Interview • 19.06.2015

"Consumer willingness to make cashless payments needs to increase"

Interview with Dr. Markus Weber, Managing Director of Ingenico Payment Services

Dr. Markus Weber: Thanks to the improved technical possibilities, the wiggle...
Dr. Markus Weber: "Thanks to the improved technical possibilities, the wiggle room for new services continuously increases."
Source: Ingenico Payment Services
Within the scope of the Regulation of the European Parliament, the payments market will continue to change. Given dwindling margins, only larger payment service providers will be able to afford the continued integration of new payment methods and payment services. We spoke with payment expert Dr. Markus Weber, Managing Director of Ingenico Payment Services, about the specific impact of the Regulation and its effect on the innovative capacity of the industry sector. 

Dr. Weber, there is currently a lot of heated debate in the industry about the EU Regulation. Can you briefly explain what it specifically contains and how the Regulation will affect retail in your opinion? 


The design of the national implementation of the EU Regulation is of utmost importance for the industry. The pricing model will influence the acceptance and future of credit card and mobile payment options. On the one hand, fees are drastically capped and the profit incentives for new market participants will decrease. On the other hand, the Regulation will make card-based payment options more attractive to retailers, especially when compared to cash payments. It is expected that more retailers will offer card-based payment options in the future since their costs will be lowered sustainably. 

The public debate is fueled by the percentage cap in the fee structure (0.2 percent for debit and 0.3 percent for credit cards). This so-called interchange fee is just one component of the total charges retailers need to pay for the international payment methods (e.g., Visa or MasterCard). In addition, retailers need to pay fees to the credit card organizations (“scheme fees” e.g., to Visa or MasterCard) as well as a fee to their own payment services provider, the so-called acquirer. The fees to the credit card organizations and the acquirer are not a part of to the EU Regulation and are therefore not subject to any regulation. 

Currently there is a heated debate as to what extent national payment methods in Germany, the EC cash method with the Girocard (debit card) as well as electronic direct debits are included in the Regulation. These very common and cost-effective methods for retailers do not exhibit varying cost components and were so far charged a standard percentage fee of the purchasing price, for instance, 0.3 percent in the case of the Girocard. Previously, there was a fixed lower price limit to ensure that payment service providers are still able to break even given even very small purchasing amounts. In the case of the Girocard, that’s 8 cents per transaction. 

With the upcoming national implementation of the EU interchange fee regulation, the German legislator under the auspices of the German Federal Ministry of Finance needs to decide on fee caps for Girocard and ELV. Here it is strongly suggested to take the different price structures of national and international payment methods into account. 

What are the distinct features of the national German payment methods? 

Germany continues to be a country where most people like to pay with cash. It is not sufficient if retailers simply provide more card-based payment methods in the future or expand the mobile payment options. Consumer willingness to make cashless payments needs to increase. The way to success is primarily paved through a simple and intuitive design of payment methods (convenience) and a certain “coolness factor".

The “war on cash” will continue and a higher level of acceptance for...
The “war on cash” will continue and a higher level of acceptance for card-based payments can be expected in the long run.
Source: panthermedia.net / Arne Trautmann
What negative impacts could there be for German retailers? 

One risk with the national implementation of the EU Regulation on Interchange Fees for Card-Based Payment Transactions could be that in the debate the regulated final price for retailers for Girocard and ELV is being equated with the regulated interchange fees for international payment methods, even though the latter only make up a portion of fees paid by retailers. 

If - spurred on by cost reduction requests of German retailers- the fees for Girocard and ELV are now being lowered to a level that no longer covers costs, the existence of these payment methods comes into question. And without the competition of national payment methods, the door is wide open for possible fee increases in the non-regulated scheme fees of Visa and MasterCard. 

In your point of view, what effects will the Regulation have on the percentage of card-based and cash payments? 

The willingness of consumers to pay with credit cards depends- among other things- on whether and how much fees they will be charged for their cards (whether you need to pay an annual fee for instance). This is where the Regulation comes into play. Thanks to the scheduled cap on interchange fees, credit card issuing banks lose a significant source of revenue. The big question now becomes how they compensate for these losses in the future. 

I don’t assume that issuers will pass their losses entirely on to the consumer by increasing fees for example. After all, there is also competition amongst card issuing banks. The “war on cash” will, therefore, continue and a higher level of acceptance for card-based payments can be expected in the long run. 

Mobile payments are also becoming increasingly popular in Germany. How does the current trend influence such innovations in payment methods? 

The Regulation will significantly alter the playing field amongst payment service providers and therefore indirectly influence the mobile payment sector. In light of the dwindling distribution margins in the value chain thanks to the Regulation, new providers like Apple Pay or Android Pay and all other mobile payment methods need to provide a benefit to retailers and users to make money in other areas. This is why they develop products in the areas of convenience, customer acquisition and customer loyalty. Unlike mere payment transactions, these products yield more attractive profit margins in the long term. 

Thanks to the improved technical possibilities, the wiggle room for new services continuously increases. The financial technology companies of the world all benefit greatly from payment methods as the core product. Yet with all the excitement about technology, we must not forget one thing: ultimately, it’s the consumer who needs to accept these things. This applies to both the mobile payment sector as well as card-based payments. The user experience is the key element. There are many new ideas in the making because they are technically feasible, but they do not hit the convenience mark with the mass market. In the future, this will be a much bigger challenge than the Regulation. 

