Future Payment Trends. Interview with Mirko Spagnolatti, Ingenico

Various new, innovative forms of payment are being introduced to the fuel retailing industry. The development of existing technologies such as unattended payment methods or mobile terminals has been followed by the surge of revolutionary forms of mobile payment. We speak to Mirko Spagnolatti, Petrol Market Director Europe & Africa at Ingenico, about these and other key trends affecting future payment methods.

Ingenico is a global specialist in terminal production. What are the major trends for payment terminals in the fuel retailing market?

We see a lot of traction in the petroleum industry towards unattended and mobile. There are geographies around the world that are specially interested in mobile payment terminals – with ATEX approvals. The portable terminals are used in countries where they use payment at the forecourt, namely the Mediterranean countries, some parts of Asia and the Middle East, and specially in Africa.

What expectations do you have for mobile payment at the forecourt?

It is a big trend. We have experienced success around Europe. Mobile payment is a very wide subject which can be divided into two parts: mobile acceptance, accepting electronic payments with a mobile device; and mobile remote payment, when you make a mobile payment without a card or a terminal. Everything related to mobile payment is so new that as an industry we still haven´t come up with specific terms. From Ingenico´s perspective, we have a strong history in mobile acceptance at terminals with specific solutions for the US and Europe.

Currently, one of the hottest topics on the market is payment through mobile phone apps. What will we see in relation to remote payment methods?

Remote payment is very promising. It is still at the beginning. Right now there are no dominating global schemes that allow for an international development, but there are all the building blocks available and there are some frontrunners who are heavily investing in this. So we expect a lot of movement on this front during 2016. According to the lastest market researches it seems that mobile remote payment is taking off mainly in segments like public transportation , ticketing and parking, but the petrol sector will come soon.

Ingenico started with strategic objectives to be relevant in this market space some years ago. The last acquisitions were all made to obtain a presence in the online business. We are investing a lot to be relevant and to build our multichannel propositions.

From a retailer´s point of view, will they have to make a big investment to adapt to these features?

In the case of just starting to use mobile phones as the payment feature or using a new contactless card instead of a swipe one, there is no major investment needed because most of the normal acceptance terminals are already contactless-enabled. For example, in the countries where Apple Pay has been launched it works seamlessly with all our terminals. There is no investment necessary if they are up-to-date with the latest specifications.

What has been the development of contactless payment, both in cards and mobile phones, in Europe?

There are areas of the business where contactless technology is very well received by the customers. In some of the European countries the dynamic is overwhelming. Poland is by far the country where it is more popular, with United Kingdom second. The contactless card-based payments are something very valued by customers, especially for the indoor environment where the fast "tap&go" procedure is very appreciated. For unattended gas stations there are still a few technical challenges to be resolved. Currently it´s not really very widespread around Europe but the expansion will continue. Almost in every European country we are witnessing double-digit growth year after year.

They say these technologies develop faster in areas of the world where there is a widespread card-payment habit such as the United States or the Scandinavian countries.

That´s a good point. The amount of traditional card payments is a basic requirement that triggers contactless payment adoption. There are some countries where there are gaps, and others which are more advanced. The final uptake of contactless payment is in direct relation to the usage of electronic payments.Where the customers are more used to handling with cards, they are also more open to testing new payment systems like contactless, mobile or others.

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Do you envision a near future where we stop using cash at the forecourt?

There are a lot of reasons (regulatory, security, fraud, customer convenience, cost of money handling) why cash should be displaced. In some countries, the benefits of electronic payments have already been understood, while in others they still have the wrong feeling that electronic payments are more expensive than cash – in terms of handling. Something which is very questionable; especially in light of the latest directives from the European Union which are putting a cap on the interchange fees. The end goal of this interchange cap is to set a parity level between the costs of electronic and cash payments. By removing this last obstacle there should be no reason why electronic payments shouldn´t displaced cash at a faster rhythm.

In recent times payment security has been a big issue. What do you expect to see in 2016 or in the near future in terms of security?

Security is an ongoing process. The bar is constantly raising. We are working on devices which are PCI-PTS V4 certified from hardware & software security perspective. Every new product has to consider additional security measures.

The point-to-point encryption is one of the biggest issues. This is a way to protect intrinsically a retailer´s network with a highly sophisticated encryption technology that puts the card-holder data in complete safety, whichever is the IT infrastructure and the communication network of the retailer. We frequently hear about big security breaches in the world. Point-to-point encryption is an effective solution achieving the highest level of security, suitable for fuel cards and legacy payment methods, becoming safe for the retailer and users at the same level as using EMV cards and PCI devices

The implementation of EMV in the US market has been, and still is, a massive operation. What are the benefits and how does this affect a payment company like Ingenico?

Finally the U.S. is moving to chip-based card payment technology. For us it is very good news, and for the consumer. All the frauds tend to be concentrated in the weakest areas – in the past years it has been swipe cards. So for the U.S. it is good news that finally they are speeding up the migration.

For a company like ours, it is obviously a beneficial period as the investment coming from retailing companies is very big. Very interesting business opportunities have emerged as part of the migration process, and our previous experience in Europe with EMV made us a secure option.

Omni-channel is another feature expected to become a major trend. How do you view this?

Consumer behaviour is changing at a very high speed and the acceleration is increasing. Some years ago we had a few online shopping players such as Amazon, while now is becoming more normal to see hybrid environments where you shop online and pick up at the store, or you order at the shop and then get the product delivered at home. Being multi-channel today is vital,a way to offer the widest user-experience and better comfort to all customers. They are expecting a very strong level of integration between the online and physical experience.

Specifically, how does that affect the fuel retailing business?

We still have to take our car to the pump to fuel up but the payment process and the way you can combine additional services will definitely be impacted by this change. For example, the petrol stations which are evolving into a more complete customer service experience can participate in the ‘click and collect’ shopping or they can offer other goods and services (e.g. solutions as pre-ordering and booking services and pay when arrive at the station) as part of an online user experience. Not to mention the future revolution of connected cars. All these things are setting a landscape where the user experience and customer services are going to change dramatically in the coming years.

Which are the biggest markets for unattended payment solutions?

At this moment is very limited to some parts of the world. The outdoor payment terminals are very common in the US and most European countries. In the past, our perception was that unattended gas stations where mostly seen as a cost reduction initiative – a way to reduce the number of employees. Now they are playing a more sophisticated role; a different way to present the product. Retailers can complete the in-store offering with something that is more convenient for the customer in terms of speed and availability. Unattended payment has become an alternative user experience.

By Oscar Smith Diamante