Post on 08-Jul-2020
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
PSE Merchant Acquiring Conference
13th November 2019
Opportunities for Acquirers with the
Payment Facilitator Model
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
2
Achieving Universal Payment Services Provider Vision
CustomersUniversal Payment Services
Company Offers
ChannelsCore Platform Systems
Consumers
Merchants
Corporates
Third
Parties
Mobile
ePOS / POS
/ mPOS
eCommerce
ACH / AIS /
PISP
F2F
Gateway
Processing
eCommerce
Gateway
Processing
Acquiring
Processing
White Label
On Risk
Acquiring
AIS/PISP
Access
SWIFT
International
Transfers
ACH Instant
Alternative
Payments
Collect
Multiple VAS
Multi-
Currency
Interbank Third Party Interfaces
Payment / Clearing and Settlement
Interfaces
Ch
an
ne
l In
tegra
tio
n L
aye
r
Ba
ck
En
d In
tegra
tio
n L
aye
rTerminal Support
Online Support
Switch
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
3
EU Payment Evolution
ISO PF Acquirer
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
EU Payments Market – Large Potential to Migrate to PF
200+ Thinking?
60-80 PI/
PayFac
300Total
Potential for 100 more (inc. UK) across the EU
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
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PF Model – High Level Roles and Functions
Me
rch
an
t
Pro
po
sit
ion
Me
rch
an
t
Acq
uir
ing
Pro
po
sit
ion
Tra
nsa
cti
on
al
Ma
na
ge
me
nt
Fin
an
cia
l
Arr
an
ge
me
nt
Sales
and
Marketing
Application
Processing
Authorisation
ICS Clearing/
Settlement
Processing
Merchant
Reconciliation
and Settlement
Credit and Risk
Assessment
Merchant
Support
Merchant
Billing
Merchant
Contract
POI
Management
MIS,
Statement
and Reporting
Fraud Credit
monitoring
and
Chargeback
Processing
Value Added
Services
Application
Decision
Shadow Sub-merchant
On Boarding
and Set Up
eCom Gateway Service
F2F Gateway Service
1
2
Payment Facilitator Acquirer
Authorisation
ICS Clearing/
Settlement
Processing
Fraud Credit
monitoring
and
Chargeback
Processing
Shadow Sub-merchant
On Boarding
and Set Up
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
PF Commercial and Contractual Arrangements
Blended Rate (%)
Settlement from Acquirer to PF
Settlement from PF to sub-merchants
Acquirer
Merchant (PF)
Interchange ++
Sub- Merchant 1
Direct contract between the PF and sub-
merchant for all services
Acquirer
Merchant (PF)
Direct contract between acquirer and PF
required under scheme rules
Sub- Merchant 1
Commercial Arrangements Contractual Arrangements
Local Regulator
(e.g. FCA)
Contracts
Tripartite Contract including the acquirer
No direct contract unless €1m PI License
66
Acquirer Acquirer(s)
Acquirer Card Schemes
• Additional date requirements
• Processes and procedure
• Net worth requirements
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
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Advantages to Becoming a PF
Avoids ICS Heavyweight
Compliance / Interventions
Matches Competitor
Offers
Operational Advantages
Build Risk Management Experience
Increased Revenue
and Profits
Direct Merchant
Contracts
Cost Management
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
8
Acquirer Benefits to Supporting PFs
Balance of Portfolio
Wider Proposition
New Distribution
Channels
New Volumes and
Opportunities
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
Building a PF – Common Operational Issues
Proposition and
Product Ownership
Sales – Direct and
Indirect
Regulation and
Governance
Structure
Risk, Fraud and
Compliance
Territory –
Domestic vs
International
High Degree of
Front/Back Office
Automation
Risk Resources /
Skills / ToolsImplementation
Support
0102
03
0405
06
07
08
9
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
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10 Critical Success Factors and Key Enablers
• Commitment to Concept Strong Board/Shareholders, commitment and ownership
• Geographies/Sectors/Merchants Clear perception of target merchants
• Business Model Recognition acquiring is a risk based business
• Sponsorship Selection of a credible acquiring partner and acceptable
contract.
• Implementation Low Risk implementation plan
• Successful Propositions Redefined propositions and products
• Delivery Platform New service delivery PF components (onboarding/merchant
accounting/settlement/CBs)
Critical Success Factors Key Enablers
1
2
3
4
5
6
7
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
Potential RisksLikelihood of
Occurrence
Degree of
Risk Study Risk Mitigation Actions to Consider
Choosing the wrong Acquirer Sponsor H• Target smaller players not in domestic
market and not competitors
Failure to meet PI/Sponsor acquirer
criteria L• Ensure good legal advisory input before
application submission
Lack of understanding of acquirer risk
and major CB hit merchant/bankruptcy
or fraudH
• Ensure recruitment of Risk officers. Set-up
Risk Committee and agree Policy
Long delay/overruns in PF
implementation M• Strong project leader, adequate budget,
outsource management
Rapid commoditisation of vanilla
acquiring market by Stripe, Square,
iZettle etcH • Target vertical sector specialization
11
= Low potential to Happen =High potential to happen
11
Becoming a PF – Risks and Risk Migration Strategy
1
2
3
4
5
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
12
BEWARE! PSE Health Warning
•13/11/2019
• PSE – Opportunities for Acquirers with the Payment Facilitator Model© 2015 Payment Systems Europe Limited
Thank YouLuke PurserLuke.Purser@pseconsulting.com
93 Great Suffolk Street
London
SE1 0BX
UK
T: +44 (0)20 3771 8520
W: www.pseconsulting.com