Using Merchant-Level Benchmarks to Optimize Revenue
Revenue optimization feels like a ‘boiling the ocean’ exercise where the opportunities seem impossible to identify. For payments companies, one way to determine opportunities is to laboriously sift through a merchant portfolio merchant-by-merchant to evaluate needs and optimal product solutions. This level of strategic solution fit is easily addressed during the sales and onboarding process but becomes more involved post merchant acquisition.
Ideally, payments companies should strive to optimize the merchant relationship throughout the stages of a merchant’s lifecycle within an acquiring portfolio: sales and boarding, actively retained, and attrition (retention). The ability to isolate and act at the merchant-level sets leading payments companies apart from the competition.
Stripe is the latest high-profile fintech company to take a massive valuation cut as the market downturn begins to hit the sector especially hard. Last valued at $95 billion, the payments processor has cut the internal value of its shares by 28%, sources told the Wall Street Journal. The Journal reports that the valuation cut comes from a 409A price change, which means that Stripe hasn’t decreased the value of preferred shares sold in the last round. An internal valuation change is meant to be a more objective pricing, not set by startups or venture investors but chosen by a third party.
Consumer Financial Protection Bureau Director Rohit Chopra reminded players in the payments and banking industries this week that some of them are in his agency’s cross-hairs. Chopra in a July 11 blog post reiterated industry practices that his agency considers troublesome and ripe for regulatory action. He framed the agency’s agenda as part of President Joe Biden’s effort to crack down on anticompetitive business practices. He noted three areas that have attracted the agency’s attention, and not in a good way.
A slowdown is in the cards. Literally — at least near term. A number of data points hint that we’re seeing a level of prudence at least when it comes to utilizing cards to make transactions. They’ve paid down debt and their keeping that debt low — as measured against pre-pandemic levels. As noted by the Philadelphia Federal Reserve, earlier this week in its quarterly report on large bank credit cards and mortgages that “customers are utilizing less of their available credit lines.”
Merchant Payments Ecosystem (MPE) 2022 Recap
TSG / 7.13.22
With over 1,200 attendees, last week’s Merchant Payments Ecosystem (MPE) event in Berlin was lively with payments professionals from across the global payments ecosystem. TSG, a sponsor and speaker at the event, caught up with various companies to understand prevalent themes they are seeing as the industry continues to emerge from the pandemic.
Key Themes:
The payments ecosystem weathered the pandemic better than other industries, and recovery has bounced back faster
Attendees discussed the rapid shift to online, contactless shopping, and mobile commerce. A key topic was around eliminating friction for the merchant and consumers
The term ‘payments orchestration’ was a buzzword brought up regularly. This term refers to a unified software layer that integrates and manages various payment processors, and other payments providers from one platform
Payments optimization, defined as getting the right balance between transaction security and transaction throughput, was a significant point of discussion
More payments companies are looking to develop cross-border payments solutions, along with support for multi-currency
Buy now, pay later was talked about as a critical alternative payment method; however, concern remains about the future due to economic pressures, impact on credit due to missed payments, and regulations
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon and his Morgan Stanley counterpart, James Gorman, both said Thursday that they aren’t steering their firms toward shelter even as they see a confluence of global events denting the economy in the months ahead. “The consumer right now is in great shape,” Dimon said on a conference call discussing his company’s second-quarter results. “So even if we go into a recession, they’re entering that recession with less leverage and in far better shape than they did in ’08 and ’09.”
May require account to read. A committee in Britain's parliament has told payment firms Visa and Mastercard to justify recent rises in their card transaction fees after the country's payments regulator expressed concerns. The Payment Systems Regulator (PSR) told the Treasury Committee last week that the increases in card fees showed the market was "not working well", according to correspondence published by the committee on Thursday.
A merger between struggling buy now, pay later companies Zip and Sezzle has been called off after a savage reassessment of the sector’s growth model, leaving investors questioning the future for junior, United States-focused partner Sezzle. Zip shares bounced 6 per cent to close at 53¢ on Tuesday as investors breathed a sigh of relief, while Sezzle shares lost 38.55 per cent to close at a record low of 25.5¢, extending Monday’s 11.7 per cent decline.
