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PayExpo Panel: COVID-19’s Effect on Payments

Sarel Tal, Rapyd’s VP of EMEA participated in a PayExpo panel exploring the impact of COVID-19 on consumer behavior, fraud and retail payments, as well as industry trends and challenges.

Discussion Transcript

Mark McMurtrie: How time flies when you’re enjoying yourselves talking about payments and what’s happening. What we’ve now done is we’ve brought to you a lineup of experts who are going to be able to take part in a panel session. And so, I’m going to be asking my panelists to come up to the stage now; and we are then going to be talking about retail payments and COVID-19. We’re going to be able to get their different perspectives and also, again, this your opportunity to type questions into the box and then we’ll be able to raise those directly to our audience.

But before we start on the questions, what I’d like each of my panelists to do is to introduce themselves–briefly, please–and also the organization you represent. I think in true British style, ladies first. Iona, would you like to introduce yourself and the company you represent? Thank you very much.

Iona Pullar: Thanks, Mark. And hi, everyone. So, my name is Iona Pullar and I work for Shell and specifically within their retail division. And I’m responsible for looking after our mobile payments within our Shell retail app.

Mark McMurtrie: Martin. We can’t hear you, Martin, I don’t think. We’ll move to–back again, Martin. We’ve got you now.

Martin Parry: Yes, sorry about that. I’m Martin Parry. I work for Skyscanner, and we operate a two-sided travel marketplace.

Mark McMurtrie: Sarel, if you’d like to introduce yourself and the organization you represent.

Sarel Tal: Sure. My name is Sarel, and I run the EMEA operations for Rapyd out of the London office. Rapyd, for those of us who are not familiar with Rapyd, we’re a Fintech as a Service provider and we provide global collection, disburse, and hold services to our merchants across the world.

Mark McMurtrie: Thank you very much to all three of you and varied panelists and so we should be able to get different perspectives from that. Do type your questions in if you’re in the audience and then we’ll pick those up.

But to kick off the discussions, what I’d like each of you to please do, is to let me know how you think that consumer payment preferences may have changed as a result of the COVID-19 crisis. So, how have the consumer payment preferences changed and whether you think these are just temporary changes or will be permanent? Iona, can you start us off?

Iona Pullar: Yes. So, I think definitely, I think everyone across any industry can see the consumer preferences have changed, and I mean speaking from personal experience and within the mobile payment solution that I look after within the Shell retail app, and we found that our penetration of that has tripled just as a result of COVID-19. So, people are really turning to a contactless method of payments; and I think we also have seen that not only with the Shell app, but then people paying inside the stations and contactless has gone up by around 15 percent. So, definitely, people who haven’t used payments before are now using them digitally.

Mark McMurtrie: Sarel, what changes have you seen from the consumer side?

Sarel Tal: Well, I think the number one change we see on a global basis–and we operate across the globe–on a global basis in APAC, in Latin America, and across Europe–is that cash has disappeared almost overnight. We had a very strong cash collection in this person network and the usage of this cash network has dropped by probably 90 percent.

And we’re seeing the merchants adopting pretty fast to this change by providing local available–alternative local available payment methods to substitute for the loss of cash. And this true for both very large and very small merchants; some of them, all of their business was based on cash and they have, almost overnight, added digital payment options; and on the other side, you see the global providers that are moving to support local payment methods and additional digital payment methods–ewallets–to replace cash.

The other thing that we’re seeing–to your question whether this a short-term change or a longer-term change that is hit here to stay, I think on the merchant side, they are starting to understand the advantages of non-cash payments; they were typically under the impression that the cost of handling cash is lower than the cost of handling the digital payments, and I think they are now realizing that that is not true and there is the additional cost of the cash-handling that they can now see that they’re saving when moving into digital.

The other side effect is not only on the online side, but also on the in-store payments where you see that this cutting queues and reducing the time that people spend the till; so, it’s not only the usability of the digital payment methods, it’s not only the cost, but it’s also the additional effects of using alternative payment methods and digital payment methods in-store.

Mark McMurtrie: Martin, what have you been seeing at Skyscanner as far as consumer behaviors and preferences?

