The time is right, he said, to take stock of corporate strategies and product and service innovations. As interest rates have soared, as early-stage-funding has dried up, startups have had to grapple with existential threats and larger firms are mulling a consolidation of product lines.
Payments providers may undergo waves of consolidation or attrition (maybe a bit of both) depending on the areas of concentration, said Benson. Top-line growth is slowing, and cost containment and optimization are daily endeavors.
In Benson’s conversation with Webster, part of the “What’s Next in Payments Innovation” series, he was quick to contend that some of the trends of 2023 have indeed been positive and still have staying power. He said local payment methods and alternative payment methods — offering consumers breadth of choice — still offer revenue torque as merchants enter new markets and eye conversions.
That’s leaving a runway to growth for the service providers that can improve reliability and authorization rates or have in-country processing capabilities. Network tokens are also gaining a wider embrace, he said. Networks are applying pressure to issuers, bringing them data to show the benefits of tokenization.
Many of Spreedly’s customers, he said, are focusing on what they’re good at — where they add value — and they’re doubling down on those attributes.
Amid the “great reset,” as Benson termed it, there are some trends emerging that offer up opportunities for forward-thinking firms to develop and promote value-added services.
Benson said 2024 may well turn out to be the year of the micro-wallet. Merchants are creating their own marketplaces and ecosystems on top of products and “knitting” together a range of activities to create new business models, which demand new fund flows.
He pointed to Shopify Pay (which is in turn facilitated by Spreedly) as an example, where the wallet operates deeply ingrained within that eCommerce ecosystem, and consumers keep balances on those digital wallets as they shop, merchant by merchant.
Beyond the Apple Pays and Google Pays of the world, he said, “you can actually create branded wallets that have value — so long as they are clearly differentiated and you’re strong in your particular vertical.” He noted that 100 million consumers with a few dollars in their wallets, raring to spend those dollars within a closed loop of commerce, can be big business for merchants and providers.
Asked by Webster about what else might lie ahead for 2024, he said account-to-account transactions will see growth. That’s still nascent, he said, but there’s the usual friction that exists in the push vs. pull model, where “pull” activity still assumes that there are funds available in the account, but consumers (and merchants) will find value in recurring, relatively lower dollar transactions.
No matter the transaction, Benson said, there will be an increasing awareness and use of payments orchestration. Interchange rates are pressured and merchants must find ways to mitigate transaction costs. Intelligent routing, he said, lets those merchants (including direct-to-consumer firms) into several providers (through a single point of integration), and get a lift from better authorization rates.
Many of these platforms may have initially served smaller businesses and then have sought to move to larger enterprises. Their original PayFac model (taking payments in-house) no longer suffices. Orchestrators such as Spreedly, he said, can take the complexity out of payments.
“Scale really matters,” he said, especially as online marketplaces grow.