If you have ever been called by your bank, asking you to confirm prior purchases that were detected as potentially fraudulent, that was by way of an MCC. Credit card companies use MCC intelligence and data to find aberrations or patterns in consumer purchases to prevent things ranging from fraud to human trafficking. Priscilla Sims Brown, president & CEO of Amalgamated Bank, said that the banking and financial industry can, and should, use these codes to track gun purchases in order to help prevent acts of gun violence.
European fintech Klarna has confirmed that it has raised $800 million at a pretty hefty valuation drop. Rumors have been circulating for at least the past month that Sweden-based Klarna, best known as a “buy now, pay later” service provider, was seeking to raise new funds. Initial reports suggested this valuation would be in the region of $15 billion, representing a sharp decline on its $45.6 billion valuation exactly a year ago. Then earlier this month, leaks suggested that the valuation may be closer to $6.5 billion — and that, as things have transpired, is pretty much the size of it.
U.S. crypto lender Celsius Network said on Wednesday it had filed for bankruptcy in New York, becoming the latest victim in the cryptocurrency sector of a dramatic plunge in token prices. New Jersey-based Celsius froze withdrawals last month, citing "extreme" market conditions, cutting off access to savings for individual investors and sending tremors through the crypto market.
Transit riders have made one aspect of their mobility routines abundantly clear. They want to use contactless payments to pay as they commute to work or ride to the beach. A full 91% of transit users in the second Future of Urban Mobility Survey from Visa Inc. either strongly or somewhat expect contactless payments options on buses, trains, and other public transit options. That’s up from 88% in 2021.
Amazon shoppers bought more than 300 million items during this year’s Prime Day sale, up from roughly 250 million in 2021, making it the biggest Prime Day event in Amazon’s history, the company announced Thursday. The company, which didn’t disclose total sales from the two-day event, said Prime members worldwide purchased more than 100,000 items per minute during the discount bonanza. The top-selling categories in the U.S. were consumer electronics, home goods and Amazon-branded devices.
Starbucks and Amazon are expanding their store concept that lets customers bypass the checkout when they pay for orders. The second “Starbucks Pickup with Amazon Go” location has opened in Manhattan, in The New York Times Building at 40th Street & 8th Avenue. The first location opened in November, at 59th Street between Park and Lexington Avenues (in Manhattan).
Many U.S. retailers are opting for new leadership or moving ahead with pandemic-delayed succession plans as the industry adapts to challenges beyond the Covid-19 health crisis. On Monday, Gap Inc. replaced Chief Executive Sonia Syngal after more than two years on the job. On Tuesday, Dollar General Corp. said its longtime CEO would step down. Those announcements follow recent exits of the CEOs at companies such as Bed Bath & Beyond Inc., athletic-equipment merchant Under Armour Inc. and luxury-consignment seller The RealReal Inc.
LendingTree recently acknowledged it suffered two data breaches in the past year, but it denied allegations that it was responsible for a larger breach and had “downplayed” the events. That’s according to a statement from a spokeswoman for the company in response to a class action lawsuit filed against LendingTree this week. On Monday, a Massachusetts man filed the lawsuit in a federal district court in North Carolina, where the company is based. On Thursday, the company responded. LendingTree does acknowledge that it has been hit with two data breaches in recent months.
Robinhood Financial has agreed to settle a class-action lawsuit that accused the company of negligence with regard to a 2020 data breach that may have exposed thousands of customers’ sensitive personal and financial information to hackers. The settlement could cost Robinhood approximately $20 million, according to documents filed July 1 by attorneys for investors who sued Robinhood last year on behalf of themselves and other customers of the popular trading app.
Inflation is melting away the value of household paychecks. Even so, household finances are as strong overall as they’ve been in decades, thanks to money saved during the pandemic, debt paid off over the past decade and a strong job market. The economic outlook now hangs on which of these forces proves greater. More than two-thirds of U.S. economic activity is tied to household spending. Recessions typically are accompanied by a pullback by consumers. Spending has surged during the pandemic, but it now shows signs of cooling.
Adobe announced the latest online inflation data from the Adobe Digital Price Index (DPI), powered by Adobe Analytics. In June 2022, online prices increased 0.3% year-over-year (YoY) while decreasing 1% month-over-month (MoM). While this marks the 25th month of inflation online YoY, June is the third month where online price increases have slowed. Key categories including online electronics and apparel saw price decreases, driving down online retail inflation overall.
