2017 Predictions for Payments and Acquiring
Greg Cohen, COO – iPayment, Inc.
Last year we witnessed massive investment in payments and the surrounding ecosystem, increased partnerships and merger and acquisition activities, and a continued flow of complimentary products and services flooding the marketplace. Certainly, more activity, and some would say, more disruption, than we’ve experienced in my 20 plus years in the industry. As we kick-off 2017, I’d expect a continuance of ‘shake-ups’ in and around payments.
My predictions for 2017.
- Software Wins: Businesses (merchants) chose software over payments! In 2007, businesses often selected a vendor just so they could accept credit cards. In 2017, they are looking for a solution to help them grow their business and payments is simply a feature of that solution. ERP, POS and other software providers are playing the hub for businesses services and have a desire to take greater control of the entire customer experience – including payment acceptance. As we enter 2017, look for more software providers, ERP companies and business management solutions to become payment providers as payments moves to “app” status inside a full suite of business offerings.
- Payments Embedded in the Internet of Things (IoT): The trend towards integrated payments isn’t new but embedding payments into IoT is a trend that we’ve already seen, started by Amazon as it’s partnerships with appliance manufacturers with its Dash reordering system and Echo voice ordering. Auto manufacturers are getting into the game and enabling commerce capabilities as well. As everyday devices and components join the IoT, buying becomes simplified and payments just happens. Look for the start of the ‘Uberization’ of everything in 2017 – frictionless payments.
- Increased Co-Opetition: Last year saw partnerships between PayPal and Visa as well as ChasePay and MCX. Arch enemies for years, interesting foes are now uncovering new partnership opportunities. As traditional infrastructure players move out of their traditional arenas, expect to see more and more partnerships that don’t, on the outside, seem natural. 2017 will see more mega partnerships that will put competitive pressure on those that are left out of the distribution and technology opportunities these produce.
- SMB Challenges: With 24/7 connectivity and the ease of comparison shopping, small retail has it hard. The big digital marketing dollars are coming from the biggest retailers and online and mobile commerce combined are growing at close to 20%. The consumer has more power and choices than ever and a “built in” simplified shopping and delivery mechanism on their computers, phones and tablets at all times. I call this “The Amazon Effect” and it’s putting massive pressure on small retailers. Even with better tools available to SMB, the struggles will continue into 2017 and beyond.
- Year of Consolidation: The aforementioned trends are forcing processors and acquirers to rethink the necessary assets for future success in the new world of commerce. While 2016 saw massive “mega” consolidation with TSYS buying TransFirst and Global Payments buying Heartland, 2017 will see a continuation especially for the mid-size players as they make the strategic decision to double-down in need of scale, distribution and technology or exit the business completely. To compete in this new economy, where technology and alternative distribution is key, mid-size players must make very strategic “in or out” decisions; and if the answer is “in” expect them to aggressively look for key assets. In 2017, I’d look for some really interesting M&A activity.
2017 is going to be a year of looking forward and not looking back for the majority of traditional payments players. As noted, regardless of size, companies are, and must, think differently about their future and their business in order to position themselves for growth in the new world of commerce. EMV, omni-channel, mobile, etc. will still be talked about, but those are technologies, features, and functionality; the bigger story for 2017 is a new foundation, a new normal, that will require a completely new set of tools and strategies for businesses to remain competitive.
As Sean Connery said in the The Untouchables, “Don’t bring a knife to a gunfight.”