Payment Networks Should Worry About Retailer-Led MCX Platform

Analyst Insight by Michelle Evans, Analyst - Consumer Finance, Euromonitor International

Follow @mevans14

The biggest hurdle to a retailer-led mobile payments platform, such as the Merchant Customer Exchange, is bringing competing brands together to agree on a single mobile platform that will serve both their consumers, as well as those of their competitors. If the retailer-led mobile payment platform is able to set aside differing interests to finally launch its products for consumers, the four major payment networks in the US will have plenty of reasons to be concerned. 

US retailers come together on m-commerce platform

Nearly 40 American retailers and restaurant chains are involved in a new US-based mobile payments platform, dubbed the Merchant Customer Exchange. It already includes retailers like CVS Corp, Target Corp, Darden Restaurants Inc, Meijer Inc, Hobby Lobby Stores Inc, Gap Inc, Dunkin’ Brands Inc, 7-Eleven, Bed Bath & Beyond and Dillard’s Inc. MCX started with just a dozen brands, but now it seems like every other week new retailers join the effort with the most recent including Southwest Airlines and Brinker International Restaurants, the parent for Chili’s Grill & Bar and Maggiano’s Little Italy. The retail partners seemingly cross nearly all verticals, including quick-service restaurants, convenience stores, department stores, petrol stations and travel companies. MCX reports that its partners combined have 80,000 stores and conduct more than $1 trillion in annual sales. There’s no doubt that such a mobile platform has a potential wide consumer base.

Understanding Australia's Business and Consumer Environment: A Guide for Successful Business Down Under

Understanding Australia's Business and Consumer Environment

How will Australia's economy, business environment and consumer trends impact the success of your business? This e-book examines the fundamentals businesses must understand to successfully expand or operate in Australia.

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Heralded as the success story among advanced economies for weathering the global economic downturn of 2008-2009, Australia’s high income levels and steady growth offer good opportunities for consumer goods and services in a wide range of sectors.

Key Findings:

• At the height of the global slowdown, advanced economies as a whole contracted by 3.5% - contrasting with Australia’s 1.4% growth.
• Whereas incomes and consumer expenditure have stagnated across many advanced economies, Australia’s per capita disposable income and expenditure have expanded by 9.8% and 3.5% respectively in real terms since 2008.
• In 2012, Australia was ranked 15 out of 183 economies on the World Bank’s Ease of Doing Business Index, meaning it is the fifteenth easiest place in the world to start and operate a local firm.
• Australia has an educated population: 99.9% of adults (those aged 15+) were literate in 2011, but suffers from skills shortages.
• In 2011, the population aged 45-49 in Australia had the highest average gross income: A$77,810 (US$80,259).

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• Ease of doing business rating
• Corruption index
• Literacy rate
• Future challenges
• Natural resources
• Media consumption
• Consumer trends
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Limitations of a Domestic Network: Case Study Eftpos Australia

Analyst Insight by Kendrick Sands, Analyst - Consumer Finance, Euromonitor International

Australia’s domestic debit card network Eftpos has been trying to reinvent itself to compete with the international operators since 2009 to stop its declining share of card payments. By total debit card payment value, Eftpos total share of transactions declined from 83% in 2005 to 77% in 2011.  Australia generated US$446 billion in total card payments in 2012, making it the 9th largest market globally. In 2009 the Australia's leading card issuers and merchants formed “Eftpos Payments Australia Ltd (ePal)” to manage and promote the limited domestic Eftpos system.  Whether the network can compete with the more widely known international operators will depend on its ability to establish online and international card acceptance over the forecast period.

Retailers Turned Bankers most Prevalent in Latin America

Due to the global recession, large banks have been tightening access to credit, and major retailers around the world have stepped in to fill the void. For instance, a consumer in the US can apply for a home renovation loan at the Home Depot, or jumpstart a small business venture at Sam's Club. However, Latin America is the most prevalent area for this activity, and it comes down to the trust that consumers have with their retailers. Consumers in Latin America distrust banks due to years of hyperinflation and high interest rates, and have turned to retailers such as Super Farmacia, Elektra, and Soriana to pay bills, open credit cards, and even start simplified savings accounts.

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Top Three Trends in Social Media for 2013

Analyst Insight by Pavel Marceux, Analyst - Technology, Communications and Media, Euromonitor International

Euromonitor International has identified three key global trends in Social Media for 2013. Social media is set for another year of transformation as market forces push greater crossover into other sub-segments and consumers demand wider availability of technical services. Top three social media trends: 1) The evolution of social networking platforms into a full-cycle offering of commercialised retailing and advertising solutions is set to continue. 2) The greatest user expansion will occur in communication-hungry emerging markets such as India and Indonesia. 3) Social media brands will focus much more on developing and integrating new content in an increasingly competitive and feature-driven environment.

