The Online Paypers is a biweekly online publication that brings news & analyses about the online payment industry. The PayPers asked ICEPAY to write an 'Expert opinion' about the most important trends in 2011 and the main developments that will impact the online payments industry in 2012. You can read the article of ICEPAY CEO Steven de Boer below.
Financial crisis in EU offers opportunities for online payment industry in 2012
Many European companies and financial institutions will remember 2011 as the year that the Euro was on the brink of the abyss, the year of the ‘big bazooka’. Despite of the European financial crisis and maybe even due to this crisis, many players in the online payments industry will evaluate 2011 as a good year. The growth of the e-commerce market in 2011 will be approximately 13,4% with a total turnover of 211 billion US dollars (J.P. Morgan) and the demand for online payments is increasing. The growing demand for (new) e-payment solutions and the influence of the financial crisis will dominate the developments in the European online payment landscape in 2012.
One of the consequences of the financial crisis is the search of European banks for liquidity. The banks can attract this liquidity through Collecting Payment Service Providers, because these companies are in charge of liquidity through the transactions they handle. Possibly, some of the banks will develop or extend their own online payment activities, others will seek a partnership with collecting Payment Service Providers. This is an interesting development for Collecting Payment Service Providers, because the banks will probably decrease their price per transaction. This will give a boost to the online payment landscape.
Despite the financial crisis consumers buy more online, because it’s easy and often cheaper than offline purchases. Next to this, the number of accesses to the internet expands and the logistics around online purchases improves in Europe. The outcome of these developments is the demand for greater cost transparency and a need for more safety in online payments. The demand for greater cost transparency also puts the price per transaction under pressure. This will probably induce a decreasing margin per transaction. The enabling of transactions for merchants will not be enough anymore, payment providers have to offer extra features and services to make sure the merchants want to pay extra for their products. This is another development that provides good opportunities for online payment providers, because they have the flexibility to adjust to these developments.
The need for higher online payments safety standards led to more regulation. This regulation and its high standards, for example the Payment Service Directive of SEPA, will strengthen its influence on the online payments industry. It makes it harder for new parties to enter the online payment market in Europe. Companies that already operate in the field of online payments will have to adjust their processes and risk management to comply with these rules. This can possibly lead to a new model for the prediction of fraudulent actions in the future.
Last but not least, the diversity of online payment methods is subject to two diametrically opposed developments. At one hand, the future will bring even more different online payment methods. Many companies will try to reap the benefits of the increase of online transactions and develop new online payment methods. At the other hand, some of the existing payment methods will not make it in the future online payment landscape. Some of these methods will just disappear or will be part of an acquisition or a merge. This has already happened in 2011 with the take-over of Wallie by Paysafecard.
Overall, 2012 will be an interesting year for the online payment industry. It can be a year of captivating opportunities and possibilities for innovative and flexible online payment providers that can keep their transaction prices low and offer interesting extra features for the merchants.