How does the PSD2 initiative impact merchants?
The impact will be beneficial, I hope. Currently, SMEs don’t really know exactly what PSD2 is all about. On the other side, retailers like Amazon and Facebook are trying to exploit each and every opportunity. Take for example Facebook getting its payments licence in Ireland and entering the payments business. They have social customer data that can be enriched with banking information about their customers. The e-money licence would be the first step.
But for small businesses, PSD2 is not a top priority. We are extremely worried about this fragmented landscape, and I see fragmentation in alternative payment methods. I welcome the payment methods but not the fragmentation, because there is a lot of strain on merchants (finance or IT departments). I would not like to see the same thing happening again when it comes to PSD2 and XS2A. We have got to integrate sheer numbers of APIs, although there are PSP solutions which make direct integrations.
We haven’t even started to think about potential business benefits for merchants in a PSD2 context. And we haven’t started yet because merchants haven’t been thinking about it (for example: book keeping, credit scoring), but there are tons of other things that you could think of with the data that would get disclosed.
From a merchant perspective, what are the main criteria you consider when selecting a suitable PSP for your business?
There are two main criteria: one generic and one specific. As for the former: in 2016 we switched to Ingenico because it is a PSP that can help us in an omnichannel way. For us that’s important because we don’t want to work with an online-only loyalty programme that is completely separated from the POS (offline loyalties). PSPs should be available to serve an omnichannel architecture offering not only payments, but also loyalty schemes. If PSPs don’t do that, merchants have to face different integrations, different rules, hence a lot of hassle.
As for the specific criterion, we are looking for a PSP that can collaborate with us on the more sensitive topics within our industry. For us, 3% of our business is adult content. That is why many PSPs refuse to collaborate with us. Other sectors like this are gambling and gaming because they provide difficulties for merchant acquirers, as they have to query on country of origin, due diligence etc. Still, these areas are not always black or white, especially thinking from a compliance perspective. Therefore, a merchant goes to PSPs asking: how willing are you to get with merchants in these types of areas?
Since we have recently noticed more and more merchants sharing their opinions, is there a formal level of communication between merchants and PSPs?
Firstly, we, as merchants, are getting more mature, and the omnichannel topic previously touched upon, whereby O2O coverage as a main criteria is an example to this reasoning. We are all faced with the same dilemma to make our in-store activities profitable. And one way to do that is not to look them as stores from a purely sales point of view, but as a marketing and service instrument for returns and pickups. There is also the CRM perspective. Therefore looking at the sales-marketing-service triangle makes an important PSP selection which can facilitate your business in this regard. And from an omnichannel point of view I totally get it.
Do you see any other trends / developments that will impact merchants in the near future?
We only briefly scratched the surface with data privacy regulation. Of course it is not immediately closed, but if you think about authentication, identification and data privacy regulation it can be more important than accessing accounts and the PSD2 because by linking authentication with identification in one smooth stream, you can create an extremely smooth check-up process.
When it comes to data privacy regulation, I don’t see the business benefits yet. I get the fact related to protecting the consumers, consumer rights and consumer advocacy groups are quite vocal, but from the merchant perspective, it is not a good thing. If you look at merchants, cross-border merchants especially, you are already facing all that. It is not so much around the regulation, but about how different countries interpret it and translate it to their local legislation. And this is the hurdle. The same goes for payments and data privacy regulation. For example, how you deal with pop ads for retailing is an important feature. If you look at the opt-in regulation implementation in France, Germany and the Netherlands, you will notice big differences. You have to know all that and deal with it. And now they are going to make it even worse, by shielding off more customer data, which will hurt my performance marketing. It’s difficult to do good for everybody. That’s regulation.
Regulation has lots of pros for consumers but lots of cons for internet merchants because of the negative effects which will have on our marketing efforts. I believe that PSD2 and XS2A will significantly spur innovation and once the whole PSD2 and the RTS are implemented by 2018, I foresee an accelerating pace for innovation in the payments space.
About Dennis Van Allemeersch
Dennis Van Allemeersch has been COO at Beate Uhse since March 2016. He is also member of the Euro Retail Payments Board (ERPB). Previously, he held various positions in global companies like CEO at Hotel Booker B.V. and Director B2C eBay Classifieds Northern Europe at eBay.
About Beate Uhse
Beate Uhse is one of the best-known brands in Germany, with focus on selling adult entertainment. Over the course of over 60 years, Beate Uhse has established expertise that millions of customers in 10 European countries continually place their trust in.
This particular interview was held during this year`s edition of the Merchant Payments Ecosystem.
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