The mPOS market is experiencing rapid global growth, with analysts suggesting 12 percent growth per year for the next 3-4 years. However, when Jean Marc Thienpont, EVP Mobile Payments Solutions at Ingenico and COO of ROAM, sat down with MPD CEO Karen Webster in Boston, he begged to differ. His calculations suggested much higher growth, and a market for mPOS that could even be much, much larger than projected.
That kicked off a deep-diving engaging discussion about what’s driving this growth, where he sees the mPOS market heading in years to come, what solutions providers like Ingenico and ROAM need to do to ensure a spot at the top, and whether Ingenico worries about mPOS cannibalizing its core business.
KW: What do you believe to be the main drivers of mPOS growth?
JMT: The first driver is the convenience and customer experience that it’s bringing. This type of mobile payments solution is not only a payment acceptance solution, but it also is a solution to help the merchant drive business and have a seamless relationship with the consumer. That’s what makes it so powerful.
The second is that it increases the payment acceptance addressable market. There are a number of merchants that were using cash only or checks and can now accept cards, which allows them to do more business.
The third is that it opens up brand new use cases worldwide. There are some insurance companies that do door-to-door sales, for example, and they need a solution that combines business (looking at the contract on a tablet or mobile phone) and accepts payments.
KW: mPOS started out as purely card acceptance but has become much more than that. How has that changed your requirements as a solutions provider – what do you have to do today to serve the market and address those three drivers?
JMT: First of all, we have to be very innovative. It’s not just about having a new payments scheme or a new connection to an acquirer developed. It’s having a full ecosystem put in place to offer to the merchants.
The second thing is that we have to be flexible – we have to recognize the fact that each business will have different needs. One size does not fit all in terms of business applications. We have to design a solution that is robust, secure, and also very flexible and can adapt itself to the needs of the customers.
The third point is that we have to be global. As mPOS is spreading, we have to have payments solutions that work in any environment – accepting chip and pin, chip and sign, or swipe with the same conditions of security.
The last point is that we also have to be local. Payments, at the end of the day, are local. We must have a local connection to a local acquirer, and we must accept local payment schemes to serve merchants. We also need to have a very solid local footprint to understand their needs.
KW: I agree that it’s a global, local play, and that makes it challenging for many players. But there are some global markets where card acceptance won’t be a big driver for mPOS. Kenya and other African countries will skip cards and go mobile-to-mobile. How do you see mPOS solutions fitting into those environments?
JMT: Absolutely, there are some geographies where the way people are exchanging money is very different. For example, in Kenya, we have a customer, a major bank, that had a mobile payments solution but it was specifically for a closed-group system for bus ticketing. It was very specific, and they needed a contactless solution.
Another continent that is bringing up new use cases and is extremely promising is Asia-Pacific. There, we have cases where people are doing door-to-door insurance or people in Vietnam collecting bills from door-to-door, they must have a mobile payments solution. These types of use cases, which people are not used to in Western countries, are really driving the growth of mobile payments solutions.
KW: Let’s talk about Ingenico and its view of mPOS, and what it’s specifically doing. In a lot of cases, what we’re describing is a very different solution than the core business of Ingenico. Do you worry about cannibalization at all?
JMT: Mobile payment will bring a huge plus to our core business, and not to cannibalization. Of course, some merchants may have their own solution – a tablet and small reader. But if you look at the use cases with mobile payments, these types of solutions are not made for heavy usage.
We believe that traditional customers will use mobile payments solutions on top of their existing solution. For example, Subway has traditional terminals that they won’t replace –but they do use mobile payments solutions as a backup in case there are any problems with their own terminals. They also use them for their catering service and for pop-up stores.
The second reason it will bring a huge plus has to do with customers that have seen our mobile solution, which includes a reader, an app that can be customized, and a backend program, ROAM MCM (Mobile Commerce Manager). The MCM is extremely powerful because it can manage hardware, applications, transactions, fraud, and a number of things not exclusive to mobile payments. Many customers have been interested in using the backend system for their traditional terminals, opening up the possibility for recurring business.
The third reason is the multichannel play. We have a number of customers, SMBs coming from the online payment world, who have a website and want to open small shops and accept physical payments. These players want to have a mobile payments solution that’s seamless, easy to use, and accepts face-to-face transactions. There are lots of synergies and new businesses that we can create by leveraging these types of online payments solutions.
KW: So, when I hear you describe MCM, it sounds like a very robust platform that enables any hardware to connect together. How do you think about that platform and those who say that hardware is irrelevant in the POS of the future because it all needs to live in the cloud, device independent? Is that what MCM is designed to anticipate?
JMT: Yes. MCM is a backend system designed to manage the different elements of the payment and business chain, including hardware. To those who believe that hardware is irrelevant, I would say that any extreme opinion of that is irrelevant. Yes, a number of things are going in cloud, and the MCM is managing the catalog of a merchant in the cloud and allows the merchant to put the catalog in its tablet, mobile, or website. A number of payments functions also go in the cloud. At the end of the day, as long as cards exist in this world, you still need to have secured readers. Not everything will rely on the cloud – hardware will not necessarily become irrelevant.
KW: Tell us what your view is with respect to mobile point of sale over the next few years. Do you see consolidation or expansion? Are there types of winners, losers, and entrants?
JMT: In terms of volume, mPOS is something that will last and grow because it will make the merchant-consumer relationship seamless. Also, consolidation will definitely occur – companies will continue to buy others as new entrants come into play. And if you want to be a winner in the space, you have to be innovative and flexible as well as strongly installed in the landscape of payment business. You can’t start from scratch – you must have a comprehensive multi-channel solution in many countries, a solid local implementation and the ability to address local merchant needs. And while Ingenico is fully equipped to do this, it will not be the only one to do so. There will be some newcomers heavily investing in this space who will have the power to fulfill the requirements for innovation and localization.
EVP Mobile Payments Solutions at Ingenico, COO of ROAM
Mr. Jean-Marc Thienpont has served as Executive Vice President Mobile Solutions and Member of the Management Board at Ingenico SA since November 2012. Prior to that, he worked at Ingenico as Executive Vice President Strategy and M&A and Member of the Management Board of the Company from 2005. Before that, he worked for 15 years on several international executive Finance and Corporate Development roles in the Telecoms / Media / Technology industry for companies like Bouygues Télécom and Alcatel. Jean-Marc Thienpont has a MSc degree from Ecole Supérieure d’Electricité (Supelec, 1990).