Subscription Billing - MPE Special

Key Merchant Payments Challenges
Raymundo Leefmans, Dimebox
PSD2 & Open Banking
With PSD2 coming up, 2018 will be the year in which
banks clearly define standards for access to the(ir)
account(s). This regulatory requirement will bring a lot
more efficiency in the payment cycle whilst combating
fraud at the same time. Merchants will be allowed (in)
direct access to debit the customer’s account with
significant cost benefits as compared to other payment
methods, as well as guaranteed availability of funds!
Financial institutions on the other hand will struggle with
this new payment method, where they can traditionally
earn much more by offering other more costly ones. Loss
of momentum and wether merchants and consumers
actually benefit from PSD2 and open banking will
strongly depend on the speed and willingness of banks
to open up.
GDPR
The regulatory framework has been set out, as well as the
2018 deadline to implement all of these rules. However,
there is still ambiguity about the actual implementation
and enforcement of the rules in different markets. How
the rules will be enforced should be made more clear in
each market, as their literal interpretation currently leads
to a costly exercise for merchants as well as unequal
implementation and potential enforcement in different
markets. It is expected that these ‘design flaws’ will be
ironed out throughout 2018, after release.
Blockchain
The actual technology behind popular cryptocurrencies
will finally be leveraged to its full potential, bringing
efficiency, control and cost benefits throughout the
entire payments value chain. The broader acceptance
and adaptation of blockchain is currently dependent on
the (larger) financial institutions opening up to provide
relevant services to their customers. As an example,
blockchain can facilitate the requirements for banks
to allow access to their accounts and enable realtime
and validated transactions. Currently Ripple is such
an enabler allowing for efficiency in the underlying
financial transactions between Financial Institutions, but
which is not yet widely embraced in the larger Merchant
ecosystem. Therein lies the opportunity for (technology)
players in the payments value chain to introduce
innovative services for Merchants.
Transaction pricing vs Value add pricing
Financial Institutions will have to step up their game
and change their business models from from the “per
click” pricing model to one where merchants pay for the
value added services they are offered. This opportunity
presents itself as an evolution of capabilities offered by
players such as Ripple or Dimebox, who leverage their
technology to bring efficiency in the payments value
chain to all parties involved. Pricing payment services
on the per click model will not be sustainable, not in the
least because of PSD2 and Open Banking, where new
payment methods will cannibalize the current payment
revenue streams. Merchants are however willing to pay
(sometimes slightly more) for a service that helps them
battle fraud, have more security on getting the actual
funds and, of course, increase efficiency and automation.
As a result of these regulatory changes coming in 2018,
Merchants will ultimately expect more transparency
from their service providers on pricing, so imagine the
possibility to offer your Merchant a pricing plan based
on:
● Their cost savings due to high automation
● Guaranteed conversion increase with smart tooling/
routing
● Decrease fraud without creating hurdles for genuine
customers
● The most granular reporting and insights into consumer
behavior and provide payment options relevant to these
profiles
● Automation for resource intensive tasks
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MPE SPECIAL