Payments Changing of the guard in the payments market
The payments market is subject to profound, primarily technology-driven and global change, but it offers attractive market growth and established profitability models. The global approach nevertheless results in local niches that are highly attractive.
While the payments market in Switzerland developed slowly in the past, with cash as the main means of payment for many, and invoice-based payments were the order of the day, the world of payments is now changing rapidly. New shopping habits, the coronavirus pandemic, innovative technologies, intense competition and also regulatory initiatives will influence and permanently change the requirements for payment in the coming years.
On the market side, we are seeing the international consolidation of payments providers in order to generate economies of scale. Many European banks have sold or partnered their dealer business because they do not have the resources to compete with specialist pure play operators. We are seeing various attempts by banks to re-enter payment transactions (Santander and Deutsche Bank have announced this, for example) in order to protect their SME customer relationships. Payments are seen once again as an important part of the customer relationship. But I consider this very difficult, especially since the high ratings of payments providers such as Adyen, Stripe or Klarna on the global side have given them too much of a lead.
On the supply side, we are seeing a clear trend towards convergence: different types of payment are converging. There is a merging of point-of-sale and e-commerce solutions, in particular. E-wallets, OEM payment options and alternative payment methods are becoming the standard for everyday payments. However, card payments still remain relevant. Account-to-account payments are gaining in importance and have disruptive potential, or may even be a game changer for the card business and all payment transactions in the long term.
Consolidation and technological globalization are not limited to Switzerland. The takeover of Concardis by Nets and then of Nets by Nexi, or the integration of the former SIX Payment Services (together with PAYONE) into Worldline has created an opening for a Swiss payments provider. While we can see that some Swiss banks want to become more like sellers again through niche offers, only PostFinance acts as a full-service provider of payment transactions for consumers and retailers.
Progress in Switzerland is slower than in the highly digitized Scandanavian countries, where state subsidies were also provided. Switzerland still has relatively high levels of cash usage; COVID-19 has accelerated the substitution trend and we can see a change in customer behaviour from cash to digital.
In other words: the payment transactions market in Switzerland must and will experience a further boost in digitization in the next few years, either through global providers or local initiatives.
Due to the current situation, Connecta Bern will again be held as a digital event in 2021. Connecta is renowned for shining a light on the diverse nature of digitization and this year will be no different with content presented across the three formats of Connecta Blog, Connecta TV and Connecta Talk. Find out more here: www.swisspost.ch/connecta.
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