Martin Parry: Yeah, I think I would echo my co-panel that there has been a change in preferences around confidence levels, and we’ve seen people adopting the newer technologies like alternative payment methods–certainly, contactless, we don’t see that where we are in ecom.

I think within the travel industry, a very important part is the–is the consumer confidence, it’s really highlighted how important the confidence level of the consumer with the merchant is–particularly, as I say, in travel where we’ve seen mass cancellations and refund issues, et cetera. So, I think it’s any new technology which supports that–and we’ve certainly seen it in the rise of the alternative payment methods–we’ve all seen the really… sort of growth of things like PayPal and the installment market. So, a lot of this is really driving consumer behavior in that way and I think, as people gain confidence in those methods, they will remain.

Mark McMurtrie: That’s an interesting point about the confidence because the crisis, in some ways, has changed people–forced people–to try paying in new ways. What examples, if any, have you seen about how people are changing and how you need to help people get comfortable with these new options?

Iona, at Shell, have you seen an uptick in your mobile wallet and if you had to do anything to encourage that or is that just being the consumer, just a natural change?

Iona Pullar: Yeah, I think, to be honest, it’s been quite a natural change. I think naturally, obviously, when communicating out, there is much more–you’re communicating with customers in a real time of need, so pointing out the services that you have, for sure, was something that we were doing and this was a way that we felt that people could remain safely on the forecourt and not feel like they were doing anything they felt uncomfortable with.

But the penetration really kind of happened naturally and it wasn’t necessarily that we did a big marketing campaign, I don’t think that was appropriate at the time. But we found, I think, one of the things that has really noticed is just the uptick in certain markets that we have; so, like the UK has obviously been very strong with quite a digital presence anyway, so we’ve seen a definite increase there as well.

Mark McMurtrie: It’d be interesting to hear the thoughts of all three of you about any regional aspects of it, if there are differences by different parts of the world or by different countries. Sarel, maybe you could start us off on this. Are these changes, do they vary very much by regions or by country?

Sarel Tal: Yes, they are very much regional, but they’re also, I would say, vertical and related to the size of the merchants. We see smaller merchants react differently than the very large merchants; smaller merchants would tend to make the move faster from the brick-and-mortar type of business they had into the online business and act more locally; and also, to some extent, change their business model. So, if you had a restaurant, you would add selling groceries in-store, if you had a brick-and-mortar shop, you would put an online store and provide the local payment methods.
Where if you were a larger global operation or a larger business, you would start to look globally because once you went online and you have an online operation, it is easier for you now to find new customers cross-border in other regions and optimize your payment solutions and your marketing activities into these markets.

And when you deep dive into the different markets, you see that they’re going into different directions. I would say that Europe is moving more deeply and quickly into the kind of PSD2 solutions, the open banking, the account information, and payment initiation services; while in APAC, we’re moving more into adding the additional digital wallets that they support, that they have not yet supported. So, basically, you would support Alipay and WeChat, but now you would support all of the other smaller and rising digital wallets in your area to optimize your acquisition.
And Latin America, which was a very cash-based market, they’re now kind of trying to see, “Okay, what’s my fastest solution to overcome the going away of cash from the markets?”, and they’re typically using the different local–in-country, I would say–solutions. So, that region is still in its in-country kind of state rather than the other regions are starting to look into other regions and other countries and in other regions.

Mark McMurtrie: Thank you very much, Sarel. Martin, what have you seen as far as variances geographically?

Martin Parry: Yeah, I think I would support what Sarel was saying there that we’ve definitely seen a preferential move to local payment methods preferred in those markets, I think he was mentioning, particularly in the APAC markets, the preference for wallet-based solutions; and you can not only see it as consumer preference, these methods are starting to have higher approval rates particularly as, perhaps, some of the card issuers and acquirers are starting to take much more of a sector-based or vertical-based risk profile.

So, there’s no doubt that, once again, travel being a highly impacted area, we’ve seen a slightly more hostile environment; whereas for the wallet-based, the local payment methods, they tend to enjoy higher approval rates.

