Financial Sector

Payment Services

What challenge(s) do our clients face?

The Payment Services industry is increasingly splitting into two halves – large one-stop-shop providers, and small, specialised organizations taking advantage of digital advances to offer customized services to consumers

ACQUIRERS LOYALTY PROGRAMS & PAYMENT COMPANIES, GATEWAY, PROCESSORS, AND SERVICES PROVIDERS CARD NETWORK BANKS & ISSUERS PAYMENT SERVICES

The Payment Services sector considers players right across the payment value chain, from Banks and Issuers through to Loyalty Programs and Retailers. As with the Banking industry, we are increasingly seeing the sector divide into two halves; large organizations with a strong foothold are continuing to benefit from economies of scale through a one-stop-shop model, however small, agile players are finding success by becoming best-in-class in niche spaces, using digital transformation to provide customized services to the market.

Over the last 10 years, disruption has been driven by 3 key factors:

In response to technological advances, countries are changing regulatory guidelines to protect the integrity of the financial system. This differs significantly by market, with some countries intending to foster technological disruption while others minimise risk. Regulation In countries lacking POS infrastructure, such as China and India, consumers are migrating directly from cash payments to digital wallets and QR codes, cutting out the card organization or acquirer entirely from the chain. In China this movement is being led by giants across retail and communication, particularly Alibaba and WeChat. In countries where credit and debit card payments are widespread and entrenched, such as the US, Europe and Brazil, there is a slower move to mobile payments, with Google Pay and Apple Pay widely available but not yet dominant. These characteristics are driving the adoption of Smart POS systems, which have been available for some time, but have struggled to penetrate some markets due to lack of necessity. Penetration of Technology in Different Markets Entry of small Fintech players, focusing on product differentiation in specialized services, or complete solutions within sector niches.Entry of technological giants into the financial world, with Google, Apple, Facebook, Alibaba and Tencent expanding their offerings. New and Intense Competition 2 1 3
In response to technological advances, countries are changing regulatory guidelines to protect the integrity of the financial system. This differs significantly by market, with some countries intending to foster technological disruption while others minimise risk. Regulation In countries lacking POS infrastructure, such as China and India, consumers are migrating directly from cash payments to digital wallets and QR codes, cutting out the card organization or acquirer entirely from the chain. In China this movement is being led by giants across retail and communication, particularly Alibaba and WeChat. In countries where credit and debit card payments are widespread and entrenched, such as the US, Europe and Brazil, there is a slower move to mobile payments, with Google Pay and Apple Pay widely available but not yet dominant. These characteristics are driving the adoption of Smart POS systems, which have been available for some time, but have struggled to penetrate some markets due to lack of necessity. Penetration of Technology in Different Markets Entry of small Fintech players, focusing on product differentiation in specialized services, or complete solutions within sector niches.Entry of technological giants into the financial world, with Google, Apple, Facebook, Alibaba and Tencent expanding their offerings. New and Intense Competition 2 1 3

With such variation between markets, players of all sizes need to take an approach carefully considering the specific needs of their context and target consumers – adjusting strategy and positioning between markets of different maturity levels.

How do we help?

Our experience across the value chain gives us the technical depth and best practices to address challenges in different markets

Players along the value chain in all markets are needing to revise their strategies, ensuring their value propositions are clear and strong versus competitors and new entrants, and they are well positioned to take advantage of or protect themselves from technological disruption. We have delivered over 120 projects within the Payment Services industry supporting clients at local, regional and global levels with different methodologies to adapt to their unique changing landscape.

Our structure of specialist practices enables us to provide deep technical support tailored to your business model, market and organizational culture, combining methodologies and industry expertise. Our projects in Payment Services have ranged from Strategic Roadmaps and Go-to-Market Design, in which we assess the market, prepare strategic paths based on new offerings and trade-offs, and define product positioning and target clients, to on-the-ground support during Post-Merger Integration processes.

In all of our projects we work closely together with you and your team to ensure that strategic decisions become reality, preparing you internally with the leadership, organizational structure, and governance to monitor progress and make change stick.

Clients

We have worked with clients in different categories, geographies and positions along the value chain:

WATCH TESTIMONIAL

In this video, a range of clients from the Payment Services sector talk about their positive experience working with Integration.


Payment Services: What our Clients Say Payment Services: What our Clients Say

SUCCESS STORIES

CHALLENGE

Our client, one of the largest acquirers/payment services businesses in Brazil, had focused their strategy on the development of new technology in payment methods. As this technology rapidly started to grow, our objective was to understand the true potential of the opportunity, guarantee the correct visibility to the market, and establish a Customer Relationship Program to grow our client´s market share: whether from new customers or conversion of current customers.

APPROACH

Our approach was to develop a Customer Relationship Program, using a points-based system to encourage customers to make more transactions, and unlock benefits at various milestones. To prepare the program, we began by segmenting the entire potential market into customer groups, with specific needs, and designed the conceptual model which would best serve each audience. With this overall picture, we could define with Leadership which customer groups were priority to target, and detail the benefits package and commercial model according to the segmentation. To take the model from concept to reality, we supported the organization to make the necessary internal changes to structure, governance and processes, ensuring there was a focused team in place, agreed the required system adjustments to enable the model, and developed a communication plan to roll out to the market effectively.

