Matt Sloan (Managing Director EMEA at Discover Financial Services) discussed with Samee Zafar (Director, London) how the pandemic has changed consumer payment behaviour and the challenges that established payment networks will have to face in the near future.
1. How has the recent situation accelerated the move to digital for payments? Do you expect pandemic physical POS payments to become smaller and smaller and over the next 5 years?
I think the current pandemic and global lockdowns have accelerated a pre-existing trend towards digital payments by about 5 or 10 years. Older age groups have been forced to adapt to video conferencing and e-commerce transactions, meaning an entire generation is now much more comfortable and adventurous in how they spend. In addition, social distancing has meant more people using contactless and setting up mobile payments to avoid cash and physical POS terminals. The pandemic itself has spurred innovation in payments too – whether educating people about QR codes in the track and trace system or using your phone to order at the table in restaurants. Whatever happens with the pandemic, I think this acceleration will be permanent, and the use of physical POS terminals for contact transactions and (especially) the use of cash will continue to decline.
2. The use of alternative payment instruments for online commerce is growing. Do you think these will provide a serious challenge to card networks?
The pandemic has forced people to become much more comfortable with mobile and e-commerce spending and this has made them much more adventurous in trusting and trying new providers. If you combine that with the rise of Buy Now Pay Later providers, developments in faster payments and bank to bank transactions and more and more new entrants, it’s clear that consumers and merchants have more choice than ever before, and this level of competition can only be good. Having said that established international card schemes have such scale and dominance that this competitive challenge will be measured. The biggest short term challenge to established card networks looks to be the rise of new domestic payment schemes – whether in individual countries (e.g. Xelmon in Spain) or regionally (e.g. the European Payments Initiative). This should reduce costs for issuers, acquirers, merchants and consumers, offer more choice and lead to more tailored, market-specific products.
3. What are your hobbies? What do you do in your spare time?
Under normal circumstances, I enjoy rowing. I’m a member of a local boat club, and it is something I started at university and kept up on and off ever since. It’s very therapeutic as it forces you to totally focus on something and after a week of travelling and eating out, it’s good exercise too. Not only that but as I’m now in the “masters” age group, it’s one of the only times in my life I’m still referred to as “young ”!
4. What is a personal goal for 2021?
Not very original but I’m trying to get fitter and be more healthy. In the pandemic, I suddenly realised that, without business travel and client dinners, I no longer had an excuse not to.
5. What is your favourite book or movie, and why?
Difficult choice on both counts. For the book, I’d have to say “East of Eden” by John Steinbeck. It’s been years since I read it, but I can still remember where I was and how I felt when I finished it. Beautiful and very moving. The film would have to be “Withnail and I”. Possibly not for everyone, it charts the lives of two out of work actors in London in 1969. It is poignant, poetic and very funny and somewhat scarily based on the writer and director Bruce Robinson's life. Brilliant no matter how many times you watch it.
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