by Ferdinand Roberts, Global Head of Sales & Strategic Partnerships
Anyone who has ever taken the time to examine the dynamics of markets will notice the cyclical characteristics they exhibit over time. Apart from the economic theory that surrounds this, to me, it suggests something more fundamental. At the heart of many of these cycles is one fundamental truth – human nature.
Now, human nature can be both good and bad, and I would argue that today in the payments industry, we see both. We see practices that are open, transparent and fundamentally progressive in nature, but we also see some practices which are ultimately undermining of the industry, and may lead to its undoing, in a manner not unlike that of the Roman Empire.
As a young man I was intrigued at how vast the Roman Empire had grown, but even more so at how it had been undone, essentially by its own actions.
Just to put it into perspective, If you were going to take a trip through the Roman Empire in the second century A.D., you would start off in the United Kingdom, cross over to Belgium and Holland, through Germany and France, on down to Switzerland and Austria, and to Hungry and Romania and Bulgaria, down through what was Yugoslavia and to Greece and then on to Turkey, through Syria, Lebanon, into Iraq, Jordan, Israel, Egypt.
You would pass on into Libya, into Tunisia, Algeria, and up into Morocco and then on up into Spain. The Romans brought stability, and law, and architecture, and sanitation, and wealth, and free market thinking to large swathes of the global map. This growth also brought some challenges, not unlike those faced by the largest players in the payments industry today.
The challenge they faced, and all superpowers face, is when you become ‘the biggest’, ‘the standard’, ‘the norm’, you also risk becoming ‘the target’. You give stability and assurance for many, but you also represent a target for the disenfranchised and disaffected. In parallel, your power, and coverage, and sphere of influence grows.
As the largest player many things become easier. The masses accept, for a while at least, the rule of law. For them, their individual size stops them from questioning what slowly becomes ‘the norm’, irrespective of the fact that the norm may not be right.
In today’s payments industry, there are examples of some of these questionable ‘norms’ – small charges slipping into statements, complicated charging structures and deliberately opaque statement descriptions, all of which serve to raise the ire of typically smaller merchants.
These merchants also serve as the largest profit pool for acquirers and as such are financially responsible for the very foundations on which the acquiring market, and its alliances are built. The challenge of course is that these practices have become the norm, the accepted face of the industry, and to a large extent, represent its single biggest potential threat.
To change this, the acquiring community needs to examine its practices and look, not just at alternative revenue sources, but also at the value it brings in exchange for these revenues.
As an example, one trend we see emerging is a move toward delivering safer payments and increased security. It’s a clear step in the right direction. As we speak with hundreds of thousands of merchants each year, we can see that security is important to them. For many merchants it’s expected, almost as a hygiene factor.
Progressive acquirers are viewing security as additional value-add to the merchant, something they can point to as a clear example of how their charges are justified.
Merchants value security, they value assurance, and they value trust. The result of this initial move by acquirers to provide additional value to their merchants is an increased focus on security, as data breaches rise steadily, and the realization that ‘it could be me’ dawns in the SMB sector.
Just as the Romans offered assurance and protection to the citizens of its empire, and grew ever larger as a result of countries fearing invasion joining its ranks, so too can acquirers benefit from the ever-present dangers that cyber-security threats represent.
In contrast with the Roman empire however, the payments industry should learn the importance of maintaining that trust that people place in them, or risk the potential for its customers to be tempted by those promising a better way, an easier existence.. etc. The example may be extreme, but so too are the challenges faced by the industry.
Every empire believes it stands strong until its very foundations are rocked.
Recent moves in the industry including increased transparency, clearer pricing, faster payment to the merchant, improved security and lower costs are all helping to avoid a fate similar to that of the Romans, but to paraphrase the words of one of Rome’s greatest leaders, Julius Caesar: ‘No one (should be) so brave that he is not disturbed by something unexpected’.
Sysnet’s compliance management and merchant engagement solution Sysnet.air® builds and supports mutually beneficial relationships between small-to-medium sized businesses (SMBs) and their acquiring organisation through the provision of targeted products and solutions that help those SMBs to improve their business by reducing costs and increasing revenue.
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