Payments have evolved rapidly over the last few years. According to the Financial Times in 2019, M&A activity in payments peaked with over 250 deals inked worth more than $140 billion. Through consolidation, the industry gained talent, deeper capability and created new efficiencies of scale. Now with the impact of COVID-19, the payments business is better placed than ever to help companies operate post-lockdown.
In the wake of the pandemic, Elavon’s customers had unique challenges depending on their sector and geography. After the initial lockdown, many businesses were able to reopen by adapting hybrid e-commerce and in-person models. Fine dining establishments began to offer takeaway delivery. Trendy boutiques set up eShops complementing their physical stores. Enterprises of all sizes employed new health and hygiene measures for social distancing. Technology and infrastructure supporting digital payments became vital.
With Elavon’s recent acquisition of Sage Pay, renamed Opayo, and by working with partners, including Santander UK, talech, and others, we helped businesses reconsider their operations, payment and distribution capabilities through a fuller set of e-commerce, app, pay-by-link and cashless support. As fintech and payments have integrated further, there are now more creative payment solutions available to help companies successfully emerge.
Hannah Fitzsimons is the President and General Manager of Elavon Merchant Services in Europe. She is responsible for revenue and growth, leading 1,600 employees across seven countries. Hannah also served as a board member of the UK Finance subcommittee and is a member of Visa’s UK Council. She is a strong advocate for diversity and gender parity and is a Women in Payments mentor.
What has been the traditional company response to financial technology innovations?
Payments are just one part of fintech. Merchants are looking for efficiencies and want to optimise the payments experience for their customers. Payments are essential to our social and financial fabric and as such, highly-regulated. The implementation of new rules and corresponding innovations can take time. For example, PSD2 (the Second Payments Directive) which will improve security, reduce fraud and support frictionless customer journeys, has required intense collaboration between the issuers, acquirers and card schemes. They have had to work together to define, harmonise and agree to new specifications. It’s a profound undertaking and has not happened overnight. Ultimately, it will provide a better payments experience across the board and stimulate innovation and competition.
How has this changed over the past few years?
With regards to PSD2, Elavon was one of the first acquirers to develop EMV 3-D Secure 2.0™ and has been helping merchants undertake Strong Customer Authentication (SCA) in time for enforcement starting 31 December 2020. Constant communications with customers have been vital. We have focused on helping them understand the rules, and make any necessary changes needed for uninterrupted payments acceptance.
Is there anything that has created a culture of change inside the company?
Elavon is and always has been a transparent and ethical company. COVID-19 highlighted the importance of collaboration despite physical distance. Many employees have had different experiences working from home. People faced individual challenges with regards to health, with child care, as carers and so on. In response, we are listening and communicating more. We have encouraged flexible working, offered employee assistance programmes and child care support, in some cases. Alongside this, we provided paid time off for volunteering and held a virtual fitness challenge to raise awareness of our Women’s Business Resource Group.
The other major event driving change was the death of George Floyd and the global call to action to do more with respect to Diversity, Equity and Inclusion. U.S. Bank [Elavon’s parent company] is a leader in this area. It has been named a Top 50 Company for Diversity by DiversityInc and recently committed $116 million to help bridge social and economic gaps and enhance opportunities for people of colour.
What fintech ideas have been implemented?
The payments industry has seen a raft of changes this year, resulting from COVID-19. Cashless payment has accelerated, and contactless spending limits have increased across Europe. Likewise, e-commerce is on the rise across all age groups and demographics. Our recent survey with IPSOS Mori found that 47% of people (55-75 years old) in the UK are spending more online now than before COVID-19. Opayo, who we recently acquired, saw a 30% rise in May and a 52% increase in June in the number of e-commerce enquiries as businesses seek to move online or adapt their operations.
What benefits have these brought?
Contactless and cashless payments are helping businesses operate in a safer and more secure manner. Merchants have thought practically about health and safety and how to best adopt the right technology. Retail customers are changing their store layouts, using mobile point-of-sale (mPOS) to encourage social distancing, setting up eShops for the first time and deploying ‘Click and Collect’. Restaurants and pubs with limited seating are using online booking as well as touchless payment and ordering systems. Niche sectors, like parking, are going strong with consumers using apps to plan ahead to reserve parking. Integrating payments capability is crucial for efficiency and pleasing customers who are looking for ease and security.
Do you see any other industry challenges on the horizon?
Consumer confidence and economic recovery continue to be volatile. For now, we’ve seen some positive signs. In August, consumer spending levels increased for the first time since February with more people shopping online and returning to restaurants, bars and pubs, primarily through the ‘Eat Out to Help Out’ government scheme in the UK.
Fraud is a perennial issue, especially with card-not-present (CNP) transactions. With the recent acceleration of e-commerce, PSD2 and strong customer authentication are now more timely than ever to help tackle security challenges.
Can these challenges be aided by fintech?
If current trends continue, the payments ecosystem will continue to become more integrated and frictionless. Elavon has prioritised innovation. Our digital and innovation teams in Europe and North America are developing Proof of Concepts (POCs) on a variety of topics and applications, including artificial intelligence and biometrics.
I encourage my teams to scan the horizon, understand the trends, and become deeply acquainted with the challenges our customers and partners face. It comes down to asking the right questions, listening and working together, so we are agile and responsive.