A Conversation with James Hicks, Executive Vice President, Global Acceptance and Solutions for Mastercard
We recently had the opportunity to interview James Hicks of Mastercard regarding the trajectory of payment acceptance and Mastercard’s insights and key priorities. James is the Executive Vice President, Global Acceptance and Solutions for Mastercard and an acquiring veteran. James managed key business units for Global Payments in Europe, the U.S., and Asia, and prior to Global Payments, was an acquiring executive at the Canadian Imperial Bank of Commerce.
1. What are the key obstacles and headwinds to the future growth of acceptance? What are the most exciting opportunities?
Although we’ve made great headway in expanding electronic payments, we can’t overlook the fact that 84 percent of all consumer payments around the world are still done with cash or checks today. Some countries are far ahead of others, as are some verticals like travel, restaurants, and shopping. But generally, cash is still king and that remains our key challenge and opportunity: To expand the reach of electronic payments, and in the process to make lives easier and better, economies more efficient and societies more inclusive.
Tailwinds come in different forms: Governments that encourage and enable the use of electronic payments to reduce shadow economies, merchants who want to create more seamless experiences for their customers, acceptance ecosystem players who are innovating around next generation acceptance solutions and consumers who embrace a digital lifestyle.
The general evolution of technology is another big driver: As every digital device becomes a connected device, it can be used to make and receive payments, including wherever the consumer wants to pay and however someone wants to be paid.
To my mind, the biggest headwinds are two-fold: Perceived cost and anonymity. There’s still a widespread perception that the cost of cash is lower than the cost of electronic payments. While the costs associated with accepting payments continue to go down, there’s definitely a high cost and risk associated with cash that many merchants, especially the small ones, are not seeing. Then, of course, there’s the feeling by some payers and payees that cash provides them anonymity.
2. What are Mastercard’s key acceptance priorities?
We have three clear priorities:
First, More Merchants, More Acceptance:
We’re focused on connecting more merchants to our network – from new verticals, going deeper in more countries, and from the base of the pyramid. The cost of POS devices is one of the top reasons why small businesses may be hesitant to accept electronic payments.
Mobile POS has done a lot to open new merchant segments to accept electronic payments – and we are continually testing innovative concepts, so we and our partners can make solutions easier to use and more widely available. All the while, it remains critical to balance convenience and security for all stakeholders.
Solutions such as Masterpass QR are game-changers because they remove the need for expensive infrastructure. Already available in 8 countries (India, Pakistan, Kenya, Nigeria, Rwanda, Uganda, Tanzania and Ghana), Masterpass QR plays a key role in achieving our goal to connect 40 million micro and small merchants to electronic payments by 2021.
Another way to grow acceptance is by broadening the footprint of existing merchants. In the U.S., already 84 percent of merchants transact beyond a single channel – and we want to enable the journey all merchants are undertaking as digital convergence continues across online and face to face environments.
Second, Merchants Beyond Acceptance:
We’re also focused on deepening our relevance and value to merchants – beyond enabling them to receive payments in a secure and efficient way. In 2016, we processed 56 billion transactions – this is giving us tremendous insights into B2C and B2B spending patterns.
By leveraging our data insights, we help merchants get better at detecting fraud, drive greater customer loyalty, become more efficient and test new campaigns through our APT platform – making every interaction more valuable. We also have a wide variety of global, scalable best-in-class solutions for merchants and our other acceptance stakeholders that drive greater efficiencies and better customer experiences, from security solutions and our Payment Gateway connectivity to Masterpass, Qkr! and a wide range of other digital products. In many cases, merchants can easily integrate with these products through our API platform.
Third, Acceptance Beyond Merchants:
While the first two priorities are very much about what’s happening today, there’s a third priority that’s increasingly coming into focus. We are determined to expand the acceptance ecosystem to all payment flows, all devices, on all rails.
Regardless of the type of transaction – buying a new pair of sneakers, paying for tuition, receiving a tax credit, sending remittances, settling a bill from a supplier, distributing humanitarian aid, etc. – we want to enable it. In an IoT world, where every connected device is a commerce device, this opens up a whole new world of opportunities to make and receive payments. Wearables, connected cars and smart fridges are just the beginning.
When it comes to rails, as demonstrated by our Vocalink acquisition, we’re adding the bank account-to-account rail, while also continually exploring other ideas to meet the needs of tomorrow’s payments landscape. However any individual or any organization that wants to send money or receive money, we want to be there.
3. How do you see the payments acceptance landscape evolving over the next 5 years?
We expect the current trends to continue for some time: Increasing convergence, integration, and competition. Merchants are working to ensure that they can sell to their customers wherever the customer wants and with a seamless, simple, and enjoyable experience. This drives customer loyalty and sales.
Solution providers and other acceptance players are delivering on that need and will continue developing capabilities either in-house or through acquisitions and partnerships to position themselves with more complete and integrated offerings. They aim to meet the specific needs of the merchants and their verticals, while simplifying the experience across the various channels. Plus, with acceptance being such an exciting and dynamic component of the payments ecosystem, new and cheaper technologies will continue to attract new entrants and drive further innovation into the system.
4. As the payments acceptance landscape evolves, how do you see Mastercard’s role in the acceptance environment changing?
Mastercard is clearly headed into a future where we help our partners enable every transaction flow on every payment rail – whether they involve businesses, merchants, governments or individuals. That’s the future: Anyway anyone wants to send or receive money.
From an acceptance perspective, people sometimes are so focused on the shopping component of cardholders and merchants that we can overlook that commerce is a 2-way street of all sorts of entities that want to pay and get paid in a simple and secure way.
Imagine a world of real 2-way commerce. Where it’s all about the ease and security of paying and getting paid, whether you’re a person, a business, a merchant or a government entity. Regardless what rail or form factor you use.
Getting to this future requires lots of hard work – and we’re excited to continue on this journey together with our merchants and all of our acceptance partners such as acquirers, payment facilitators, integrators and the many more players that drive such a vibrant ecosystem.
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