What’s holding UK and EU payments back?

Despite Brexit uncertainty, the average UK SME made international payments of £48,000 in Q1 of 2018, up 5% year on year and the second highest amount recorded in over two years. It would seem that efficient payments in a range of different currencies are more crucial than ever, and UK businesses need to keep up.

Complex, fragmented and overcrowded value chains results in slow and unreliable payments processing. But is a cloud-based, end-to-end infrastructure the answer?

I spoke to Yannis Larios, Business Development Director, Viva Wallet, about the future of seamless payments in the UK and EU, and what merchants and retailers can do to revolutionize their payment systems.

What are the main challenges facing medium to large companies in the UK and EU with regards to their payment systems?

One thing that is a major challenge for many companies, especially multinational ones, is the fact that they’re using multiple payment methods in several different countries. They have to support major card schemes such as Mastercard and Visa, but they also have to support localized closed loop card schemes, which can be quite complex. Also, if they have a central accounting department, they might have to settle for multiple acquirers across Europe.

Even though Europe is a single market, in terms of payments it’s a very fragmented one. All this complexity can create a nightmare for an accounting department. Typically, large companies across the UK and EU would like to see an acquirer or a payment provider that can provide services across the region, in as many countries as possible – to have unified reporting, and to be able to settle in all these different payment methods, supporting local closed loop card schemes and mobile wallets.

How is a cloud-based payments provider a better companion for these companies?

We’ve built our infrastructure from scratch – it’s state of the art and fully PSD2 compatible. The payment services directive caters for modular access to bank accounts through APIs. Our infrastructure is designed so that we can reap the benefits of APIs immediately. Being cloud-based means that it’s fully scalable – we can offer payments efficiently at any volume.

There’s no restraints in terms of our capacity to process payments. Due to this infrastructure, and how we’ve built it, we’re ‘always on’ – the chances of the service being interrupted are greatly minimized, if not eliminated. Viva Wallet constantly improve the service so that it’s always working, even if an issuer is down, or any other part of the payment chain is interrupted.

Why is it so important to be able to adapt to financial institutions across Europe?

Because, typically, other payments providers serving these markets, don’t offer their services localised to specific regions, which makes a big difference. If we open a payment account to merchants we assign a localised IBAN to the account. This facilitates transfers for merchants at a lower cost and renders the service more familiar to them, making it far easier for them to transact from day one. Other payment providers may be able to offer their services in several countries, but they do so with an IBAN based in their country of origin. Viva Wallet is also multilingual – we use the language of the merchant, and even specific dialects.

How does relying on intermediaries put some payments providers at a disadvantage?

Most acquirers and payment providers rely on legacy systems – our youngest competitor is ten years old – but they also rely on other vendors. If you follow the value chain of a typical card acquiring transaction, such as the use of a card in a shop, typically you will see three, four or five steps before the transaction is completed. This also involves seven different companies in the same transaction. Of course, in such a complex value chain, if any part of the chain breaks, the transaction will fail.

Eliminating all of these intermediaries and replacing them with an end-to-end structure such as ours creates a far more reliable value chain, and a far more reliable transaction. It also means that dealing with any potential issues is far simpler too, as there’s only one person a merchant will need to call to sort it out – us. Viva Wallet can also innovate faster and more effectively because we control the value chain more efficiently. For example, we even offer our own POS devices, for which we’ve built our own software, and because we control this end-to-end we can customize our services to whatever a retailer requires.

What’s the next major area of innovation in the payments space in Europe?

I think we’re going to see more innovation around the seamless integration of payments. Payments has always been a distinct part of the consumer and merchant experience, but we’re moving now into an era where payments will become more seamless, the point that the consumer won’t notice the payment taking place. Consumers will pay for their shopping in the supermarket without having to take their card out, and drive through road tolls without having to stop, as the payment will be automated.

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