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Overcoming payments fragmentation

Companies, like Adyen, believe that how to effectively manage the myriad of payment channels that are springing up in many countries around the world is to give the problem to them. They will sort it.

Payment fragmentation, they say, is now the “new normal”, giving consumers a great deal of choice, but this gives merchants an ever-bigger challenge to deliver seamless services across channels.

“The omni-channel payment behaviour of increasingly online consumers, the multiple payment service demands of merchants, the globalisation of merchant businesses and technology driven fragmentation of payment services are real challenges for payment platform providers.” - a new report from RS2 claims. But what about the multi-national corporations who have to knit all these solutions together - rejecting the ones that are too risky or cannot handle the scale of their operations?

New report from RS2

The recent research published and sponsored by RS2 - Overcoming Fragmentation – The Payments Platform Challenge - highlights the impact of payment fragmentation in the digital payments world, as seen in key payment markets around the world, through the lens of both merchant businesses and the payments industry. 

The report explains that, “For a long time, payment services have been pretty straightforward, even the advent of online shopping did not make things more complicated as e-commerce payments were seen as a completely separate channel. However, the proliferation of payment channels and the fragmentation of payment services has made payment service processing increasingly complex, and the blurring of previously separate payment channels is only set to continue.”

Key payment markets

The country analysis of USA, Canada, China, Singapore, Malaysia, Indonesia, and Philippines (China example shown below) shows the significant variation between the countries.

China Market Context – Selected Macro Payments Data

Source & Copyright©2018 - PCM Research

From a technology perspective, the following emerging trends were identified in the more mature payment markets:

  • Digital card form-factors, omni-channel payment service demands, in-app payments, mobile in-store payments
  • Invisible payments, conversational commerce, in-car payments
  • Card-less payments, IBAN-based payments, immediate payments in real-time.

Fragmentation is going to get worse

Bank mobile payment Apps mobile banking apps are being combined with payments direct from the account. These solutions are expected to expand market share and will enable shopping at the new Retail Checkout Retail outlets, see below:

Source & Copyright©2018 - PCM Research

The other major features of payments systems at point of sale predicted are:

  • much more use of immediate payments.
  • Messenger Pays – More and more consumers chat with businesses through messenger apps like Facebook Messenger, WhatsApp
  • Invisible Payments – e.g. Uber and Amazon.
  • Conversational Commerce Payments – Conversational commerce refers to the intersection of digital assistants and consumers while shopping. Meaning, the trend toward interacting with online shops through digital assistants like Amazon’s Alexa, Apple’s Siri, Google Assistant and Microsoft’s Cortana.
  • In-Car Payments –from the Internet of Things (IoT) world.

The fragmentation of payment services is now a reality even in emerging payment markets like Malaysia, Indonesia and the Philippines.

How can corporates cope?

How can corporate treasurers of large MNCs fighting back against this tide of new payment system ‘opportunities’? 

First by:

  • Rejecting systems that just don’t have the scale to provide process their volumes
  • Only adopting well established systems that cover many countries.

Second by using the biggest omnichannel systems.

Third by ensuring that counter-party risk is really covered.

Lastly by encouraging larger players and banks to offer such services, e.g. Standard Chartered’s Straight to Bank Pay service which presents range of payment options.


CTMfile take: Payment fragmentation is becoming/has become the “new normal” in B2C payments and increasingly in B2B too. AND it is not going to disappear, the problem is only going to get worse. How are you going to cope?


This item appears in the following sections:
Payments - Collecting at POS
Card Payments at POS
Cash Payments at POS
Cheque Payments at POS
Collecting Payments on the Internet
Collecting Payments via Mobile
Regular Bill Payments from Businesses
Regular Bill Payments from Consumers
Paying Suppliers

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