RESULT

We had originally estimated an increase of 200%-500% in the number of customers with the adoption of this incentive program, and a considerable increase in net income. Both hypotheses were proven the correct soon after the implementation.

CHALLENGE

Our client, an American Private Equity & Investments (PE) firm, asked Integration for support in evaluating the Brazilian acquirer market as part of an investment thesis due diligence. The project aimed to answer two primary questions: (1) What are the key trends in the acquirer market (e.g. growth of credit cards, micro credit, additional services)? (2) Are there new players or any disruptive technologies in this industry? Is there a price war?

APPROACH

To answer these questions, Integration interviewed key executives from the payment industry, technology specialists, undertook extensive desk research, conducted field visits with clients and launched a survey with over 300 clients. Based on our findings, we prepared a complete sector due diligence covering four main areas:

  1. Market Overview: payment habits, growth potential, sector fraud and regulation
  2. Value Chain: payment ecosystem, card organizations’, issuers’ and acquirers’ reality in Brazil, and client profile
  3. New Technologies: major movements at global level and in the Brazilian market
  4. Target Company Business Model Due Diligence

RESULT

The complete due diligence of the market enabled the PE to confirm whether or not to invest. Above presenting the reality of the Brazilian market, we clarified the key challenges that a PE firm would face in the sector in both the short and long term – looking at competitors, regulation, new technologies and the business model of the target company.

CHALLENGE

An organization specializing in prepaid corporate services, and operating across 42 countries, agreed a strategic alliance with one of the largest players in Brazil to become the market leader in fleet management of light trucks and cars. This joint venture represented the largest investment in the history of the organization, turning Brazil into a hugely important operation for the group.

The project challenge was to make the JV operational from Day One, considering two simultaneous spin offs and mergers.

APPROACH

Integration worked as a Clean Team to design the operational model, commercial strategies, remuneration equalization drivers, synergies identification, internal and external communication management and organized the closing preparation.

Given the confidentiality, size of the deal, legal criticality (evaluated by the Competitions Agency), and the cultural differences between the two organizations, we created a unique project governance and workfront arrangement that involved more than 30 consultants and 50 top executives across the two clients. Due to the importance of systems integration (not under Integration’s responsibility) we ensured as a PMO that all workfronts were closely aligned with the system needs/architecture to protect full-service continuity.

RESULT

As result the organization was able to operate JV from Day One, without sales disruption, with a minimum approval period process from the antitrust regulators and with no restrictions – credited by legal advisors as the result of an efficient Clean Team with knowledge and respect of legal regulations during the process.

We achieved an operational integration in record time – two months for core finance processes, accounting and systems interfaces, and synergies which would increment % profitability by more than 5p.p were confirmed, with clear implementation leaders. As a result of well-planned external communications, client attrition was reduced to lower than expected levels and brand image recognition improved.

As a result of well-planned external communications, client attrition was reduced to lower than expected levels and brand image recognition improved.

TALK TO US

Augusto Ribeiro

Augusto Ribeiro is a Managing Partner at Integration and has been working since 2003 in the Marketing & Sales practice. Augusto built a solid international experience, leading and implementing strategic Marketing & Sales projects in industries ranging from Consumer Goods through Construction & Property Development to the Financial Industry, especially in the Private Equity sector.

Carolina Flores

Since 2010 Carolina has been working in our Finance & Management practice, helping our clients across industries achieve important transformations. She has often been involved in projects of large and international scale supporting organizations to achieve their financial objectives through efficiency programmes, Organizational Structure changes, Synergy Evaluation and PMI to name a few.

Diogo Selingardi

Diogo has been working in Integration's Implementation practice since 2011, supporting our clients across sectors, but in particular Private Equity, Financial Services and Consumer Goods. Across his time working in Implementation he has delivered and led complex projects related to M&A, PMI, synergy capture, cost reduction and strategic planning.

Gilberto Sarian

Gilberto is a founding Partner at Integration. Over the course of more than 25 years he has led the development of Integration`s award-winning Supply Chain practice, advising international clients across Latin America, Europe and USA. With a background in Engineering, he frequently participates in events and lectures across the world, to discuss latest trends and [...]

Hugo Ribeiro

Hugo is a Founding Partner at Integration and can count on more than 30 years of experience in consulting. Hugo, who holds a post-graduate degree in Business Administration from Harvard University, is a senior specialist in the area of Finance & Management and frequently leads projects in Organizational Structure, Strategic Planning, M&A, Improvement of Productivity, [...]

Jorge Gomes

Jorge is a highly experienced professional in our Finance & Management practice having joined Integration in 2008. Jorge has travelled to countries around the world in support of our clients, leading projects related to revenue management, strategic planning, M&A and more. He has a well-rounded experience having completed multiple projects for clients across sectors including [...]

Lucas Tavolaro

Lucas joined Integration in 2011 and found his home in our Finance & Management practice. He has supported our clients in the creation Strategic Roadmaps, M&A synergy evaluations, Go-to-Market strategies, Cost Efficiency and Strategic Sourcing projects. His experience includes sectors such as Consumer Goods, Construction & Property Development, Education, Private Equity, Oil & Gas, and [...]