Mark Beresford, head of the Retailer Practice at Edgar, Dunn & Company (EDC) and Volker Schloenvoigt, head of the Acquiring Practice at EDC, chaired two panels each at the MPE 2024 event in Berlin – Europe’s Number 1 Merchant Payment Conference.

The four panels were:

1. Day 1, Session 4: Merchant of record, Marketplace, Platform or Payfac – hosted by Volker
2. Day 1, Session 5: The complexity challenge – hosted by Mark
3. Day 2, Session 4: Cross-border payments made easy – Hosted by Volker
4. Day 2, Session 5: The endless possibilities of SoftPOS – hosted by Mark

Merchant of record, Marketplace, Platform or Payfac

For Volker’s first panel discussion of MPE, the panelists were:

• Matthew Steinbrecher / Reach

• Kenny Ebanyat / NBA

• Alisa Applebaum / Guesty

• Mike McHugh / J.P. Morgan Payments

• Ugne Buraciene / payabl.

Whilst payment schemes clearly define the different models included a description of key responsibilities, there appears to remain much confusion and uncertainty in the industry around the ‘models’ that merchants or (SaaS) platforms can pursue to engage more widely in the provision of payment acceptance services; hence, this session was eagerly anticipated and well attended. We started with two introductory presentations. Firstly, Matt (Reach) and Kenny (NBA) talked about how both organisations have worked together to address key pain points such as fees and approval rates for recurring-based streaming platforms especially in a cross-border context. Focus was given to Merchant of Record model which enables local acquiring channels depending on where the consumer sits. As a Merchant of Record you take responsibility for the payments process assuming liability on behalf of the businesses and you become the entity in the terms & conditions in the sales contract.

In the second presentation Alisa (Guesty) provided a thorough description of how it implemented GuestyPay for the hospitality merchants trading on its ‘all-in-one platform’. What are the key drivers in Guesty’s payment strategy and how does this impact the selection of the right business model. Especially the alignment of regulation and liability scenarios with the different business models was well described. In this case, a decision was taken to go down the regulated PayFac route.

For the subsequent panel discussion, the speakers were joined by Ugne (payabl.) and Mike (JPMorgan).

In the open discussion we started defining the roles that payment providers or acquirers would play in the different models, ranging from a full-stack service provision in the Merchant of Record model to an acquiring compliance and scheme relationship focused model in a PayFac model. We then explored the differences in models (especially Merchant of Record) between the US and Europe, and how it aligns with scheme-imposed location rules. What clearly came out in the discussions throughout was the importance of different liability types, the appetite of a merchant or platform to accept any of those and how those decisions would ultimately impact the selection of the most suitable model.

It was a fascinating discussion that, hopefully, provided more clarity in this complex environment.

The complexity challenge

Mark’s first panel on Day 1 of the event was “the complexity challenge” – a hot topic amongst merchants wishing to accept more payment methods, across more markets, across more sales channels. The panelists were:

• Gabriel Lucas / Redbridge

• Tamas Huszar / Mastercard

• Andrzej Tomaszewski / Prezi

• Matteo Gamba / Wayfair

• Eelco Dettingmeijer / PPRO  

Both Gabriel and Tamas presented their perspectives in two brief presentations before the panel was introduced. The panel session covered a wide arrange of challenges that merchant must deal with. Topics included optimisation of payment methods/choices for customers, engagement, conversion, seamless checkout, retention, end-to-end solutions vs payments orchestration vs payments facilitation and payout distribution.  The panellists all agreed that this session covering complexity in payments was a topic that was not going to be simplified overnight. In fact, for many, payments and the acceptance of payments for many enterprises, large Tier 1, merchants were getting more complex – not just in terms of technical complexity but also in terms of regulations and compliance.

New payment methods like "Buy Now, Pay Later" (BNPL) services and cryptocurrencies are gaining traction, requiring merchants to integrate with new platforms and understand their associated risks and regulations. Consumers are increasingly using digital wallets like Apple Pay and Google Pay, as well as contactless payment methods. This requires merchants to invest in compatible payment terminals and infrastructure in store. Equally, online merchants must be prepared to accept global and internationally recognised wallets but also deal with local payment methods. Consumers, it was stated by the panellists, are always going to use their preferred payment methods and that means more work for merchants to be ready to accept and process these preferred payment methods.

Payment orchestration was one topic that the panel addressed as a mean of a potential tool for merchants to navigate the growing complexity of payment acceptance. Payment orchestration platforms act as a central hub, allowing merchants to integrate with multiple payment processors and gateways through a single API. This eliminates the need for individual integrations with each provider, saving time and resources. Payment orchestration platforms can intelligently route transactions to the most suitable payment processor based on factors like cost, transaction type, and risk profile. This can optimize processing fees and improve transaction acceptance rates.

Overall, the payment landscape is becoming more dynamic and requires merchants to stay informed about evolving technologies, security threats, and regulations. While complexity increases, it also presents opportunities for merchants to offer a wider range of payment options and improve the customer experience. The panellists agreed that the complexity question is not likely to go away and we all agreed that this topic would still be discussed in five years time – when a different set of complexity challenges will be discussed.

