The Payment Mix : an answer to the challenges posed by realtime operations
In the age of real-time, the customer can chose whether to pay by card, or directly with their IBAN, depending on their profile,the security offered and the cost. Looking beyond the full range of payment methods that banks have to offer, this is an opportunity for banks to provide enriched and attractive services, combining several different payment methods.If bank cards didn’t exist, who would invest in creating them and implementing them today? Probably no one! Yet they do exist! They are authorised and guaranteed electronic payment instruments, mixed with an interoperable identification and strong authentication system.
Furthermore, it’s a medium which has been able to evolve over time. The bank card, which was once cardboard, then made out of plastic with a magnetic strip and a chip, and is now virtual, offers value-added services and tomorrow can be present on all connected objects. Nowadays,the card is popular with consumers (47% of payments carried out in France in 2015, for example.)
Even though for cards specialists it would have been possible to base instant payments on the card, today public authorities are fostering the emergence of new, pan-European and cheaper payment methods which are based on new technologies and the digital phenomena: instant SCT and Account Access.
While banks and networks are interested in cards, and cards open up possible synergies with the GAFAs (Google, Apple, Facebook and Amazon) and the NATUs (Netflix, Airbnb,Tesla and Uber), all these players themselves are tempted to offer added value services to customers.
Therefore, how is it possible to withstand this disintermediation movement? Banks must not run the risk of losing their relationship with customers and seeing themselves limited to the expensive, yet non-profitable role of account administrator.
In order to safeguard their interests, banks must have a full payment methods offering that they can combine with enriched services to satisfy consumers who are fond of new products. For example, in France, consumers have four different payment methods (cash, cheques,cards or IBAN) that meet their essential needs, whether personal or professional.
However, in the Digital era, Payment Mix combines card and IBAN payment methods, providing a number of advantages for stakeholders in the payments chain; for example, limited investment given that both methods are already used and are broadly rolled out among customers and their creditors;secure payments because the person making the payment is identified and authenticated via their bank cards; payment guarantee for the creditor and less of a risk thanks to use of a bank transfer or direct debit; and customer access which is facilitated by streamlined processes.
Therefore, it’s in a bank’s interest to be part of the Payment Mix implementation: they will guarantee compliance with data security and supervision requirements. Banks will be able to ensure that we all have the same obligations and rights, and finally they will make sure that responsibilities are equally shared when it comes to using their customers’ banking data.