The Omni-channel challenge in Retail payments

More and more merchants in Europe feel the need to offer their services via multiple channels (i.e. physical stores, online, mobile etc.), embracing the so-called omni-channel retail approach.

“In terms of payments, an omni-channel approach for merchants means accepting a wide variety of (offline and online) payment methods,” explains Evelien Witlox, General Manager Product Management & Innovation at Equens.

“As – especially online – the variety of payment methods has been increasing significantly, merchants are often faced with more hassle than they would wish, having to deal with multiple payment providers.”

In practice, this means that merchants need contracts with both a payment service provider (PSP), a POS terminal vendor and with several payment method providers (under which banks) in order to become fully omni-channel. The result is a variety of contracts, financial flows and a very complex administration to be handled by the merchants.

The Rise of the Collecting PSP (CPSP) model

The situation for merchants is not expected to change on the short term. “As more and more merchants start offering their services cross-border, even more payment methods are to be supported,” continues Witlox, “making the life of a merchant even more complex.”

Especially in the more mature e-Commerce markets, a new type of PSP has been born: the Collecting PSP (CPSP). Such a CPSP allows merchants to enter into one contractual agreement for online payment acceptance, independent on the payment methods requested.

The CPSP then makes sure the merchant receives one reconciled transaction overview (over all payment methods) in one merchant pay-out. This decreases the hassle for merchants and allows them to offer a wide variety of payment methods without having to deal with all the work involved.

The Future

Although Collecting PSPs are doing a good job in decreasing complexity in online payments, in the majority of cases merchants still have separate contracts for both in-store and online payment acceptance: for in-store payments, these merchants are typically served by their bank and/or acquirer in combination with a POS terminal vendor, whereas online the CPSPs are dominant.

“The next step towards omni-channel will be combining the physical and virtual channels for a merchant providing clear insights, payment settlement and reconciliation information, allowing for one seamless omni-channel customer experience,” says Witlox. “For the traditional parties, this means moving towards PSP services, whereas PSPs need to move towards traditional POS services.”

Equens’ retail payment strategy is aimed towards helping these parties with making these steps by providing all kinds of white-label services. For traditional POS payments, these services go as far as delivering a complete white box with a plug-and-play POS terminal, co-branded acquirer license management and merchant screening.

And for online payments, Equens has a white-label PSP offering in place, allowing any party to become PSP with Equens performing the vast majority of work in the back.

“We have fifty years of experience in the European cards & payments market,” concludes Evelien Witlox.

“When it comes to retail payments solutions, Equens has the knowhow, the technical background and the back office to support banks, acquirers and PSPs on every level. Our goal is to offer to our clients a one-stop shop which enables them to focus as much as possible on the commercial side of doing business, with Equens acting as a trusted party in the back.”

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