European ISO offer

European Payments Gateway Conference,

Brussels 9nd June 2016

Niklaus Santschi, nps fintech & payment consulting

Experience related to the topic

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• 2006 at Multipay: Build of a “all-in-one” POS proposition/offline proposition for Swiss SME Merchants including all relevant acceptance brands (direct acquiring and routing to 3party acquirers), DCC, VAT Refund, Couponing, Loyalty, own POS hardware and own EMV software

• 2008 at Multipay later SIX Pay: Build of an all-in-one offline proposition and distribution for large multi national large retailers, hotel chains and UAT customers, including all relevant brands, POS software/PSP services, DCC, VAT Refund, Loyalty for all European markets independent of currencies, languages, ECRs, etc.

• 2010 at SIX Pay: Build of a integrated PSP/Acquiring offer for SME in the DACH region.

• 2011 at SIX Pay: Build of an international SME offline proposition and distribution for Germany, Poland, Czech Rep., Hungary, Italy and Belgium

• 2015 as Advisor: Consulting PE’s on acquisition targets in the PSP and Acquiring space.

Definition: European ISO

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• Multi-country and

• Multi-channel (off- & online) offering of

• Relevant payment acceptance brands and infrastructure for

• SME merchants

7 reasons not do spend any effort on this topic

• Too complex

• Too strong local competition

• Too many innovation in the market to assess per market and to cope with it

• Margin pressure and the low customer lifetime value in SME will never payout the investments and efforts needed

• Different jurisdictions and ongoing pressure from regulation will increasecosts and absorb management attention and available funds

• No way to scale and to build an efficient operation model within thisfragmented setting

• Too high risk of failure before doing the first transaction

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Herzlichen Dank! Merci

beaucoup! Mille grazie!

Muchas gracias !

Tack så mycket ! شكرا جزيال

большое спасибо !どうもありがとう非常感谢Many thanks!

7 reasons to consider it

• Large customer potential

• High potential of winning new customers – hold-outs due to increasing

card payment driven by changing habits and new to the business

customers

• Often neglected by local Acquirers – so high churn potential

• Underserviced

• Good margins, with an «extra» as Acquirer didn’t passed on IC reduction

• Lower price pressure

• Stand alone POS and standard brand offering needed

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Merchants perspective

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• «My passion is my business»: Payment is only the element which fulfills the «contract: money for goods/services».

• «I am special»: The payment proposition needs to fit my business, my customers, my needs

• «I need it simple»: Ease of on-boarding, easy techno-handling, ease of use for consumer

• «I am growing: I may open another shop or channel»

• «Is it secure and reliable?»:

• «It’s too expensive!»

• «What can you do for me? Do you understand my local needs?»:

• «Are you responsible? Can I call you personally if it doesn’t work?»

Perception equals reality

Suggestion for positioning

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LeadingEdge

Average

LoosingEnd

Geo-graphy

Europe

Local

Stable,Secure

High

Low

Low

High

PriceProduct/Solution

High

Low

Cust.Service

High

Low

Time toMarket

Fast

Slow

ProductRange

Broad

Narrow

Differentiation

Customer

proximity

Super service

quick and easy

Customer proximity • Focus either on a vertical or a niche, or on a typical domestic or foreigner oriented

segment

• Offer one contract for all product & services, with incentivicing conditions

• Add local expertise and flavor

• Deliver multilingual interfaces

CRM • One central marketing, sales, on-boarding and CRM platform, combined with

operations and self-self services

• Automated data feed as source for marketing and sales

Sales • Lead generation by

• Outbound/Telesales

• Free lancer field sales

• Partners / Integrators

• Resellers

• Anchorman on the ground

On-boarding • easy and quick “do-it-yourself”

• fully digital without media gaps

• with video identification or Bank ID integration

• Upload of docs and scans

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Provide best customer experience at any touchpoint

First contact

• Immediately after successful on-boarding

• Customer chooses POS, devices, etc. as packages in the internet

• Shipment of POS to merchant

• Download of Plug-ins or APIs immediately after on-boarding

• E-mail confirmation with Merchant ID and portal login data and tracking

number for shipment of POS device and activation process

• Merchant activation before POS arrives at merchant

• Merchant connects POS and is ready to accept cards; Every successful process

step will be confirmed to merchant via SMS, chat or email (according preference)

Self-Service

Merchant Portal

• Very simple language, tutorials, “payments for dummies”

• Product explanations, guidelines, GTC

• Settlement reports, simple data analytics tailor made for merchants/MCC

• Data maintenance

• Customers sees same data than staff

Communication

Channels

• Just any! Let the customer choose!!

• Chat, email, phone, skype, letter…..

Service taff • First contact – great experience!

• Immediate answer – no IVR and blablabla

• Super nice and competent staff, ideally in mother tongue

• No up- and cross-selling – just real help

• In case of trouble – send “sorry and gifts”. Be nice and keep10/06/2016 12

Customer proximity, ease and speed of service

Critical factors for market development

(1) Market: Size, growth rates, structure, potential

(2) Competitive environment: local/regional players, ISO and/or bank distribution, domestic brands (debit) and loyalty

(3) Margins per segment and market

(4) Localized needs: Technical specifics, languages, holidays, culture, habits

(5) Local partners: As partner for the solution (debit, etc.), delivery/logistics

(6) Readiness for ISO: Labour law, availability & cost of (free lance), sales staff

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SME markets, segmentation & target groups

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low ´high

foreigners

Market size

Co

nsu

me

r ty

pe

slocals

Restaurants3

Every day spending1

Tourism & Travel4

Luxury goods6

1-4 Star Hotels 5

Standard high street2

Key markets

• UK / Ireland

• DACH & BeNe

• Spain

• Poland (& CEE)

• Italy

Product offer: «Pragmatic» approach

SME domestic business

• POS, mPOS and materials

• E-Com plug-in, PSP, inApp

• Card acceptance• MC, VISA, MAE, Vpay• Domestic Debit

• Domestic/regional relevant APM

• Domestic relevant closed loop orvouchers

• Value adds• Couponing, loyalty scheme

• Volume incentiviced pricing

SME tourist business

• POS, mPOS and materials

• E-Com plug-in, PSP, inApp

• Special integration hospitality ortravel system

• Card acceptance• MC, VISA, MAE, Vpay, CUP, Diners,

Amex, JCB• Domestic Debit (only few countries)

• Value adds• DCC, VAT refund

• Value incentiviced pricing

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Strategic partners

European:

• Acquirer and processor needs to support multi, multi, multi….

• PSP with broad offer of APM

• POS vendor and logistics provider

Local / regional:

• POS SW engineering

• NSP for local/domestic specials (i.e. Girocard, Postfinance, Edenred, Sodexo….)

• Job and recruiting partners/platforms

• Market research and networking organisations

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Key success criteria

• Proposition: Reduce to the max! Segmentation is key!

• Focus on the key touch points: «Communicaton» and«Tangibles» (POS, mPOS, paper, reporting, contract

• Digital marketing & sales: Fully digital processes for marketing, distrubution and service

• Digital services, such as automated on-boarding, self service & merchant portal

• Local anchorman and knowledge within service organisation

• Scalable and flexible partners/suppliers

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Thanks!

European Payments Gateway Conference,

Brussels 9nd June 2016

Niklaus Santschi, nps fintech & payment consulting