NEW PLAYERS IN THE PAYMENTS ECOSYSTEM

Change, Disruption & Innovation in the IndustryAmy Zirkle

VP Industry Affairs, ETA

electran.org

DEFINING NEW ROLES IN AN EVOLVING INDUSTRY

▪ Industry Evolution

▪ Transformation of the Payments Ecosystem

▪ Industry Initiatives for Emerging Players

Industry Evolution

PAYMENTS THEN …

… AND PAYMENTS NOW

ELECTRONIC PAYMENTS MODEL

The basis of the electronic payments system is the 5-party model

Buyer Merchant AcquirerPaymentsNetwork Issuer

$2.97$3.26

$3.60$3.78

$4.05

$4.44 $4.53

$5.14

$6.62

2009 2010 2011 2012 2013 2014 2015 2016 2017

Data from the Federal Reserve and Nilson Report

Card volume grew 8%year over year from 2009 to 2017

($trillions)

Data from The Nilson Report

67.9

48.6

34.6

10.46.8

70.6

49.4

37.7

8.77.0

Debit Cards Cash Credit Cards Checks Prepaid Cards

2016 2017

Purchase transactions (billions)

DEBIT CARDS ARE US CONSUMERS’ PREFERRED WAY TO PAY

0%

2%

4%

6%

8%

10%

12%

14%

$0

$20

$40

$60

$80

$100

$120

$140

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Data from the US Census Bureau and US Department of Commerce

2010 2011 2012 2013 2014 2015 2016 2017 2018

eCommerce Sales in the U.S.$Billions

% of all Retail Sales

Transformation of the Payments Ecosystem

TODAY’S ELECTRONIC PAYMENTS MODEL

Buyer

Merchant

Acquirer Issuer

AcquiringProcessor

PaymentsNetwork

IssuingProcessor

Sub-Merchant

Sub-Merchant

Gateway

PaymentFacilitator

ISO/MSP

THE EVOLVING SALES CHANNEL

DRIVERS FOR TRANSFORMATION

▪ Technology

▪ New companies

▪ New products and services

▪ Mergers and Acquisitions

CONTINUING INDUSTRY CHANGE

▪ Expansion of ecommerce

▪ Companies serving multiple roles

▪ Technology drivers

▪ New players

PARTNERING WITH NEW PLAYERS

INDUSTRY EVOLUTION

FURTHER INDUSTRY EVOLUTION

▪ New Technologies

▪ New Players

▪ New Business Models

▪ New Merchants

▪ New Approaches

CONSIDERATION OF A CHANGING ECOSYSTEM

▪ Things to watch for in the payments industry

– Seamless and frictionless payments

– Emergence of more “Payments in the Cloud” options

– Increasing merchant insistence on streamlining the payments process

– Continued blurring of functions and roles

• In payments

• In banking

Industry Initiatives

Education for a rapidly changing market

TECHNOLOGY

SECURITY

BUSINESS

PROMOTING PROFESSIONAL EXCELLENCE

THANK YOU