Here Mark Collins, managing director at TNS UK and Ireland, tells PaymentEye what makes his market unique, what the true value of encryption is and why we shouldn’t expect cards to disappear any time soon.
How long has TNS been involved in the UK and Ireland? How do you support payments players in these geographies?
TNS was born in the early 90s and came to the UK in about ’97.
Our core competence is split into two types of services. First we have our access communications: how remote devices connect back effectively and securely to different hosts. We manage various methods, supporting old and new terminal types and technologies.
The second part is supporting the payments ecosystem. You’ve got this multitude of market participants, which have evolved either in different or overlapping parts of the value chain. We sit in the middle and provide the connectivity in the most seamless, effective way we can to make it easy for all of the participants to communicate and compete. Ours is a borderless network, we have no geographic rules or limitations.
It’s been said that UK consumers are early adopters of new financial technology. What has this meant for the payments space, and what are some other unique features of this market that payments players can consider when looking to expand or make a splash here?
I’m not convinced that we’re as early adopters as we think we are. In some respects — if you look at cash, for example — we’re still very slow. But we’re getting better as a society.
If you look at electronic or automated payments there’s huge upside potential. I think there’s still a lot of cash commerce, a lot of opportunity to drive more automation across evolving products like mobile payments. There is still significant scope for new players in the community — if you look at card acquiring in particular in the UK and Ireland, it isn’t yet ultra-competitive.
It used to be the banks that acquired traffic; the banks have since outsourced or sold those businesses on and new independent organisations have come into the marketplace. Lots of new technologies are emerging — albeit most of them are still based to some extent on plastic cards or on some type of banking account — but I do think the opportunity for further innovation in that area is very high, and the opportunity in the marketplace is still significant for new players and for TNS in terms of supporting them.
Could you tell me about Managed POS Encryption, the life it’s had in the US and its rollout in the UK and Ireland?
At its very basic level, encryption gives everybody comfort. If you’ve got data that is encrypted securely, even if it falls into the wrong hands it’s of no or very little benefit.
The problem with encrypted data is that it’s very difficult to work with and integrate into your own systems. What we did in the US initially was provide a Managed POS Encryption service by working with the terminal providers and enabling the data to be encrypted at the terminal and carried all the way through securely and then decrypted by us, presented to the people that need to see it over a secure, private network and then presenting the encrypted results back to the merchant.
So you can understand why it’s attractive to a merchant: it means that they don’t have to hold the data in a clear format. They can minimise the amount of development on their own back end systems with us handling all of the complexity around encryption and decryption.
This market is different because, firstly, we are almost completely EMV, whereas the US is only starting out on that path. We’re also seeing a very strong desire to de-scope PCI obligations on this side of the Atlantic; the less data that you as a merchant are holding in your environment, in any form, the simpler it makes the whole effort. So we are developing managed encryption services, working with key partners — typically terminal providers — to facilitate the best solution for the marketplace.
The UK and Ireland are mature, sophisticated payments markets. Do you see this as limiting or bolstering the opportunities for payments players in the region?
I still see a lot of growth potential in the market. People are becoming much more comfortable with making smaller-value payments using a non-cash method. That has to do with demographics, so there’s a lot of volume growth. If you look at organic growth in the marketplace it’s still very healthy. When you look at the number of new payment types, there is huge potential to grow.
Coupled with that you’ve got new players, by which I mean non-traditional card schemes. I’m looking specifically to UnionPay, who want their cards accepted across the globe. What you’re seeing evolving over time is a merchant pushing for a truly international acquiring capability and the ability to accept all payment types in every market. I think there’s a lot of opportunity for the various players, and I think there’s a significant opportunity for TNS to leverage its existing capabilities and map that out across the world to provide a truly seamless international ecosystem for payment management.
What are the big trends you see impacting and shaping the region through the second half of 2016 and beyond?
The world of payments, when you look at it at its highest level, is dynamic but not fast changing, in that there is a huge amount of innovation but also significant elements of the ecosystem that aren’t changing.
You’ve got to marry the consumer and the acquiring sides in perfect lock step, and that will always take time. Even when you look at very successful products that have seen significant market penetration, they’re essentially the same plastic card being presented in a different form. At some stage somebody, somewhere will crack this, but I don’t think that’s going to happen near-term.
Near-term the real requirement is how to minimise and drive cost out of acquiring and aggregating payment data, and how to enable systems to accept all different card and payment types as they emerge. I think you will see a continued move to IP and wireless solutions, and you will see that the payment acceptance will continue to penetrate the marketplace even to those places historically that you would not have been able to present a card — food markets, conferences, music concerts. Everybody everywhere within the next 24 months will be capable of accepting a payment card at a reasonable cost, and will have no excuses not to do so.
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