Irish innovation is helping to reinvent payments around the world – here’s how.
The global payments industry is undergoing unprecedented transformation, driven by the twin engines of growing adoption of technology and changing consumer expectations.
Without doubt, the race is now on to launch innovative new payment products, services and business models.
As Paytech: Reinventing Transactions, a new eBook commissioned by Enterprise Ireland, demonstrates, traditional enterprises are being increasingly disrupted, as technology-enabled businesses carve out a completely different payments ecosystem.
The result is a proliferation of new opportunities, as banks, long the cornerstone of the payments sector, are both challenged by – and themselves embrace – new digital payment options.
Rapid growth of payments technology
It’s an opportunity that is gathering pace. The 2018 World Payments Report predicts a continuous increase in the volume of global non-cash transactions at a rate of 12.7% between 2016 and 2021.
But payments of all sorts are increasing. According to consulting firm McKinsey, global payment revenues grew 11% in 2017, to US $1.9 trillion, the highest rate of growth in five years. It even suggests the US $3 trillion payments threshold could be passed within just five years.
Ireland is perfectly positioned to play a driving role in this transformation.
The country is already an internationally acknowledged global fintech hub. The expertise it has developed is quickly enabling it to become a global paytech centre.
With a strong cluster of multinational and Irish-owned payments companies, Ireland is playing a driving role in the transformation of the global payments industry. World leaders in payments such as Elavon, First Data, Mastercard, Paypal and Citi all have substantial R&D and payment processing operations in Ireland. Stripe, the rapidly growing high profile global payments platform founded by two Irish brothers, John and Patrick Collison, plans to substantially grow its engineering operations from Ireland.
Irish paytech companies already have a strong track record of facilitating all kinds of payments, in all corners of the globe.
These include Realex Payments, founded by Irish entrepreneur Colm Lyon in the early noughties to provide the technology that allows online companies to accept payments from customers.
In 2015, it was acquired by US giant Global Payments in a deal worth €115 million. By that stage, the company was already processing almost €30 billion worth of transactions a year on behalf of its 12,500 clients around the world.
Lyon’s latest venture is business and consumer payments company Fire Financial Services. It helps businesses to manage payments with digital accounts, supporting a range of payment services that are accessible via a powerful API (application programming interface).
In 2018, Fire became the first Irish-based payments firm to be authorised as a Payment Initiation Service Provider (PISP). This means it is able to provide new services under the EU’s second payment services directive (PSD2) rules, which force banks to open up their technology platforms to third parties.
“The payments industry is a complex global ecosystem which seamlessly processes an immense volume of B2B, B2C, point of sale and e-commerce transactions across cash, card, contactless, online and mobile modes” says Brendan McCormack, senior fintech development advisor at Enterprise Ireland.
“All of these transactions must be accurately and securely processed and recorded on an increasingly instant basis and all in line with complex financial regulations. Irish companies have developed particular strengths in card payments, cross-border payments, account-to-account payments, secure payment authentication, blockchain and open banking, and Ireland has emerged as a centre of innovation in this transformative paytech space.”
For example, dynamic currency conversion (DCC), the user-friendly, point-of-purchase service, which allows international card users to choose to pay in their home currency rather than the currency of the country in which they are making their purchase, originated in Ireland.
Irish companies Fexco and Monex were early adopters of this paytech solution, and have become global leaders in the sector. These Irish companies continue to develop new innovative paytech projects around the world in this space.
WorldnetTPS helps EMV (Europay, MasterCard and Visa) companies around the world to ensure merchant terminals are compliant and up-to-date with both chip and pin and contactless payments.
Prepaid Financial Services (PFS) was founded by Irish innovator Noel Moran ten years ago from a base in London as a bank challenger, an alternative to traditional banks offering a range of prepaid payment cards. The company now employs over 160 people between its offices in Malta, the UK and its sister company eComm Merchant Solutions in Navan in Ireland. The award-winning company is currently one of the fastest growing financial services, technology companies and e-money payment institutions in Europe
Ireland has a number of paytech companies that are providing solutions in the international payments space. These include Currency Fair, an online peer-to-peer currency exchange marketplace, and TransferMate, a time- and cost-effective global B2B payments solution. The whole area of cross-border payments is undergoing significant global transformation and Irish companies such as these are providing market leading solutions in the area.
Sysnet Global Solutions has a suite of cyber security and compliance solutions that help businesses to improve security in card payments and acquiring organisations to monitor exposure and reduce the risk of payment card details being stolen.
One of the key developments in the payments area arising from PSD2 is an increasing need to authenticate payment transactions. Solutions that use the biometric capabilities of the smartphone to confirm the identity of the purchaser and thereby process the transaction are due to become much more common.
Biometric Strong Customer Authentication solutions leverage smart phone technology to ensure bank customers can easily access all the features of their online banking without hard-to-remember usernames and codes, thus increasing access rates to the services offered by online banking and mobile payments.
Daon has developed technology that will ultimately replace usernames and passwords as a means to authenticate. Its universal platform allows users to authenticate themselves on any mobile device just by taking a selfie. It is adaptable to allow clients, and their customers, to pick and choose the biometric they’d like to use, including but not limited to facial recognition, voice recognition, and fingerprint ID. All of these factors can be used individually or fused together in a multi-factor approach, delivering the desired level of assurance based on the risk of individual transactions and facilitating rapid, safe and secure payment authentication.
Account To Account
Sentenial is a leading provider of European payment solutions, whose next generation cloud payments platform securely processes over €42 billion a year as an outsourced provider to many of the world’s leading banks.
One of its newest innovations, Nuapay, is a pioneer of open banking and the industry’s leading account to account payment environment, helping to reinvent what’s possible from a modern banking and payment solution.
Irish companies are also providing innovative payment solutions to the unbanked and underbanked. PiPiT Global has devised a secure and private online payment platform that helps customers spend cash digitally.
In particular, it allows migrants living and working around the world, who may not have full access to banking facilities, to send money and pay bills internationally, at low cost and in a secure way. It uses bar codes or QR codes that can be taken to collection networks such as post offices to connect the cash payment to the associated bill or account in their home country.
Irish company AID:Tech enables entitlements such as aid, welfare and donations to be digitised, delivered and tracked using blockchain technology, including the distribution of international aid to refugee camps. This solution enables, for the first time, the ability to track a payment from the donation to the recipient.
Right now the possibilities in paytech look limitless. The question is who will harness this potential first and how. Irish paytech companies are leading the way.
“These are just some of the Irish companies that have developed interesting paytech products, which they are already selling overseas around the world,” says McCormack.
“With 2019 set to become the year when the benefits of PSD2 become widespread and open banking commonplace, the paytech ecosystem is likely to see significant change. Evolving technologies such as blockchain and cryptocurrencies, as well as payment products from less traditional banking sector players may also disrupt the payment landscape. The potential to analyse the rich underlying customer spending data collected by payment processors has considerable appeal to many technology giants who may look to enter the paytech market in the coming years and Ireland’s paytech sector is already developing close links to these companies many of whom are already based here.”
It means that for anyone looking to navigate the world’s newly-disrupted payments ecosystem, there is no better guide than one of Ireland’s paytech innovators.