10 Ways the Consumer Payment Experience Has Evolved Most Recently

Analyst Insight by Michelle Evans, Consumer Finance Analyst at Euromonitor International

Follow @MEvans14

For years, the bricks-and-mortar shopping experience has centered upon the consumer selecting a tangible good on a shelf and paying a clerk at the front of the store for the item. Over the years, the only part that has really changed about this process was the method of payment that was used to pay for it.  But now the consumer payment experience is influx as new technologies not only transform how retail and payment players operate, but also the entire shopping experience.  

Retailers and payment execs are in the process of redefining this brand new world. New technologies, like smartphones, and overarching trends, such as e-commerce growth, are driving this revolution. Ultimately, these changes will provide for a more immersive, personalized and cohesive brand experience.  In addition, they will offer new ways of capturing, measuring and understanding consumer behavior that until now was just a marketer’s dream. Lastly, there’s the potential for these changes to drastically change the way people physically pay for a good or service. Not only will consumers likely be able to send payment directly to the store from their mobile device, but the payment could happen in an aisle or while the consumer is on the go.

Here’s a look at 10 ways the consumer payment experience has evolved most recently:

• Mobile phones and tablets are now increasingly replacing the bulky registers often found at the front of merchant outlets. Square is the fast-rising US start-up that popularized the “dongle” concept, which enables a smartphone or tablet to accept card payments. These products have become popular with small businesses and aspiring shop owners that may have found establishing a merchant account through the traditional card networks daunting, if not impossible. Square now has dozens of counterparts both in the US and abroad.
• Now instead of giving a clerk a cheque, cash or even a plastic card to make the payment, the transaction can be executed entirely through the mobile phone. Consumers can tap an NFC-enabled mobile phone at a POS terminal to transfer the payment wirelessly or flash a QR code for the clerk to scan for the connected payment information. NFC commercial services are present in a number of markets, including the US, the UK, France, Poland and Canada among others. One of the more successful mobile payments systems to date is the QR-code based system from Starbucks Corp. After just two years, Starbucks reports that a fifth of all card transactions are conducted using the mobile app and that the coffeehouse chain processes 2.1 million mobile payment transactions weekly.

• Over the last year, PayPal, the e-payment division of eBay Inc, has begun offering an alternative payment method that does not require a wallet or smartphone — let alone one equipped with NFC technology. Consumers can fund purchases from their PayPal account by simply typing in their phone number and PIN at the POS terminal. It also entered into a partnership in August with Discover that would enable merchants on the Discover network to accept this PayPal method of payment.
• Scan-as-you-go mobile devices are the next logical step after the self-checkout lanes. Scan-as-you-go shoppers literally scan the products as they pick them off of the shelf and then either go to a self-checkout station to upload their bill or hand the device to a cashier to pay. The Netherlands-based Royal Ahold NV has been a pioneer of this technology, dating back to its first trial in 1993. Now its Albert Hejin B.V. brand in its home country and its US brands of Giant and Stop & Shop offer such a handheld option.
• In this scenario, a consumer scans the goods via a barcode reader on their smartphone instead of a store-issued device. Once the consumer has finished selecting the items, the consumer waves their phone over a receiver at the checkout to pay. The process is similar to the self-checkout process except for when the consumer scans the item. UK-based Sainsbury’s supermarket is trialing a new service called Mobile Scan & Go that allows users to shop with their smartphone in the aisle and then pay for the purchase at the POS terminal. Retail giant Walmart is testing a similar system in more than 200 stores across a dozen US cities.

• RFID tags, which rely on radio-frequency technology, can be used to track individual items through a supply chain. There’s a lot of promise in terms of what item-level RFID could do to streamline the checkout process. In one scenario, an RFID sensor attached to a grocery cart would automatically detect the items as they were added to the cart. Essentially, shoppers can pay for a variety of products with just a single scan at the POS terminal. Walmart, American Apparel, Macy’s, J.C. Penney, Chico’s FAS Inc and Target in the US, as well UK’s Tesco and Germany’s Metro Group, all have conducted RFID trials or rollouts of item-level RFID tagging.
• At retailers like Nordstrom, Apple and Home Depot, mobile POS devices are slowly beginning to supplement, and even replace, traditional POS terminals. Employees are being armed with these mobile POS devices to enable them to accept card payments from anywhere in the store. Nordstrom, for example, has deployed more than 6,000 mobile POS devices throughout their 100-plus full-line stores. The devices are a modified iPod Touch with a merchandise scanner and card slider that enables employees to check out consumers anywhere in the store.
• Retailers have used technology to create virtual stores in highly trafficked areas like malls, airports, movie theatres and bus stops through the use of posters that display available items for sale and the respective QR code. Shoppers scan the QR codes associated with the desired items and then the consumer pays and schedules delivery via the mobile app. Once the order is complete, the retailer delivers the order to the consumer’s doorsteps. The virtual store blends a mobile-based shopping experience into people’s everyday life. UK-based Tesco has used this concept in its home market and also South Korea.