Interview by Daniel Stöter, iXtenso.com

related articles:

popular articles:

Thumbnail-Photo: Digital access controls support distancing requirements in the era of...
06.07.2020   #brick and mortar retail #retail

Digital access controls support distancing requirements in the era of Corona

Essential staff are relieved and the risk of infection is reduced

Since the beginning of the pandemic, larger supermarkets and discounters have been imposing entrance restrictions to ensure that only a certain number of people are allowed within their Stores. Usually the access management is carried out by ...

Thumbnail-Photo: The safety barrier you need right now
02.06.2020   #customer satisfaction #security

The safety barrier you need right now

Poindus ProShield is an effective protection screen.

Safeguards like social distancing implemented in-store during staff-customer interactions are enhanced with our ProShield, an effective protection screen that provides an additional layer of protection for cashiers & customers at the point of ...

Thumbnail-Photo: World’s first convenience store retrofitted with AI technology...
14.08.2020   #video surveillance #video cameras

World’s first convenience store retrofitted with AI technology

Standard Cognition to provide Circle K with autonomous checkout

Standard (“Standard Cognition”) announced that Alimentation Couche-Tard, a company that operates close to 14,500 convenience stores worldwide, including under the global brand Circle K, has selected Standard to pilot touchless, ...

Thumbnail-Photo: Europe to dominate open banking implementation...
26.05.2020   #mobile payment #payment systems

Europe to dominate open banking implementation

Instant messaging users to reach 4.3 billion in 2020, as new payment services emerge

A new study from Juniper Research found that the number of instant messaging users will reach 4.3 billion in 2020, rising from 3.9 billion in 2019. This is a growth of 9 percent year-on-year, largely driven by an increased need for remote ...

Thumbnail-Photo: Stay safe with VariPOS
11.05.2020   #cashpoints #terminals

Stay safe with VariPOS

How technology helps – Stay safe at the point of sale

Technologies for product identification and payment authentication are great for improving the customer experience with speed and accuracy, but these technologies are also being seen as beneficial in the wake of the Coronavirus Pandemic. ...

Thumbnail-Photo: CCV announces consolidation of its international payment division,...
02.07.2020   #mobile payment #payment systems

CCV announces consolidation of its international payment division, focuses on market innovations

Under the flagship of CCV GmbH, the company plans to bring its innovation into specific international markets

CCV Group B.V. has announced that all of its international business activities will now be consolidated and run within its Germany-based division - CCV GmbH. CCV GmbH will carry out the activities of the former CCV Deutschland GmbH and CCV Easy, a ...

Thumbnail-Photo: SALTO releases the SALTO Neo Cylinder
18.08.2020   #access control #access control systems

SALTO releases the SALTO Neo Cylinder

State of the art, wireless access control technology

SALTO Systems, a leading manufacturer of electronic access control solutions, has released the SALTO Neo Cylinder – a new electronic cylinder that offers more features and better functionality than any other cylinder on the market. ...

Thumbnail-Photo: Creative criminal meets intelligent security system...
28.05.2020   #security #brick and mortar retail

Creative criminal meets intelligent security system

Interview with Ralph Siegfried, Business Development Manager at Axis Communications GmbH

Stores come in different sizes, have different settings and vary in product selection. That’s also why they need a customized loss prevention and security solution. What are some options for retailers and what key elements do they need to ...

Thumbnail-Photo: Quantity discount on the WIMIsys PT51!
05.08.2020   #POS systems #displays

Quantity discount on the WIMIsys PT51!

From now until September 30th: 10% discount on the WIMIsys PT51 POS System when purchased together with a Swissbit TSE solution

Are you looking for TSE compliant POS solution for your customers in bakery, restaurant or retail shop? ...

Thumbnail-Photo: Hobbii continues the growth adventure …
23.06.2020   #POS systems #brick and mortar retail

Hobbii continues the growth adventure …

… with new stores and several digital initiatives

The online store Hobbii.dk continues the opening of physical stores with the launch the third store in Tarup shopping center in Odense, Denmark. The close collaboration with Delfi Technologies, which is based on several digital initiatives, will ...

Supplier

SALTO Systems GmbH
SALTO Systems GmbH
Schwelmer Str. 245
42389 Wuppertal
Adasys GmbH – a Poindus Company
Adasys GmbH – a Poindus Company
Max-Planck-Straße 10
70806 Kornwestheim
Reflexis Systems GmbH
Reflexis Systems GmbH
Kokkolastr. 5-7
40882 Ratingen
CCV GmbH
CCV GmbH
Gewerbering 1
84072 Au i.d.Hallertau
Delfi Technologies GmbH
Delfi Technologies GmbH
Landgraben 75
24232 Schönkirchen
Poindus HQ - Taiwan
Poindus HQ - Taiwan
5F., No.59, Ln. 77, Xing-Ai Rd.,Neihu Dist.
Taipei City 114
POS TUNING Udo Voßhenrich GmbH & Co KG
POS TUNING Udo Voßhenrich GmbH & Co KG
Am Zubringer 8
32107 Bad Salzuflen
Apostore GmbH
Apostore GmbH
Uferstraße 10
45881 Gelsenkirchen
APG Cash Drawer
APG Cash Drawer
4 The Drove
BN9 0LA Newhaven