Rising inflation and supply-chain bottlenecks are two phrases you’ve heard repeated over and over and over again throughout the past year-plus. But mentions of one more not-so-great word are cropping up: recession. Federal Reserve Chair Jerome Powell said he believes a recession is possible, but not a foregone conclusion, while some economists from Morgan Stanley predict a mild recession is on the horizon for the end of 2022, according to Bloomberg.
The outlook for the global economy has “darkened significantly” in recent months, the head of the IMF has warned, and the world faces an increasing risk of recession in the next 12 months. The commodity price shock from the war in Ukraine had exacerbated the cost-of-living crisis for hundreds of millions of people, Kristalina Georgieva said on Wednesday, and it was “only getting worse”.
Adyen, the global financial technology platform of choice for leading businesses, has officially launched Tap to Pay on iPhone, which allows businesses to use iPhones to accept contactless payments without the need to purchase or manage additional hardware. By partnering with NewStore, businesses including Vince and Burton can accept payments with a simple tap of a customer’s iPhone.
Deutsche Bank is developing its own BNPL (buy now, pay later) solution for invoice and instalment purchases in a collaboration with Vienna-based fintech Credi2. The white-label – own brand – solution for online merchants and e-commerce marketplaces in Germany can be flexibly integrated into the payment process. Pilot projects are scheduled to start this year. "Together with Credi2, we want to create a real alternative to existing BNPL offerings," says Kilian Thalhammer, Head of Merchant Solutions at Deutsche Bank.
Mastercard announced an expansion of its Engage partner network to include its open banking services, offering customers easy access to several technology partners that can quickly build and deploy open banking solutions for payments and lending decisioning at scale. According to Mastercard’s 2022 New Payment Index, 83% of consumers globally use digital tools for at least one financial task, and more than half use technology for five or more tasks.
Synchrony, a leading consumer financing company, announced that merchants will now be able to offer a short-term, no interest installment option, Synchrony SetPay pay in 4, via the Clover® point-of-sale and business management system from Fiserv, Inc. This BNPL offering will further expand the reach of Synchrony's innovative payments and financing options and enable select merchants that use Clover to accelerate growth while providing more choice and flexibility for consumers – especially at the point of sale.
viafintech GmbH, part of the leading specialized payments platform Paysafe, announces a new partnership with leading Spanish food retail group, Grupo IFA. The two companies will provide consumers with easier access to cash services by enabling cash withdrawals and deposits at grocery stores across Spain.
Bluefin, the recognized integrated payments leader in encryption and tokenization technologies that protect payments and sensitive data, and Waystar, the leading provider of healthcare payments software, have partnered to provide Bluefin’s PCI-validated point-to-point encryption (P2PE) solution and payment gateway through Waystar’s software.
Nuvei Corporation, tomorrow’s payment platform, announces that it is extending its partnership with GoldBet, one of Italy’s premier sports betting, online casino, and poker platforms, to enable the operator to integrate new payment methods into its cashier, including Apple Pay. Nuvei has been enabling GoldBet to offer an industry-leading player experience in Italy since 2020, via a single integration to its full stack payments solution.
UK digital bank Monzo has been given a clean bill of health from its auditors for the first time since 2019, after narrowing losses to £119mn from £131mn in the previous financial year. The app-based bank, which raised $500 million in December before the current market downturn, is reporting a 92% surge in revenue to £154.2 million in its 2022 annual report. The increased turnover has been attributed to increased card spending in the wake of the pandemic and a surge in sign-ups to its premium fee-paying accounts.
Lightspeed Commerce Inc., the one-stop commerce platform for merchants around the world to simplify, scale, and create exceptional customer experiences, announced the launch of Lightspeed Payments for Golf. This expansion advances Lightspeed's commitment to bring seamless, integrated payments to its customers globally across products and industries.
Melio, a leading B2B payments platform for small businesses, announced the launch of a fully integrated accounts payable solution with Capital One Business. This strategic partnership will enable Capital One small business cardholders to pay their vendors and suppliers with a card – even if they do not accept credit cards – directly from their Capital One Business account.
Global Primex, a privacy-first payments company specializing in secure digital payment solutions for merchants and consumers, announced the launch of its payment platform VLoad in partnership with New York-based Metropolitan Commercial Bank. VLoad is an innovative online payment method that provides industry-leading privacy and security to consumers and empowers merchants in the VLoad Merchant Network with increased revenue resulting from unparalleled fraud prevention, dispute management, and acceptance rates.