Mark McMurtrie: Okay. Iona, I know that the Shell mobile wallet is available in multiple markets. What’s your experience of the differences between countries?
Iona Pullar: Yeah, I think I will echo a lot of the things that the co-panelists have said, but I think that one of the trends I’ve kind of noticed is that, with the adoption of the payments within the app and how we’re seeing transactions increase throughout the kind of crisis period, and countries that had that more tendency to be into mobile wallets and things like that have tended to have the bigger growth.

So, for example, China, we saw a growth of about 85 percent on our three months’ period of transactions and versus the UK which was about 55 percent. So, still a massive increase, but as you’re sort of pointing out, Sarel, the APAC region is obviously much more into those kinds of wallet-based payments and are much more used to those ways of paying. So, I think that’s definitely been an important trend on that one.

Mark McMurtrie: I’d be interested to hear the thoughts of all three of you, as panelists, on what you think have been the key learnings for businesses. What have been the key learnings for businesses which has come out of the crisis? Martin, why don’t you kick us off first this time?

Martin Parry: Okay. I mean, for us, I think within the business–and probably as payment people, we kind of all experience this–payments are quite often seen as a [hedging fact] [00:14:32] at the end of the funnel; it’s not really something that anybody gets terribly excited about. But with the strains which this crisis has brought upon us, suddenly the payment process and the friction that that’s causing has got a lot more attention within the senior team in the business, and the impact on how that can affect your conversion.

I think one of your earlier presentations was around payment optimization; so, that certainly has become a much more higher-profile activity within the business now to make sure that you take–the opportunities that you have, you should maximize on those and that’s really across the whole risk piece, the authentication piece, the approval piece. So, yeah, that, I think, would be one of the biggest changes I’ve seen.

Mark McMurtrie: Iona, are there some other key learnings you’d like to add?
Iona Pullar: Yeah, I mean I think that this, again, isn’t just, I think, a unique thing for Shell; I think it’s consistent across the industry. But just by testing and learning, you can innovate fast and I think this has tightened more than ever, you’ve kind of learned if you’re not fast, you’re last and you need to be able to–you might think you can innovate on a normal basis, but in a crisis and you really learn how quickly you need to respond to customer needs. And I think we’ve seen this with our restaurants that, overnight, have stepped up to take-away online services, creating that payment platform where you can get your food online and then cook the food at home; and I think that that type of innovation is very rare to happen, and I think yeah it’s just kind of showing that it doesn’t need to be 100 percent, but you can do something that will actually truly meet what the customer wants and get it right.

Mark McMurtrie: Sarel, what are the learnings do you think you want to share with our audience today?

Sarel Tal: I think the interesting part is that all of us–for all of us, I think–the communal learning is that you need to act fast; and it’s our customers needed to act fast and they had to change their business models overnight and adapt to the new normal. And the result–

Mark McMurtrie: We’ve had to adapt. Should we be calling this Rapyd rather than fast?

Sarel Tal: So, so we had to react rapidly to their new requirements–and maybe I can share with you just two new solutions that we’ve added over the recent months just to support these new requirements. One of them is to support the new businesses that need to go online quickly and we have completely redesigned and launched a self-onboarding process; so, today, we’re enabling small merchants to sign up, integrate, and go live in a 100 percent frictionless environment from start to stop, and they can start accepting payments at the end of this process. This can be a day long or two days long, it all depends on their capabilities. So, this is a solution we’ve implemented for the smaller merchants.

And for the larger merchants, we’ve seen that they’re moving a lot of their business into online marketplaces–the WooCommerce, the Magentos of the world–we have expedited our integration with these plat platforms so that our customers can integrate their platform usage and platform-based marketplace into our payment solutions in a very simple way.

So, these are kind of two examples where we have also adapted very rapidly to support our

Mark McMurtrie: So, Martin, I’d be interested to know what you think people should be planning to do differently. Are you planning to do anything differently at Skyscanner or any suggestions for other retailers in how they may be able to do things differently in the future?
Martin Parry: I think, really, it is… it is examining those alternative and local payment methods. It really is, for us, trying to give the consumer the confidence to book. I think your previous presentation was quite pertinent that the checkout point–the point where you pushing the pay button or the book button–is a typical approach of avoidance of conflict; so, anything you can do to lower the friction for them or the conflict that they feel is paramount. So, I would really encourage people to really look at that at their checkout process and make sure that you’ve made it as easy as possible and you’re trying to give the consumer as much confidence as you can at that point. It really shouldn’t be a decision of, “Should I pay?”, it should be a decision of, “How I’ll pay.”

