We’re standing on the brink of a cashless society

Payment technology is changing so quickly that businesses are struggling to keep pace. Identifying when to move, however, can be more important than staying at the cutting edge

 
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Payment technology is evolving. Companies must stay one step ahead of the game in order to remain competitive

Author: Jóhannes Ingi Kolbeinsson, CEO, KORTA Pay

31 Aug 2017

We’ve come a long way in the two decades that have passed since the dawn of e-commerce. In that almost-forgotten time, we bought goods and services in person, either in a store or by phone. Since then, we’ve gradually moved to online shopping, and while we still use phones, their most common purpose is as an internet device for online shopping, or as a payment device at a point-of-sale (POS) terminal. On top of this, our use of cash has gradually decreased, with card and NFC payments now clear favourites.

What’s more, the speed of development is constantly increasing. Who could have imagined a few years ago that we could transfer money to friends just by bumping two phones together? Or that we would be able to pay for public transport fare by simply touching a debit card at a turnstile? The upside for consumers is obvious: they are free from the hassle of carrying cash. This has, however, led to increased pressure on merchants, who have to be ready to accept a growing range of payment options, or risk losing out on business.

Payment panic
Whether you run a coffee shop in Prague, a design furniture outlet in Copenhagen, or an airline in the UK, you need to be able to keep up with the latest developments in your field of business. The challenges are different for every industry. The coffee shop will, for example, need to cater to tourists wanting to pay with contactless cards or even their phones. The furniture shop will be asked for instalment and finance options. And the airline will look to provide a user-friendly interface for booking and check-in, with active integration of inventory and accounting solutions.

These are only a few of the challenges facing merchants in today’s business environment. While these are ample for each of the specific industries discussed, consider the pressure on payment providers who have to provide solutions for all of these situations – and thousands more – while maintaining the integrity and security of their core transaction systems. The truth is, this has caused an immense struggle for major global players in the payment services market, who have not been able to keep their legacy systems up to speed with the latest developments in financial technology. They are slow to react, and each upgrade of their systems is complicated, time-consuming and expensive. This also means customised solutions for individual merchants cannot be catered to, and merchants are often forced to adapt to the major players’ complicated and restrictive solutions, while paying premium rates for technical support and post-processing work in their accounting departments.

Who could have imagined a few years ago that we could transfer money to friends just by bumping two phones together?

In some instances, this has led to frustrated merchants developing their own bespoke interfaces and solutions when racing to provide their customers with the latest fads in financial technology. This obviously creates all sorts of challenges and costs, as well as an increased security risk inherent in fragmented, hastily produced solutions.

Disruption distraction
The result of these developments has been a tremendous amount of waste in the global payment processing market, which could easily be avoided. The constant flow of new solutions and technologies leads everyone – be they merchants, financial institutions or payment providers – to believe they are missing the boat. Every new development on the market is described as a business disruptor, predicted to have the same effect on the payment industry as Apple had on the mobile phone market or Uber on the taxi industry. The vast majority of such ‘disruptors’, however, turn out to be distractions, causing unnecessary costs and consuming too much time for those trying to keep up with every single one of them.

Yes, you have to be on top of the latest developments and be ready when major shifts occur in the market, but you really shouldn’t spend too much catering to the earliest adopters. After all, they will most likely be ready with plan B when they find out they can’t pay with their latest contactless smartphone app at the till. What you really should watch out for is when your parents and children start using a new payment solution. That should be your cue to move, but when that happens, odds are the manufacturers of POS systems and online payment solutions will already have integrated that particular solution into their core systems, saving those who don’t jump the gun precious time and money.

New perspective
So, if developing bespoke solutions has too many pitfalls for merchants, and the major players in the payment market are too slow and inflexible, what is the right way to go for merchants who seek to offer their customers the most appropriate and up-to-date payment options? Thankfully, the ever-developing market, with its challenges to both the traditional major global payment solution providers and merchants, has created a new breed of nimble, technologically oriented, customer-focused players. My company, KORTA Pay, happens to be one of them, and I have seen first-hand how the right blend of enthusiastic implementation of cutting-edge solutions and customer-orientated service can help merchants provide their customers with the best ways to purchase goods and services while also saving costs in implementation and accounting.

When founding the company 15 years ago, in a stagnated Icelandic market that was split between two dominant players, we knew doing things differently would be the key to surviving. Viewing our solutions from the standpoint of the merchant and developing them free from legacy systems and structures provided us with that competitive edge.

Our online solution, for example, gave small websites the opportunity to handle online payments with first-class PCI-DSS security for a fraction of the cost of other options on the market at the time. And, realising integration of payment solutions with accounting infrastructure was a real pain point for merchants, we made automatic synchronisation of data between these systems one of our top priorities, which led to significant cuts in accounting costs for our clients.

Learn to see
Having secured a significant market share in Iceland in the first 10 years of our operation, we realised merchants all over Europe were dealing with the same problems we had been solving domestically. And, since they were dealing with slow-moving major providers in a constantly evolving market, the problems they faced were expanding rather than being solved. That is why KORTA Pay, as a small, innovative payment provider, has been able to help international companies take on huge challenges at a cost no other provider could match.

Our success stories include: Collector Bank in Sweden, where we built an easy-to-use check-out system for online payments; Radisson Blu hotels, which are now using our payment integration for the mainstream hotel and restaurant solution Oracle Micros; and airlines like Wow Air and Monarch Air, where our systems handle vast amounts of international online payments with deep system integration. These, and other similar international deals, were a significant reason for KORTA Pay being listed number 106 on Inc. magazine’s list of Europe’s fastest growing companies in 2016.

Merchants who are increasingly frustrated by today’s challenges to their existing payment structures need not despair. The success of KORTA Pay and other tech-orientated payment start-ups clearly shows merchants no longer have to choose between being left behind, or spending huge amounts to keep pace with an ever-changing market. There’s a middle path, offering all the benefits at a fraction of the price.