Whether it’s the rapid normalization of contactless payments, the buy-now-pay-later boom or the growing interest in cryptocurrencies, the payments industry has been evolving at a rapid pace.
In Europe, the Middle East and Africa (EMEA), this evolution takes on a different shape depending on which sub-region you look at — but overall, the picture is one of sustained growth.
On account-to-account transfers (A2A) and open banking more broadly, Pete Wickes, General Manager, EMEA at WorldPay, said although the uptake has been relatively slow to date, it’s gradually picking up steam as merchants increasingly appreciate how much they save in costs compared to traditional card payments and the speed of payments.
“We are going to be moving much more to real-time payments across the industry, and account-to-account payments will put some pressure on the historical schemes to speed up the way that they sell to both the acquirer and to the merchant. [And that] is good for the whole ecosystem,” Wickes told PYMNTS in an interview.
When it comes to security, one might assume that a banking model built around sharing account details with third parties would expose consumers to heightened fraud risk. But as Wickes said, people are increasingly recognizing that open banking can actually be more secure than entering card details which comes with its own fraud risks.
Contactless payments are also on the rise, particularly in the U.K. where contactless now accounts for more than a quarter of all payments, according to UK Finance, after the limit was increased from £45 to £100 during the pandemic.
According to Wickes, there’s been a growth of mobile wallet use associated with that surge, with “people leaving the card behind and using their phone as a payment method [across] all demographics.”
Minimizing Digital Fraud
For eCommerce merchants, it’s increasingly important to offer a range of payment options, especially if they want to cater to international markets. But how do websites entice customers with multiple payment methods without overcomplicating the system or exposing themselves to digital fraud?
As Wickes puts it, “merchants are looking to accept as many good transactions as they can and make sure they remove the bad transactions. What they don’t want to do is have so many fraud systems in place that they end up not accepting a good customer.”
It’s an area where WorldPay supports its merchants, he explained, by ensuring that they’ve got the right fraud measures in place or working with a chargeback indemnification partner to optimize their acceptance rate at the time when the transaction comes through.
“Our job as a payment partner to our customers is to make sure we eliminate [fraud] as much as possible by providing data, insight, and knowledge of what’s going on in the industry at any one point in time,” Wickes added.
Fragmented Payments Ecosystem
The growth of cross-border payments has created opportunities for EMEA businesses to break into new markets, but retailers looking to boost their overseas sales face the challenge of a fragmented payments landscape, requiring them to customize their payment flows to prioritize the preferred methods in their target markets.
“For example, in the Netherlands, you’d be crazy not to have iDeal [popular online payment system] as your preferred payment method at the very top of [your list],” he pointed out.
The fragmentation issue can be even more challenging when it comes to the booming buy now, pay later (BNPL) market, Wickes said.
“There’s well over 25 different companies just in Europe alone, and [while] the biggest companies maybe cover 15 to 20 markets, they might not cover a particular Eastern European country,” he explained.
For merchants who want to sell in Czech Republic or Hungary, for example, it can become a major pain point as they try to avoid having multiple integrations and instead work with a payments company that can give them as broad a coverage of solutions as possible.
Despite those challenges and calls for greater regulatory oversight of the sector, Wickes said he is optimistic about the future of BNPL, as transactions provided by a BNPL solution are expected to double from 6% in 2021 to 12% in the next three years.
Finally, he said cryptocurrency is one area that promises to declutter cross-border payments moving forward as FinTechs and central banks across EMEA show a growing interest in the prospect of using digital currencies, particularly stablecoins, to move money across borders.
Learn more: FIS, Circle Team Up to Offer USDC Acceptance
Further reading: Circle Debuts Euro Stablecoin
In April, Worldpay became the first global merchant acquirer to give merchants the ability to receive settlements in USD Coin through a partnership with Circle. And with the latter announcing the launch of a EuroCoin this month, payments in euro-denominated stablecoins may soon be an option for WorldPay’s merchants.
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