The endless possibilities of SoftPOS

Mark’s second panel on Day 2 of the event was “the endless possibilities of SoftPOS” – one of the topics that MPE has included on the agenda for several years and was seen to be a “possibility”, prior to 2024, but this year, SoftPOS was very much seen as the “reality” rather than a possibility. The realisation that SoftPOS has come of age and is being deployed in a variety of use cases and different merchant verticals. The panelists were:

• Houssem Assadi / Dejamobile

• Federico Gambi / Mastercard

• Wendy Hompes / ING

• Alan Moss / Newland Payment Technology

Houssem and Federico first presented their perspectives in two brief presentations before the panel was introduced. Houssem, from Dejamobile gave some real-world use cases of SoftPOS and Federico, from Mastercard described the future developments in payment acceptance for merchants which included SoftPOS.

The panel discussed was kicked off by Mark asking the panelists for a definition of SoftPOS for the benefit of the audience. It was quickly established by the panellists that SoftPOS, short for “Software Point of Sale”, which is a technology that transforms a mobile device (a commercially off the shelf device such as a smartphone or a tablet) which is equipped with Near Field Communication (NFC) into a contactless payment terminal. This eliminates the need for traditional hardware POS (Point of Sale) systems.  Effectively, everyone in the audience, as Mark announced, could be a merchant by simply downloading a SoftPOS app to their phone. Obviously, other than the usual authentication and a contractual agreement with a merchant acquiring institution, the possibility of everyone being their own merchant is closer with SoftPOS than it was with a M-POS card reader or a traditional POS hardware technology.  

SoftPOS offers a variety of use cases for businesses due to its portability, affordability, and ease of use. The panel described the use cases and different merchant verticals where SoftPOS was being deployed. SoftPOS eliminates the upfront cost of traditional POS hardware, making it an attractive option for businesses on a budget. Merchants can accept payments anywhere with an internet connection and an NFC-enabled device. This is ideal for mobile vendors, pop-up shops, or businesses operating at temporary locations like, music venues, outdoor events, farmers markets or trade shows. It was noted that SoftPOS apps are generally user-friendly and require minimal training for staff, making them a good fit for smaller teams.

SoftPOS transactions can be completed quickly and efficiently, reducing wait times for customers. Queue boosting was one use case that some of the larger enterprise merchants were using SoftPOS – as described by Wendy at ING. Overall, SoftPOS offers a versatile solution for businesses of various sizes and models. Its affordability, convenience, and ability to accept contactless payments make it a valuable tool for start-ups, mobile businesses, and those seeking a more flexible payment acceptance method. Houssem at Dejamobile described the deployment of SoftPOS technologies that are embedded within self-service kiosks used for meal ordering and payment at quick service restaurants.  

It was interesting that the level of detailed questions from the audience was fascinating to see. Questions delving into specific functionalities like supported contactless payment methods, transaction limits, integration with existing systems, and other payment capabilities was indicative of a strong level interest in the potential application of SoftPOS from the audience. This is refreshing and compared with previous years at MPE, a sure indication that the level of detail in the audience's questions can be a valuable gauge of their interest, specific needs, existing knowledge, and how seriously they are considering SoftPOS as a potential solution for their retail businesses.

At Edgar, Dunn & Company (EDC), we are very positive that the value proposition of SoftPOS will be high for a wide range of specific circumstances. The audience had taken a vote to predict that within the next five years SoftPOS would account for between 20% to 50% of all POS volume. We will have to keep a watchful eye on the development of SoftPOS in the next few years – I’m sure we will see this topic on next year’s MPE agenda.  

Cross-border payments made easy

For Volker’s second panel on Day 2, there are so many different facets and complexities around cross-border payments which could not all be covered in this session. However, we ended up with a fascinating debate about the pain points of cross-border payments and how they can best be addressed.

The panelists were:

• Charlotte Al Usta / Flagship Advisory Partners

• ShengLiang Yang / UnionPay International

• Juan Manuel Musetti / dLocal

• Jacques Soussana / nexo standards

• David Backshall / Terrapay

Charlotte (Flagship Advisory) started us off with a great overview of definitions, use cases, market sizing and an analysis of current and future business models and players. This was followed by ShengLiang’s (UnionPay International) description of how its company engages with European merchants to support payment acceptance e.g. for digital wallets for the growing number of Asian tourists in Europe (57% of Asian tourists surveyed stated their intent to travel to Europe in 2024).

The speakers were then joined on stage by David (TerraPay), Jacques (nexo) and Juan (dLocal). In this subsequent panel discussion, we firstly explored the different challenges of cross-border payments, namely transparency, timings and costs, and how they can be overcome. A common view was that innovations, largely driven by fintech players, are gradually replacing incumbent payment processes but that some of those implementations will take time. Furthermore, close interaction with local regulators is important. Very quickly the topic of standards came up. Whilst there is no disagreement about the need for standards, it was challenged whether a global standard will ever be achieved and whether it might not be more realistic to achieve regional standards with interoperability amongst those. There might also be a difference between in-store and online payments. Whilst merchants are looking for global standards in POS infrastructure, online payment preferences with local APMs may well limit the opportunity to standardise those payment preferences.

The panel discussion concluded by exploring future technologies that can impact cross border payments. Open interoperability and API connectivity enabling Fintechs to engage with the banking community will help drive efficiencies; digital wallets and CBDCs can provide alternative means to move money.

Whether cross-border payments will ever become easy remains to be seen but new players and technologies appear to start shaking things up a bit and consequently deserve attention.

The content of this article does not reflect the official opinion of Edgar, Dunn & Company. The information and views expressed in this publication belong solely to the author(s).