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Transformational payments solutions:Amazon is in talks with Banxico, Mexico’s Central Bank, to launch a new mobile-backed payments system using QR codes. The new system, called CoDi will allow customers to make payments online and in-person through free QR code technology. Mexico has a large unbanked and underbanked population and such a solution could bring more individuals into the formal financial sector. Similar phone-based payment systems have been widely adopted in developing countries in Africa and Asia. A pilot rollout of the CoDi product is expected later this month. Source: Reuters |
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Regulatory landscape: Philadelphia becomes one of the first municipalities to ban cashless stores. The municipal bill, which was signed into law in February, places fines of up to $2,000 on merchants that do not take cash within the City of Philadelphia. However, many transactions will be exempt, including parking lots, garages, rentals, online sales and more. Massachusetts and New Jersey are also considering legislation to reduce or eliminate cashless stores. While many think cashless stores promote inequality, cashless merchants claim it increases efficiency and reduces fraud. Atlanta’s Mercedes-Benz stadium recently adopted a cashless concessions model for all future events at the stadium.Source: The New York Times |
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Customers’ evolving expectations: Lloyd’s Banking Group in partnership with Visa announced a new pilot scheme designed to boost access to cash across the UK. The new scheme will provide fees to merchants for providing cash-back services at checkout. Lloyd’s aims to increase the number of cash-back locations, especially in areas with few or no ATMs. The initiative also aims to drive more traffic at high street merchants in the UK. Tens of thousands of merchants in the UK have cash-back capabilities in their stores but have thus far chosen not to participate due to a lack of incentive. Lloyds hopes that these incentives will drive merchant participation in the scheme. This comes at a time when the maintenance of ATM networks are in-question, as customers increasingly move to cashless and digital forms of payment. In response, banks are finding new and creative ways to adapt to give customers access to cash when needed.Source: Lloyd’s Banking Group |
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Data:The PCI Security Standards Council announced that they are developing standards for contactless acceptance of payments for off-the-shelf devices. The standards aim to allow merchants to safely accept payments on traditional phones or tablets through native NFC antennas in these devices, eliminating the need for a dongle or third-party acceptance device. The standards will provide guidelines and specific criteria for payments providers to protect payment data within their offerings. The council aims to publish these standards by the end of 2019. Source: PCI Security Standards Council |
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New providers: Barclays is launching a new merchant acceptance application called Pay-by-Bank, which will allow customers to check out on their mobile phones with a merchant. The new checkout method, which was created by MasterCard’s Vocalink, will not require customers to enter any personal details but check out with their own Pay-by-Bank profile. Barclays is hoping merchants will see benefits through lower fraud and higher conversion rates at the point of sale.Source: Barclay Card |
PARTNERSHIP SPOTLIGHT
- FIS announced the acquisition of Worldpay for an enterprise value of $43 BN. The deal is the largest in the payments space, topping Fiserv’s recently announced acquisition of First Data for $22 BN. The deal is seen as being complementary to both FIS and Worldpay, with FIS gaining a stronger foothold in merchant acquiring and payments processing, especially in the eCommerce space, and Worldpay gaining distribution access to FIS’s large customer base, particularly financial institutions. The two companies expect their clients, including both SMBs and enterprise merchants, to benefit from enhanced omni-channel payments, and payments risk and fraud solutions.
Source: FIS and Bloomberg - Walmart and Affirm are launching an omni-channel partnership to provide Affirm’s point-of-sale (POS) financing to Walmart stores and eCommerce channels. At checkout a customer can seek approval for a loan. Once approved, the customer can select loan instalments amounts for 3, 6 or 12-month periods. Affirm POS loans can now be used on Walmart purchases from $150-2000 across the entire US except for Iowa, West Virginia and Puerto Rico.
Source: Walmart
MERCHANT SPOTLIGHT
- Kroger has announced that it will stop accepting Visa credit cards at California Smith’s Food & Drug Stores.
Kroger cited ‘excessive interchange and network fees’ charged by Visa as the reason for terminating the relationship
Smith’s has 134 stores across 7 states and employs over 20,000 people and will stop accepting Visa credit cards immediately in 21 stores and 5 gas stations in California
Smith’s stores are the second Kroger brand to stop accepting Visa credit cards, following Food Co.
All Kroger’s stores will still accept Visa and other networks’ debit cards
- KFC and Flux have partnered to launch paperless receipts linked to select bank cards across KFC restaurants in the UK.
The new feature will allow customers to view a digital version of their paper receipt for KFC transactions in their banking app
Flux is an opt-in platform that individuals can connect to their retail banking platform at participating banks
Flux claims that soon users will be able to automatically collect KFC points and rewards when they pay through their bank platform
Currently, the paperless receipt feature only works with Monzo and Starling Bank, two UK challenger banks, but will soon be available with Barclays and others
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.
Note that Oliver Wyman believes the curated content to be reliable, but it has not been verified. As such, Oliver Wyman gives no warranty as to the accuracy of such information. Oliver Wyman’s curation of such content should not be interpreted as an endorsement of the organizations that published the content.
