/04/01/data-breach-hits-lord-taylors-saks/476838002/) (https://www.usatoday.com/story/money/2018/04/05/data-breach-service-provider-hits-thousands-sears-delta-customers/490089002/) (https://www.usatoday.com/story/money/2018/04/06/best-buy-shoppers-payment-information-may-have-been-exposed-data-breach/493690002/)
	New providers: Uber has submitted an application for an e-money license from the Dutch Central Bank in order to expand its financial services offerings to its customers. If the application is successful, Uber plans to build an electronic money subsidiary called Uber Payments BV to focus on streamlining its payment processes. Uber expects this move to help improve the customer experience and payments journey by continuing to innovate and streamline its payments offerings, including peer-to-peer transactions. Source: Sky News (https://news.sky.com/story/uber-seeks-dutch-payments-licence-in-drive-to-diversify-11305691)

PARTNERSHIP SPOTLIGHT

Walmart is reshaping its payments strategy in China by partnering with WeChat Pay to enable customers to make in-store purchases
- This partnership comes as Walmart decides to drop Alipay as a payment method in its stores in the western region of China. Walmart claims this is a business decision to improve the customer experience
- Tencent, WeChat’s parent company, and Walmart both have stakes in JD.com, an online retailer in China. Walmart China uses JD.com’s platform for its Chinese ecommerce sales

Source: Reuters
(https://www.reuters.com/article/us-china-walmart/in-china-payment-war-walmart-places-bet-on-tencent-idUSKBN1H30U9)

Shell is enhancing the payments experience for its customers by partnering with Chase Pay to enable customers to pay for fuel using their mobile phones
- Customers can use the Shell app or the Chase Pay app to pay and earn points from Chase’s Ultimate Rewards program
- Customers can also use either app to pay for purchases at convenience stores
- This adds to a number of initiatives that Shell has undertaken to improve its customer at-site experience, including building an in-app locator and station amenities

Source: Chase
(https://media.chase.com/content/pr/customers-shell-pay-using-mobile-chase-pay)

MERCHANT SPOTLIGHT

In an effort to encourage unbanked customers to buy online, Amazon launched its first debit card called Amazon Rechargeable in Mexico
- This offering comes as retailers are investing heavily in online shopping as eCommerce begins to gain more popularity in Mexico
- Amazon Rechargeable targets customers who wish to convert cash into a card payment method to enable eCommerce shopping
- The launch of the debit card is in line with Amazon’s objectives of accelerating its presence in the financial services and payments space. It is reportedly preparing to launch its own peer-to-peer (P2P) payment offering through its virtual assistant - Alexa, enabling individual payments through voice command

Source: Reuters
(https://www.reuters.com/article/us-amazon-com-mexico/amazon-launches-first-debit-card-in-mexico-e-commerce-push-idUSKCN1GP35A)

Source: NASDAQ
(https://www.nasdaq.com/g00/article/amazon-amzn-to-roll-out-voice-automated-payment-system-cm945448?i10c.encReferrer=&i10c.ua=1&i10c.dv=13)

Oliver Wyman is a global leader in management consulting with offices in 50+ cities across nearly 30 countries. Our Payments practice works with constituents across the payments value chain to deliver insights with real impact, combining deep industry expertise with powerful consulting capabilities. To have a discussion with Oliver Wyman on your payments issues and opportunities, please contact Beth Costa or Rob Mau at payments@oliverwyman.com.