Mark McMurtrie: Iona, are you planning to do anything different?

Iona Pullar: I mean I absolutely agree kind of with what Martin’s saying. I think for me, it’s maybe not doing anything differently, but I think it’s just going back to the basics and just remembering the key things that are going to make your customers return time, and time again. And that’s just having things working really well and very slickly; so, to your point around when you check out, you want it to go through and you want it to be seamless, and I think that that’s really the fundamentals that now that digital, even more so, is so much more a prominent part of how consumers are choosing to pay and how they want to pay, that it needs to be right first time and there’s a non-negotiable of that–it’s like your first impressions really count and you need to make sure that you’re building that relationship straight away because customers now have got the shorter patience, I think, for that because it’s just expected that it’ll be working and there’s no excuse if it doesn’t.

Mark McMurtrie: So, do you think we should be expecting to see increases in digital payment budgets going forward and maybe then being prioritized over on-premise, your face-to-face, bricks and mortars payments investments? How do you see the investment choices for businesses for digital against old brick-and-mortar systems?

Iona Pullar: Yeah, I mean definitely I think we’re going to see that if companies aren’t having–and been investing in it, then they sure will be now because now, if you don’t have that option, it’s one of the things that to be honest, for me–I mean obviously I work in digital payments so I’m quite a digitally-adopted person as it is–but I probably–I don’t want to use cash anymore, it’s something which I’ve really moved away from. And so, if I walked into a shop and it was cash-only, that would be a deciding factor on me purchasing and I think, therefore, businesses know that–I don’t think I’m particularly unique, I think I’m one of the majority now; so, they know that they have to react and change. So, if you haven’t got a budget line for that, then you should be doing that to ensure that your business will survive and ride through this.

Mark McMurtrie: Sarel, it sounds like this may be good for your business and would you concur that the investments are all going to be around digital going forward–digital payments?
Sarel Tal: Obviously, yes and I agree with our panel partners with respect to the checkout optimization–and this an ongoing battle for many, many years. But I think the interesting trend that we are seeing coming up is another source of optimization, and that’s the optimization between the online and the offline. Many of the merchants now have both an online front and a storefront, and ensuring a unified customer journey, customer experience across these two very different experiences is something that is very important to our customers; and I think the challenge going into 2021 will be to optimize this customer flow from the storefront, onto the online store, and back into the storefront. So, you buy something online, you go to the store, you want to exchange it, the person the store will identify you as a returning customer, will offer you discounts or will offer you additional products based on your online purchases.

I think this where we’re going to see a lot of focus on the optimization–in addition to the obvious optimization of the checkout process. And I agree that there is still a lot of things to be done there as well.

Mark McMurtrie: Martin, is there anything you’d like to add to this conversation?
Martin Parry: No, I think it is all just about optimization and removing friction, and just making it really easy, that final step for your consumers.

Mark McMurtrie: Okay. So, there’s been various questions coming in. Sorry, we haven’t been able to answer all of them, but we appreciate that we’ve been having some great discussions here. Unfortunately, as always is the case, time just flies when we’re having these discussions.

And so, what I would like to do is to ask each of the panelists–we can go back to the panel–each of the panelists, please, to sum up and give us a closing thought. So, for each of the panelists–Martin, maybe you could start with this, to give us a closing thought on retail payments and the impact of COVID-19.

Martin Parry: I think it’s really highlighted the importance of payments and the requirement to optimize; but the one thing that I think I would like to mention to all ecommerce payments: stronger customer authentication is coming, guys; and please do not underestimate the impact that this going to have. So, I would really look to that. That would be my last thought on this.

Mark McMurtrie: We seem to have heard that from all the presenters today. Sarel, maybe you could give us a closing thought, please.

