Our Samee Zafar (Director, London) caught up with Laurent le Moal, CEO of PayU, the leading payment services provider with presence in 16 growth and emerging markets across the world reaching 2.3 billion consumers, to talk to him about innovation in payments – what’s important, the challenges, and the opportunities – for companies providing services in payments.
Which country is the most innovative?
Whilst the western world has enjoyed mature banking and payment systems for some time, a new wave of payments innovation is now taking place globally. In fact, some markets traditionally regarded as less mature are now leapfrogging countries with more established infrastructure. Free from the burden of legacy banking systems and motivated by increasing customer demand, favourable regulation and a collaborative spirit, countries in high growth markets are leading the pack when it comes to large scale payments innovation.
A great example of this leapfrogging trend can be found in India. As the country’s leading payments services provider, we are seeing first-hand that India is fast becoming a hub of payments innovation and disruption at scale. India’s progress has been accelerated by the presence of many necessary market ingredients required for payments innovation: customer demand, a supportive regulatory environment and a thriving startup ecosystem.
What are the barriers to innovation?
The ability to innovate in countries that still rely heavily on cash is an interesting challenge. It is critical to understand local market dynamics and consumer preferences so that the financial services system can be inclusive and support everyone, including those that use alternative payment methods.
Alternative payment methods – which refer to payments made using something other than a credit card like cash, coupons, bank transfers, prepaid cards etc. – still represent as many as two-thirds of all payments, even those made online.
Where digital or electronic payment methods are used, there is growing consumer expectation of frictionless payments across multiple channels. This is a key challenge for financial services companies and merchants alike because they must grapple with the need to support many multiple payment types. This is operationally challenging and cost intensive.
What are the greatest areas of opportunity in online payments for payment providers going forward?
Regulation has always been a driver of change in the payments industry and 2017 is no different. With the European push for interoperability and open platforms, payment providers have an opportunity to support fintech companies, financial institutions and businesses meet obligations such as the CMA Report in the UK and the PSD2 across the EU. These regulations aim to open competition in payments but they also support firms’ increasing desire to operate internationally.
Providing the payments technology that supports our clients’ international growth is a significant opportunity that we are pursuing, one which requires local market knowledge and presence.
What’s PayU’s key strategy and how different is it from other providers?
PayU extends the reach of financial services to growth markets. Hundreds of millions of households and small merchants across the world don’t have access to traditional banking services, stifling opportunity. The vast majority of them will soon be online and will leapfrog the traditional banking experience. We use our expertise and heritage in payments to build and extend financial services to growth markets.
Our regional expertise makes us one of the smartest investors in financial technology at a local level. We also have the global support of Naspers, one of the largest tech investors in the world.