2017 has marked several key developments in the online payments and ecommerce segments. As 2018 draws nearer, it is a good opportunity to review the main news and trends that have shaped and changed the industry this past year.
Online payments – Innovation and Consolidation
In the PSPs ecosystem, the trend towards consolidation is growing stronger with 2017 witnessing some of the biggest merger and acquisition deals in this segment. We’ll start right off with the biggest of them all – Vantiv’s acquisition of Worldpay for USD 10 billion in August 2017. The newly emerged company (which kept the name Worldpay) is forecast to have a strong global position in the online and offline payments industry.
European payments providers have also kept busy forging and signing their own deals and partnerships. Among the most M&A deals of 2017 are Klarna’s acquisition of BillPay, Worldline’s acquisition of Digital River World Payments and Ingenico’s acquisition of Bambora.
There are several facts that could explain the growing number of M&A deals in the PSP industry. First, retail prices for online transactions have been steadily dropping, forcing players to adopt a more aggressive and competitive strategy. Secondly, merchants’ expectations of payments offerings have also changed and grew to include a full-suite of services to help them digitize. More information about the new developments in the PSPs ecosystem can be found in this editorial from Innopay.
Instant Payments Come to Europe
As if saving the best for last, the European Payments Council has announced that the SEPA Instant Credit Transfer Scheme will go live on 21 November. Although only a month has passed since the reveal, implementations of instant payments on this new open and accessible infrastructure have already taken place. Netherlands bank ABN AMRO was one of the first banks in Europe to integrate instant payments. Finastra quickly followed suite and announced on December 1 that it has connected to the European instant payments infrastructure systems via SIAnet.
More information about the SEPA Instant Credit Transfer scheme can be found in our interview with EPC chair Javier Santamaría.
Ecommerce – Growing Stronger
2017 was a good year for ecommerce, as the global ecommerce industry continued to grow in all markets. In Asia, ecommerce remains as strong as ever with a growth of 20%. In North America, it has slowed down, showing only a 9% increase, yet ecommerce in Europe (at a 19% growth) is experiencing a strong boom.
Cyber Monday, the online shopping holiday, made history, becoming the largest online sales event to this day. Reports show a total transaction value of over USD 6.59 billion, which represents a 16% increase in online sales from 2016. Another important fact is that almost half of these purchases were made on mobile devices, signalling a new age of m-commerce in the West.
Although Black Friday and Cyber Monday brought a huge boost to online sales, Alibaba’s Singles’ Day, on 11 November, takes the crown. Over USD 25 billion have been spent by shoppers from 225 countries, making Singles’ Day an international shopping event. Furthermore, 90% of all the transactions have been completed on mobile devices.
Competition between Big Players is Steaming Up
When it comes to ecommerce, South East Asia is as dynamic as ever. The two main competitors in the area, Alibaba and JD.com, as well as the latter’s partner Tencent, have been gearing up their investment motors. Alibaba struck a deal to invest USD 2.9 billion in hypermarket operator SunArt and poured USD 1 billion into Lazada, a South East Asian ecommerce platform with a good market presence in markets like Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
JD.com has also made several investment into Indonesia-based niche ecommerce players. Potential partners among the smaller ecommerce companies are Fabelio, an online furniture marketplace, and Laku6, a used phone ecommerce website. JD.com also plans to expand its logistical operations in the Indonesia archipelago and is not shy of expanding into Western countries, mainly the US, where it has partnered with startup accelerator Plug and Play.
Moving West, in 2017 we witnessed the rising competition between Amazon and Walmart. Amazon still dominates the ecommerce landscape, taking 44 cents per dollar spent online in the US. However, logistics in the online retail business are just as important as payments services. In 2017, the company continued improving its existing delivery services and developing new ones, like Amazon Key, an in-home delivery system.
Traditional brick-and-mortar retailers, however, are not going down without a fight. Walmart continued its investment into its ecommerce operations by acquiring online fashion retailer ModCloth in March 2017. It has also beat Amazon in the race for in-home delivery (or in-fridge delivery, as the company calls it) systems, beginning tests of its prototype before Amazon. Furthermore, the company is taking strides into the IoT by partnering with Google to offer voice-based shopping.
For some traditional retailers, 2017 has not been a good year, especially for Toys’R’Us, which filed for bankruptcy in the US. Growing competition from ecommerce players coupled with debt problems have forced the retailer to scale down its operations. This is a story that will continue well into 2018, but there is a silver lining - retailers like Toys’R’Us and others understand that the retail space is changing and make efforts to adapt, ramping up their ecommerce capabilities.
2017 at The Paypers
The industry brought some spectacular developments for The Paypers as well. In 2017, we have launched the eighth edition of the Online Payments and Ecommerce Market Guide and the second edition of our Payment Methods Report - Insights into the e-wallets landscape. For both publications, we had great contributions from experts and partners who shared their insights into the present and future of the payments industry.
The guide and the report also feature dedicated mappings and infographics of important players – the Online Payments and Ecommerce Market Guide includes a mapping of all the relevant PSPs and the Payments Methods Report showcases the top e-wallets in the world.
Last but not least, we would like to thank all our readers, partners and contributors for a great 2017 full of insights and opportunities. We hope that you will continue to follow us on social media and read our insights in the upcoming year!
Stay tuned for the next instalment of the 2017 The Paypers Review, this time discussing the changes in the Online Security, Fraud Management and Cryptocurrency space.
Happy Holidays from The Paypers!
About Bogdan Moisa:
Bogdan Moisa is Content Editor at The Paypers with an interest in the online payments and ecommerce landscape. He follows the latest news and developments that are essential for understanding the changes taking place in the industry.
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