Sarel Tal: Yeah, I think my advice to the audience will be that you need to be very careful in your selection of your payment partner; it’s not a short-term engagement when you select a payment partner, it’s a very long-term engagement and a global engagement. And while we all go through very tedious processes of evaluating our partners, and testing their capabilities, and running different tests and validations on their capabilities, at the end of the day, this a very fast-changing world, a rapid-changing world, and the things we think we will never need or things we don’t even understand that we will need, we end up requiring in the future. And we need to make sure that our partner will be there to work with us in these solutions and on these changing requirements.

So, when you kind of go through this partner selection process, look at the partner, look at their technology stack, look at their investors, look at their management; and most importantly, look at the people because, at the end of the day, it’s people that you do business with and it’s people that you interact with, and these people will be there to support you when you do need this support in times of change. So, this kind of my advice to the people selecting the payment provider.

Mark McMurtrie: That resonates very well with the projects I’m working on and helping businesses. Business is about people; it’s around picking the right companies as partners–long-term partners–and we heard earlier on about future proofing. So, it’s a long-term investment.
But Iona, you started off this panel session, I’d like you to leave us with you the closing thought for our audience.

Iona Pullar: Yes. So, I think, again, similar to what Sarel said, I guess my closing thought would be find someone who makes you look good if you don’t have the time to do it yourself. So, I just think with COVID and everything that happened, everyone’s had to respond so rapidly. So, don’t miss the mark and wait to build something say in-house or do that, find a partner that can make you look really great and make sure you pick it well. And just listen to your customers; I think more than ever, that’s where you’re going to build loyalty and long-term retention way beyond once, hopefully, we get back to normal and this all a distant memory, but the relationship you have with your brand will stay there. So, keep that at the forefront of your mind.

Mark McMurtrie: Well, on behalf of all of our audience, can I please thank our three panelists for this excellent panel discussion. Thank you for sharing your experience and giving your thoughts on where things are going and of how the industry is changing. And you’ve all confirmed the speed of that change and the fact it’s not going to be temporary going forward.

So, thank you very much to each of the panelists. And what I’m going to do now is just move to closing this afternoon’s Pay Expo Digital Payment session with just a few closing thoughts.
I think the first one is there have been very dramatic changes; we’ve heard this from all of our speakers and we’ve seen this in the questions that you’ve been asking, so it has been a dramatic change. But really, what’s happened is it’s been accelerating the change; maybe some of these changes were already underway, but extra gas has been given to accelerate them, whether it be the move to digital payment options, whether it be the move to ecommerce from brick and mortar.

But it has also highlighted the importance of responding to consumers’ needs; to be successful, businesses have to understand hear what their customers are wanting, and to be able to respond for that. And so, if the customers are wanting to be able to have a different flavor and a different experience, or a frictionless, really, as retailers, we need to be of providing them with that capability. So, it’s around the acceleration of the changes; as Sarel said, it’s the rapid, it’s the need for agility and it’s the… I think, as Martin highlighted at the beginning, certain sectors, because of the crisis have faced real peaks of things like chargebacks and refund requests, and these are areas people didn’t have to focus on before, but now it’s come to the forefront: did they have the systems in place, did they have the partners to be able to support them?

The final area, though, is we started the presentations this afternoon looking at fraud and managing that. And it’s fair to say that the criminals have not been asleep, they have been maximizing the change we’re all facing, the change in way things happen in order to be able to exploit people, and to commit crimes, and to make financial gains.

So, I think everyone needs to step up their game as far as fraud prevention, improve their risk management in order to be able to protect their business; but not only their business, but also put their customers center stage as well, look after their customers and do the right things.
So, no shortage of things. I’m going to be very sad not to be seeing you at the Design Center next month for the face-to-face conference when we could have continued some of these discussions, but thank you for joining us today and I hope you found the Pay Expo Digital Session today of value and of interest.

Please do follow up with questions; the question facility is still there. We’ve also got the opportunity for you to go back on the Pay Expo digital site to look at some of the previous sessions which you may have missed; and I believe, also, there’s a networking session now for you to be able to meet and greet with speakers, other sponsors, and discuss matters further all related to payment.
I think you all agree with me, it’s a very dynamic time we’re living through and how we got to respond. I wish you good luck in that; I hope that the new normal can become how we wish it to soon. And in the meantime, please stay safe and good luck with your businesses, and do well.

I look forward to speaking to you again soon. Thank you very much for your attention today.

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