Michael Burtscher is responsible for the further development of Payvision’s global card payment network. In his previous role as Head of Third Party Risk at Visa Europe, Michael successfully led a number of initiatives which increased Security for consumers and payment solution providers in the e-commerce market. At the EPCA Payment Summit 2012, which took place in Rome 18—20 April 2012, The Paypers sat down with Michael Burtscher to discuss the company's growing presence, services and strategy.
Q: What is your perspective in terms of online vs. mobile or online vs. offline, do you see these combinations between channels as a future development in the next 12 months?
R: From my point of view, the mobile space will certainly be much more mature in the near future, we’ll know which players have really been able to take off properly and which ones have fallen behind.
Also, there are definitely going to be some more developments with regard to risk management, not only in terms of regulations but also from a technological perspective. We will see new and more secure technology, which will both secure the physical card-present base and provide more clarity around these new technologies, because from certain aspects, like PCI, there are still open questions around the security of certain new applications. Within the next 12 months we will know who has actually been certified and who hasn’t and that will really determine who will survive within the industry.
Q: What can you tell us about your unique selling propositions as a PSP, processor and acquirer, which give you an edge over your competitors?
R: In my opinion, besides innovation, one global reporting interface, one internationally approved Risk and Underwriting Protocol, it is definitely the technology, because that is what enables us to switch transactions and process them across the world. The culture is also an important aspect, because we are a quite dynamic and lean organization. This means that our customers can talk to us easily, they can also get in touch easily with our executives and that really gives us an edge over the other organizations.
Q: Do you have a global coverage?
R: We have a strong presence in Europe, where we provide processing services for PSPs, merchants and banks, we also have a large presence in the US and Asia-Pacific as well. We have offices in Singapore, Hong Kong and Macau, which was opened in 2011, and we are now expanding across Canada as well, the Pacific region and also Latin America.
Everywhere we go, we first focus on putting together a team of local experts, who have been in the industry for 10 to 15 or maybe 20 years, in order to make sure we have the local knowledge in place and the networks, before we go live. Otherwise, we are just another player who enters the market but doesn’t understand the local specificities. For us, local knowledge and the ability to be compatible with the local culture are the most important.
Q: Which market or region do you find most attractive?
R: The Asia-Pacific area is where we see the biggest growth. In Singapore, for instance, we see an increase of nearly 200 percent and in Hong Kong of 82 percent. That’s why we have also opened a business unit in Macau. Obviously, each country has to be managed on its own terms due to geographical limitations and Taiwan, China, South Korea will also be very big players. Also, recent trends have shown us that shoppers in Japan are buying a lot again.
Q: What about merchants in the region? Are they interested in expanding in Europe or in the US?
R: This is definitely an interesting question. There are several European and US companies who have moved towards Asia and in a number of cases they have had to enter partnerships. For example, Yahoo has partnered Taobao, just because these players are very strong and well-connected out there. Obviously, via those partnerships, the Asian players will have a very easy way of entering all the markets so it’s all about remaining relevant, something we strongly believe in, and realising where you can add value by working together. Of course, in some markets it may be a competitor and you may not work together, but in all the markets where the needs of the merchants and the consumer are different and allow for collaboration, I think that will really add value.
Q: Merchants have, however, stated that communication between them and PSPs is not very efficient. What is your opinion on this matter? Is there a balance between their needs and what PSPs are offering?
R: There are merchants who are more aware and have more experience in terms of payments and how they work and some large merchants have their own payment experts and teams within their organization. Thus, they will know what is best for them and what they want. When we offer payment solutions, we usually don’t say that you have to take all of them, they are the ones we can support you with, but you have to tell us what you want. There might be services that we are not able to provide, but we will be working with partners so we will be able to redirect you over there for other payment services that we can’t provide, which means merchants will be able to see the value in it. The way we are growing as well is really in discussion with our customers. Before deciding to expand in a certain region, we ask our customers where are they planning to grow, which markets would they like to enter.
Q: Since you have a global coverage, I am sure you have your own opinion on how the online payments market is developing in different regions. Do you think that we, as Europeans, have learned or should learn from what is happing in the US/Asia-Pacific market or is it the other way around?
R: We can see a strong growth in e-wallets, especially in the Asia –Pacific region, where is the most popular. For the mobile point of view, Asia has always been quite ahead of Europe and actually it is Europe and the US which are only just catching up with everything that has been happening in the Asia-Pacific region. It is clear that a lot of innovation is coming from Asia.
Q: How do you see the online payments eco-system three years from now on?
R: From my point of view, this is going to continue to grow. There are a lot of discussions about alternative payments, different payments solutions which are coming up and different ways of payment, but certainly the established card organizations such as Visa, MasterCard, (China) UnionPay Ltd. and American Express will continue to be the main drivers of change in the industry, because they’ve been around for 50 years, they know the business, they know where they are going, they are in absolutely every single market and they will continue to shape the agenda in conjunction with technology. This means that all the other payment methods will still be relying on these major brands and technology providers to be able to grow themselves.
With regard to online fraud, this is going to continue to come down, it is already at the historical low, just under 4 basis points and it is going to come down again. If you look at the card- present fraud, 10 or 20 years ago it was 15 to 18 basis points and it has come down as a result of a better understanding of how the market works, better technology and better use of the technology itself. In the card-present transactions there has been traditionally more fraud but this has been coming down as the market develops and people understand better what are the risks they have to look out for. I think that the problem with fraud in the card-not-present space has to do with the fact that a lot of the acquiring players traditionally came from a domestic face-to-face environment and believed that applying the same technology to e-commerce will be sufficient. And, in fact, it is completely separate, because you need a different set of skills to understand how transactions work and it is important to do more in terms of educating issuers to prevent friendly fraud. I hope that issuer education will make a difference as well.
Q: What is your opinion on cross-border e-commerce in Europe?
R: Merchants in the e-commerce space are very much aware that they can go from one country to another and that they can have an acquirer from the US or any other part of the world, if they want, although there are some limitations from the card organizations and once must always be mindful of that. That is why merchants working globally across multiple continents will often require multiple acquiring relationships; however there are solutions to streamline this process and that is one of our strengths at Payvision. Typically, merchants will go for those acquirers which offer them good services, which can support them from a language point of view and also which share the same kind of vision in terms of looking outside borders. The challenge is really in the card present space where is harder to do cross border and in countries where you still have domestic schemes as for instance in France or Spain.