TSG Insights following the October 2013 Payments Conferences

October was a huge month for the Payments Industry with both Money2020 and the ETA Strategic Leadership Forum (SLF) occurring within a week of each other. While both events cater to the same industry, in many ways they could not be more different. Following are some general insights and opinions on what the TSG Team, who attended both shows, observed.

The Conferences

Potential disrupters as well as many legacy players attended Money2020, while the traditional payments power brokers were at the SLF. You can certainly argue there is a place for both.
One industry veteran and client told us, “At Money2020, the attendees represent the successful and the potentially successful – however you need to get through many attendees to talk to ‘real’ players. At SLF, all the ‘winners’ are there in one place”. We believe both events will play a continuing role.
As the industry continues to evolve, the traditional sales-focused ISO will find it more and more difficult to grow and succeed in this industry that is continuing to specialize and develop new and different business growth models.

Government Oversight

There is a definite change in governmental interest in the industry.

Payment issuers have long been of interest to Congress for the simple fact that they inherently involve consumers
Historically, the focus on B2B (Merchant Acquiring) was left to regulators (FDIC, state banking examiners, etc.); that is changing:

Merchant acquiring is seen as a “systemic risk” point
Federal government focus is on consumers, who are voters. As consumers complain to the FTC, investigations turn to acquirers/processors
There is a change in approach, with more skepticism and enhanced enforcement

One very interesting and proactive move – the ETA is starting a Political Action Committee. The theory is that in order to influence, you must have the ear of Congress. Congratulations to the ETA for proving industry leadership on this new front.

Innovation and Relevance

While the industry continues to evolve and change (when hasn’t it?) with new innovation in payments, it appears that legacy acquirers and the card brands can adapt to the shifting landscape and remain quite relevant. The processors however may find it more difficult being as nimble.

Disintermediation Threat

As we have commented before, the threat to disintermediation by new players has been exaggerated in some quarters and we believe that incumbents will continue to change to meet the demand of an evolving landscape that includes new and more competitive threats.

New Strategies and Common Themes:

Using data analytics to understand the current performance of your own company and plan accordingly to proactively improve results. This is evidenced by the fact that TSG’s MPPS product currently has 18 portfolios from the top 60 U.S. merchant acquirers, which is focused on merchant acquiring performance benchmarking. (TSG MPPS Benefits)
Understanding attrition and investing in retention strategies are being embraced by the large innovative acquirers. 44% of top acquirers currently list retention management as a top five priority for this year and the next, according to TSG’s soon to be published Retention Management Study. Furthermore, TSG is currently piloting its Retention and Attrition Management solution with one of the largest U.S. acquirers.

Goel

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