• Technology is enabling consumers to skip to the front of the line by pre-ordering anything from lunch to movie tickets. The ability to pre-order food via a mobile app and then skip to the front of the line upon pick up at the physical restaurant has become a trend in consumer foodservice. For example, quick-service restaurant chains like Burger King, Five Guys and Chipotle allow consumers to place orders and pay for them using their mobile.

• Retailers also are using location-based discounts to initiate sales while the consumer is on the go. For example, the location-based social networking site, Foursquare, has signed deals with Visa, MasterCard and American Express. The partnership aims to reward individuals with deals by checking in at a participating location. Users must sync a card to their profile, use it to pay for the purchase and then the discount will appear as a credit on their statement. Foursquare earns a fee from the offers redeemed. The first deal that debuted in February 2013 offered Burger King’s customers a $1 discount to those that had checked in and spent at least US$10 at the fast-food chain.

Evans recently spoke about retailers in the payments space in a presentation entitled Retailers Encroach on the Payments Landscape at Card Forum and Expo. For conference highlights, visit her Twitter profile. 

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Visa and MasterCard Each Debut New Mobile Payments Programmes

Hear Us Speak at Payments Services LATAM Summit

Date: 23-25 July, 2013
Location: Eden Roc Renaissance, Miami Beach, FL, USA

Join consumer finance analyst Michelle Evans as she discusses the panorama of payment methods in Latin America. The Latin American cards market has grown tremendously over the last few years and growth is expected to continue. In this session, Evans will discuss the specific types of cards and the factors driving growth, as well as the unique challenges facing the region.

Payments Services Latam Summit and covers strategic aspects of mobile financial services, marketing financial products, relationship management and loyalty programs among other vital issues to achieve operational efficiency of the sector. 

Follow Michelle Evans on Twitter for live Tweets from the event: @MEvans14
For Tweets in Spanish, follow our LATAM Twitter handle: @EuromonitorES

Acompáñanos en Nuestra Presentación en Medios de Pago Latam Summit 2013

Fecha: 23 al 25 de Julio, 2013
Lugar: Eden Roc Renaissance Miami Beach, Miami Beach, FL - EEUU

Acompaña a Michelle Evans, analista de la industria de Consumer Finance en Euromonitor International en su conferencia titulada “Panorama de medios de pago en Latinoamérica”.  América Latina es el uno de los mercados de tarjetas de pago que más ha crecido en los últimos años y se espera que esta trayectoria de crecimiento continúe en un futuro.  En esta sesión, se discutirán los tipos específicos de tarjetas y los factores que impulsan este crecimiento, así como los retos únicos a los que se enfrenta esta región.

Participe de la 6ª Edición de la Conferencia y comparta aspectos estratégicos de los servicios financieros móviles, el mercadeo de productos financieros y la gestión de programas de relacionamiento y de fidelidad entre otros asuntos vitales para alcanzar la eficiencia operacional del sector. Participe de la conferencia Medios de Pago Latam Summit y encuentre: CEOs, Presidentes, SVPs, VPs, Directores Ejecutivos y Directores responsables por: canales, medios de pago, estrategias de medios de pago, productos, tarjetas, ciclo de vida, de bancos, instituciones financieras, cajas de compensación familiar y ventas al por menor.

Clientes de Euromonitor International tienen un descuento exclusivo para participar en este encuentro, utilice el siguiente código para realizar su inscripción: 13525006EM.

Sigue a Michelle Evans en Twitter: @Mevans14
Siguenos: @EuromonitorES

Brazil's Network Elo Making Progress

Analyst Insight by Kendrick Sands, Analyst - Consumer Finance, Euromonitor International

Brazil’s new card network Elo Participações finished 2012 with ten million cards in circulation, an impressive accomplishment for a two year old network. Elo was born out of the 2010 Brazilian Central Bank review of the card payment market and sponsored by Banco Bradesco, Banco do Brasil and Caixa Economica Federal. The network has a stated target of 15% market share for total cards in circulation by 2016. This is an aggressive target, but with a current 42.8% market share for the three partner banks it might just be possible.

Payment Landscape: Brazil

Euromonitor International expects cards (11% CAGR) to exhibit the highest purchase volume growth among consumer payment instruments from 2012 to 2017. Our research suggests debit (17% CAGR) will experience the highest purchase volume growth among card types over the same time period.