The waves of payment transformation

By James Georgiou

The Global Payments landscape has seen a seismic change in recent years. We have witnessed large shifts from the traditional model due primarily to the digital and technological revolution that is happening all around us. The increased adoption of smartphones and wearable technology, coupled with the changing nature of consumer expectations, has revolutionised digital payments. Customers have become even more demanding and now expect instantaneous one touch payment solutions that are transacted through a phone, card, watch or even through fabricated material in your jacket!

A key characteristic in how the retailing landscape is changing can be defined by the innovative business models and partnerships which have come to the fore in recent years. These have, in turn, created very different value chains and commercial arrangements.

The evolution of contactless payments has developed out of the use of contactless EMV card payments to include mobile NFC payments. We now can’t imagine paying for our morning coffee with anything other an instantaneous, contactless transaction.

The landscape has changed markedly from an ‘operator controlled model’ to a much more fragmented marketplace. No single business model is prevailing, but all the models that exist are becoming increasingly interconnected. This environment, in turn, encourages a variety of vendors, merchant types, applications, services and payment methods.

The future priorities for payment firms will have to revolve around customer experience, real time payments infrastructure and value-added services. Payment providers providing value added services such as the desire to leverage analytics to drive enriched services such as rewards, offers and discounts, loyalty programs and tailored marketing messages will ensure customer stickiness as well as attract new consumers in this highly competitive marketplace.

The payments industry needs to focus not just on the bit it does well already – the reliability and the resilience – but on the data as well.  Clive Humby, UK Mathematician and architect of Tesco’s Clubcard, famously said “Data is the new oil.’’ Ultimately, if the payments industry doesn’t wake up to the fact that it’s the data that is more important, then it risks becoming irrelevant.

The financial services industry is spending billions of pounds on preparations for impending regulatory changes, potentially paving the way for a radical reshaping of consumer financial services. The digital revolution means that the historical stranglehold of the banks on the provision of financial services is both unnecessary and undesirable. An ‘Uber of banking’ type transformation is a realistic scenario.

On top of the changing general population’s expectations of payments, we will soon see the adoption of the Payments Services Directive II (PSD2) which will drive further competition in the European Payments market.

PSD2 was proposed by the European Commission in 2013 to be active and implemented in 2018, and its primary goals are to:

  • Increase, improve and integrate payment efficiency across the EU
  • Offer better consumer protection
  • Offer a seat at the table to new and emerging payment service providers
  • Promote innovation in the payments space, and reduce transaction costs
  • Provide clarity on the use of emerging payment methods such as mobile and online payments
  • Harmonize pricing and improve security of payment processing across the European Union

At the core of the new payment regulations is the need for banks to allow a secure way for customers to authorize their preferred third-party providers to have direct access to two aspects of their bank account — their account and transactional data, and the ability to authorize payments directly from their account.

The idea behind PSD2 is to improve the customer experience, as well as increase marketing competition and innovation. It’s about aggregating account data from multiple institutions into a single view. (PSD2 Playbook).

These regulatory changes reflect the market growth in e-commerce activities and the use of internet and mobile payments as well as the rise of new technological developments and a trend towards customers having relationships with multiple account providers.

PSD2 will impact organisations at a time when the payments and financial services industry is already going through a period of significant change.

Many financial services companies will need significant help in delivering the technical changes allowing them to be compliant with the upcoming compliance programs. Banks need to make major changes to their processing and data infrastructures. This could prove the spur for an acceleration of cloud adoption amongst legacy banks.

The need to partner with fintechs, merchants, IT service providers and other banks that are able to perform a part of the end-to-end transaction better than they can will become a key strategy going forward. Payments is now becoming an ecosystem where different players are part of the transaction lifecycle and each play to their own strengths to give the best experience and technological advantage to the customer. It is vital that companies understand their role within the digital ecosystem, as new innovative payment systems increasingly become the norm.


  1. The Uk Cards Association – Digital Payment Solutions
  2. 2017 Mastering Today’schallenges: Harnessing Tomorrow’s Opportunities – Finextra
  3. Understanding The Uk Payments Market – A Comprehensive Analysis – Techmarket View
  4. Payments Transformation: Modernising To Stay Relevant In The Digitial Age – Finextra
  5. PwC Report

James Georgiou is a Cards and Payments Pre Sales consultant at DXC Technology. James has been heavily involved in the development of new Digital Wallet Proposition for a leading UK retail client and has led the charge on working with a Fintech Provider on a new PSD2 Strong Customer Authentication (SCA) solution.

Connect with James on LinkedIn.



Cards & Payments: Time to “evolve or die”


  1. Very well written article with strong points. Informative, to say the least.


  1. […] of these peer-to-peer payment systems. First there’s the obvious need to be part of that ease-of-payment ecosystem so as to add to transactional […]

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