August 17, 2015

Central Acquiring & New Issuing Game – agile now to survive and thrive

The Visa CBDIP programme (Visa Cross-Border Interchange Programme (27 June 2014) and the recent EU Regulation (EU regulation 2015/751 – 29 April 2015 on interchange fees for card based payment transactions) announcement reminded us not only of the power of regulation to change the payment industry’s business dynamics but also of the short timescales we may need to operationally respond.

In the case of Visa CBDIP, acquirers with large merchants had a competitive systems and administrative scramble over 6 months to participate/comply or likely lose their key merchants to the competition.

The EU Regulation has finally been announced and one outcome we can expect over the course of the next few months is an acceleration in demand by international merchants towards a central acquiring model. This is partly due to a levelling of the interchange playing field and licensing rules across Europe.

The regulation will have consequences for both issuers and acquirers:

• Issuers will need to re-assess their business models, re-focus on reducing infrastructure costs and seek new revenue streams through new product development.
• Acquirers will not only need to comply with new requirements such as Interchange Fee plus pricing & reporting at transaction level but they will also need to consider whether their systems and back-office infrastructures and processes can support the growing demand for central acquiring.

Agility at all levels including payment systems is a core competence for a payments institution and, in our opinion, will remain a source of competitive advantage in the market for those who wish to survive and thrive.

RS2 has had central acquiring and agile Issuing functionality operational in our customer base for over 10 years being constantly updated, empowering our customers to be at the forefront of capability to win new market share. Talk to us to find out more