Payment evolution: payment circuits for companies

Do Fintech companies overcome traditional banks? Never like now, this dilemma is current. User experience designed around customers, speed and flexibility in solutions, continuous innovation, these elements combined with an increasing trust of the costumers are all elements that would lead to an affirmative answer. On the other side, however, we have a still high credibility of the banks and an endless database of customers.

The best solution, preferred by everyone (including consumers), seems to be the Fintegration, namely the integration between Fintech and financial institutions. Thanks to this commercial collaboration, in fact, both parties have the opportunity to obtain advantages: banks can innovate and become increasingly “digital” while Fintech can access the huge customer base of the banks, thus succeeding in accelerating their business and to reduce marketing costs.

One of the most innovative sectors of the Fintech world is Payments.

Thanks to the European Directive PSD2, today Fintech have the great opportunity to interface directly with the banking institutions to offer their innovative services by exploiting their openness. The directive offers customers more choice opportunities, namely services other than those offered by banks to make payment transactions, but also to apply for loans or to make investments.

This situation described above has led Fintech to innovate by proposing new payment circuits and new touchpoints to reach final customers, contributing to the creation of different value-added services able to offer customers more and more immediate and customized payment solutions.

The Fintech specialized in Payments can be classified with two macro segments of activity:

  1. Payments & Remittance which includes two types of payment solutions:
    • P2P (person to person)
    • Wallet & Consumer
  2. Technology Provider which includes:
    • Distributed Ledger Technology that is, all those companies that develop solutions on Blockchain technology.
    • PSP, POS e Mobile POS which have developed Mobile and Virtual POS solutions for merchants and professionals
    • Cryptocurrency Exchanger that concerns all those solutions that allow the purchase of Bitcoin virtual currency.

Among the alternative payment services there are certainly private payment circuits, that are, network of shops with their own defined payment acceptance network. Another key feature of these circuits is the possibility to “link” to the payment different value-added services such as: loyalty programs, cashback, couponing, etc.

The main payment instrument in the privative circuits is the Closed Loop or Stored Value Card (SVC), a physical or digital card not connected to a bank account that can be recharged and allow the accumulation of credit from different sources (es by charging the credit for meal vouchers). It can be anonymous, unlike the credit / debit card and is not even subject to transaction fees by the financial system.

At a global level, the Country that most treats the Payments market is certainly represented by China, whose factors that have determined its development and success are basically three:

  1. presence of the most developed e-commerce system in the world (672 billion dollars transacted, equal to 40% of the world value in 2016).
  2. presence on the Chinese market of two giants such as Alibaba and Tencent which hold about half of the online payments market (43%).
  3. large customer base and users who use social networks (think for example the use of WeChat for Social Payment).

In Italy, the development of the world of digital payments is part of a regulatory framework that is not certain: on the one hand, the obligation to use POS by merchants and professionals has encouraged the development and the emergence of new realities focused on Mobile POS solutions, on the other the latest Stability Law which, increasing the limit of payments in cash from € 1,000 to € 3,000, does not seem to encourage this growth.