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Revolution in payments business: new model will change the game and the rules

Payment system business is having growing pains as:

  • e-commerce explodes -  European Ecommerce Report 2017, by Ecommerce Europe, predicts that in Europe will hit EUR 602 billion mark in 2017 
  • new technologies disrupt everything
  • new players are appearing who are creating a whole set of new rules.

There are so many opportunities and problems for all players. Not surprisingly there have been a slew of reports recently on what to do in the payment business.

What banks should do

Finextra’s european payments industry insights report, June 2017 ‘Mastering Today’s Challenges: Harnessing Tomorrow’s Opportunities’ which contains articles from many leaders in the payment business looked at what banks need to do to maintain their place in the business. The finextra key takeaways on how banks can move forward in the payments business were:

  1. Think about the future as well as the present, and think about payments change holistically. 
  2. Get out of the race to the bottom by focusing on the data and the value-add. 
  3. Collaborate with and listen to your customers to dentify future business models that will enable you to make payments a business again.
  4. Modernise with speed – but care. 
  5. Partner with fintechs, merchants, other banks – any entity able to perform a part of the end-to-end transaction better than you can. This will help you secure your role in the digital ecosystem and deliver the innovative new payment services.

Advanced Payments Report 2017 and API banking

Edgar, Dunn & Company’s Advanced Payments Report 2017, sponsored by wirecard, is based on experts’ opinions as to what is happening in the payment business, comes to some fundamental conclusions:

  • initiatives are pushing industry reform through the introduction of standardised APIs
  • API banking is creating a new role for banks as the structure of the payments and retail banking market is breaking up
  • entirely new set of activities in the banking value chain has emerged between banks and customers
  • banks will need to decide where in the value chain a bank wants to be: do they want to position themselves as API platforms or as third parties

Overall EDC see a bank as a programmable enterprise as the new role for banks in a financial value chain dominated by APIs.

The other key conclusion in EDC’s report is that the current payments ecosystem:

Source & Copyright©2017 - EDC

is going to change dramatically with payment applications “riding multiple rails”:

Source & Copyright©2017 - EDC

The vital part of this new vision is the API layer which will enable a payment app to connect with any payment system. This changes the game. 


CTMfile take: The EDC report is essential reading in understanding what is coming in payment systems. Corporate treasurers will need to assume that they belong to all payment rails, the key choice will be which payment app they accept payments from. This really is a revolution.

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