After our analysis and evaluation of Payvision’s achievements in 2013, we thought of the top five predictions for the payments industry in 2014, which will directly impact the evolution of merchants, PSPs, acquirers and banks around the world.
1. More market consolidation – Given the expected growth in the cross-border eCommerce space and payments industry, the industry may see a continuation of the consolidation trend. Most of the consolidation has been among established players in the industry, such as Visa and Cybersource, MasterCard bought DataCash, or Igenico & Ogone, American Express invested in Payfone, and major players will continue to increase their investments in eCommerce space and create customer-designed programs and services.
2. More legalization around card transactions, leading to cost reductions of merchants’ fees. The lack of transparency in how the current system of Visa and MasterCard establishes fees goes unchallenged, and the credit card networks can continue to restrain competition.
3. Payment service providers will experience lower margins – Regional or local PSPs will face increased competition from the international PSPs, leading to more acquisitions and mergers. We wrote a full article about this trend, its causes and effects here.
4. The rise and dominance of IPSPs and payments’ facilitators. Payments have become a commodity these days, and added-value services turned out to be more important than just accepting and processing payments. Thus, many companies who are providing content, marketplaces, and app-driven services are now adding delivery and logistics to their propositions. To do this, payments are being aggregated under the company or merchant able to deliver a complete suite of services in a one-stop shop model. Obviously aggregation is not permitted by the card schemes, and so they have created special programs (for Visa: IPSP and for MasterCard: Payment Facilitator) to facilitate and accommodate these new types of business models.
5. Alternative payments for domestic ecommerce are expected to grow by 13-15% by 2015, while the growth in cross-border ecommerce growth means credit card usage will increase in the card-not-present space, as regional and global “glue”. With almost half of all online shoppers looking for goods abroad, easy payment solutions are the key to changing payment habits and encouraging alternative payments’ acceptance. So there will be a lot of opportunities for banks and other players in the payments industry to leverage on.
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