1 Global Acquiring Geoffrey Barraclough Head of Proposition - International Payments Knowledge Forum - October 2016
1
Global AcquiringGeoffrey Barraclough
Head of Proposition - InternationalPayments Knowledge Forum - October 2016
Network Value
* Direct operations in 7 countries with processing capabilities in 50 countries.
EVO Snapshot
2
Global Player
Countries
Currencies Authorized
Transactions Processed
Settled Volume
Merchants Served
InternationalNorth America
64% 36%
Revenue Mix 2016
50
>130
>1.5B
~$80B
437,000
Top 4
2012 2015
Markets USA / Canada 50
Volume $30b $58b*Merchant outlets served 212,000 534,000*
International revenue 6% 36%Transaction currencies 2 >130
Employees 500 1,488
Office locations 3 14
Expanding Internationally
3Source: Nielson
Strong Global Presence
4
#6USA
Office locations
Headquarters Direct market presence
Pan European acquiring license
#4Spain NEWIreland #5Europe #1Poland #2Mexico
Every market is different
5
0 50 100 150 200 250 3000
2000
4000
6000
8000
10000
12000
Belgium
Bulgaria
Czech
Denmark
Germany
Estonia
Ireland
Greece
Spain
France
CroatiaItalyCyprus
LatviaLithuania
LuxembourgHungary
Malta
Netherlands
AustriaPoland
Portual
Romania
SloveniaSlovakia
Finland
Sweden
UK
Usage of payment cards in the EU (2013)Size of bubble indicates relative value of total payment card transactions at points of
sale
Average number of transactions per head (2013)
Aver
age
num
ber o
f tra
nsac
tions
per
poi
nt o
f sal
e pa
ymen
t ter
min
al (0
00)
The world’s a big place and shopper behaviour is different in each country
6Source: PWC Total Retail Global Report
62%
24%
CHINA CHILE
I shop online because it’s
cheap
63%
36%
CHINA CHILE
I shop online because it’s convenient
Cross-border e-commerce set to grow
Between 2014 and 2020
• Xborder share of e-commerce grows from 15% to 29%
• Shoppers who buy x-border grow from
25% to 45%
7Source: Accenture
International expansion still attractive for store-based retail too
8
One week’s headlines…
There are a variety of strategies
9
Retailers can grow internationally or online or bothD
omes
tic
Inte
rnat
iona
l
Pure Online Store focused
Gra
phic
Foo
tpri
nt
Three use cases
10
Domestic Multi-national store focused
X-border e-commerce
LandscapeDomestic technology deploymentSimple payment needsTypically buys from bank
International technology deploymentUses integrators for standardized solutionsStrong HQ functions
Strong export focusLocalisation of web content
Payments Challenges PCI
Domestic debitManaging multiple protocolsStandardising servicePCI
Managing dozens of APsAcceptance ratesFraudCost of x-border Interchange
Decision maker Finance Director or treasurer Treasurer / CIO Head of payments
Value of Global Acquirers? None Yes – economies of scale
Yes – offer domestic Interchange, higher authorisation levels
Retailer needs
11
Domestic Multi-national POS based X-border e-commerce
Terminal Anything that works Standardised international deployment (reality may be rather different) n/a
Payment acceptance
Local debit + international schemes Local debit + international schemes All relevant
VAS Market specific eg installments, DCC, TFS
Market specific eg installments + standard deployment of DCC, TFS n/a
Service Local languageTerminals – integrated to local market IT helpdesks in local languageSettlements – to HQ
To HQ teams in home langauge
Billing Local language Consolidated bill to HQ Single bill in local language
Management Information n/a Comprehensive reporting suite,
configurable by country/site/hierarchyComprehensive reporting suite
SettlementTo local bank account in local currency according to local convention (T+?)
Single settlement to HQ bank account in home currency (T+?)
Single settlement to HQ bank account in home currency (T+?)
The value propositionSave money, improve operational efficiency and offer better customer service by implementing a single payment service for all your international operations
12
• Save up to €500 pa per POS
• Buy in bulk• Rationalise supplier
contracts• Consolidate cash
management• Open new markets
faster
• one ePOS interface
• one payment terminal
• one PSP
• one telecom supplier
• one acquirer
How to become a global acquirer
• Get a Visa/MasterCard licence
• Get a Payment Institution licence (or equivalent)
• Join local debit scheme (directly or via partnership)
• Open local bank account
• Settle in local currency (at reasonable cost) which may involve joining local settlement scheme
13
Do this for each country in the world
• Certify local terminal and protocols, recruit logistics partner
• Establish local service centre
• Write (and keep updated) local contracts in local law
The EEA is a single market…. but
European Visa/MCI licences cover all EEA
PI licences can be passported to all countries
SEPA payments make T+1 possible for eurozone 14
• Local debit schemes persist• Visa/MCI regions are not contiguous• Visa/MCI charge extra fees for new markets• Not all European countries are in the EEA - Monaco,
San Marino, Channel Islands etc• Local bank accounts needed to make T+1 elsewhere• Multiple terminal protocols persist• Local contracts needed de facto if not de jure• 14 currencies & 24 languages used in the EEA
Brexit’s not making things
easier….
15
Buy vs build - strategies to become a global acquirer
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Strategy Detail For Against
Build Set up capability from scratch No legacy systems
High risk – investment is made before customers signed.Getting to scale is difficult - proposition likely to be only attractive to x-border merchants
PartnerRefer transactions to a local acquirer in return for commission
Low riskQuick No differentiation
Risk of disintermediation
Acquisition Buy a local acquiring business
Brings all capability you need in a single transactionGives scale in-market
Slow and only addresses one market at a timeLikely to bring legacy technology