Can you tell us how the payments terminals market is doing?
The payments terminals market is currently growing all over the world. The strongest growth is happening in developing countries such as in Asia Pacific and South America, which have seen double-digit growth and represent important development opportunities for us. For now, Worldline sells its products mainly in Europe, where the payments terminals market is experiencing consistent growth, with a nominal growth between 3 and 6% per year, whereas it is closer to 30% in Asia. On one hand, this growth comes from new retailers buying payments terminals; and on the other hand, this growth can be explained by technological advances, such as the ones we saw with EMV (Europay Mastercard Visa) and credit card authentication by chip and pin, which stimulate the market. We can currently distinguish two technologies which are speeding up the replacement of payments terminals:
- The NFC (Near Field Communication) technology, also known as the contactless cards. The contactless cards’ schemes are still in development in a lot of countries. It means that older terminals will need to be replaced with NFC-compatible terminals.
- The PCI PTS 4 (Payment Card Industry PIN Transaction Security) certification which is the latest evolution of the PCI certification and represents a set of standards for payments terminals. This standard requires that terminals be decommissioned on a set date. For example, if your terminal is certified PCI PTS 2.x, it will have to be retired on 30th April 2017.
These technological factors are contributing to payments terminals sales’ increase. Our growth (10%) is now higher than the market’s.
What are the current stakes of this market?
There are several stakes. First, there are payment alternatives, developed in the last few years alongside multichannel retail, such as Google Pay, Apple Pay, or PayPal. These payment methods are generally tied to a credit card, however authentication is through other means than the credit card, such as smartphones or smartwatches. The majority of payments are currently made with credit cards, but, with these new payment methods, some payments can also be made without payments terminals. The other stake for payments terminals manufacturers is to adapt themselves to new technologies, taking into consideration the new tokens during payments terminals manufacturing. A token can be, for example, a credit card chip, the magnetic impulse from a NFC card or a connected object (mobile phone or smartwatch). The future payments terminals have to be adapted to these new tokens, but also to the alternative payments methods.
How is Worldline taking part in this market?
First of all, Worldline has an advantageous position: indeed, we have a unique position because we are one of the rare global companies that is active in every step of the e-payment value chain. Additionally, we have a clear view of the e-payment evolution, precisely because we are present in the entirety of the e-payment value chain. By being active in the e-payment world, and not only in payments terminals, we are able to define future needs, characteristics and features for future payments terminals. For example, the fact that we work both in acquiring and processing enables us to know about new certifications and new requirements, such as the PCI certification, in advance. This way, we endeavor to create value added for our customers and this is part of our unique selling proposition. Our aim is to differentiate ourselves from our competitors by working on our products’ lifetime expectancy. For that, we take actions during the product’s life cycle: we update our payments terminals, either remotely via software upload or by sending a field technician, in order to adapt our terminals to the new standards. For example, we can update our XENTA terminal, which is part of an older lineup of terminals, by adding a NFC antenna. Although XENTA came out in 2004, it is still possible, 12 years later, for a field technician to add a NFC antenna to allow the processing of NFC-enabled cards.
Is this modularity part of our unique selling proposition? Is it available on all our terminals and is it a selling point for retailers?
One of our unique selling propositions is the lowest total cost. Indeed, the payment terminal price is often considered as the most important purchase criterion. However, in the markets where we are the most successful, retailers and other customers take into consideration other criteria than price. The lowest total cost means that the customer is willing to invest a little bit more initially, he/she will not necessarily invest in the cheapest terminal, knowing that, by investing a little bit more at the beginning, he/she could recurrently save money in the long run.
Today, our payments terminals are PCI 4 certified, what does that mean and what is the difference with PCI 3?
PCI is an organization independent of card issuers, which defines, among others, security standards for payments terminals. PCI 4 is simply the evolution of PCI 3; this evolution has increased the security level of payments terminals, both physically and logically. Most of the modern payments terminals embark Wi-Fi and Bluetooth, whereas terminal activity was only performed via direct contact with the actual terminal in the past. The evolution of PCI standards helps to define of payments terminals’ new requirements.
In short, the evolution of PCI standards includes two major changes:
- Firstly, logical, physical and contactless standards become stricter with each PCI evolution.
- Secondly, it is a mix of requirements and physical characteristics in combination with software which are developed according to PCI standards.
One of the advantages of this evolution is the ability to update our payments terminals. When a new terminal is released, if it is certified, it can be used for 8 years at least. Initially, a terminal always carries the physical certification that had been presented to PCI auditors or to PCI tests laboratories. When our terminals had to follow the PCI 3 standards, we had already developed them more securely in a way that made them already compliant with the new PCI 4 standards. Today, this anticipation enables us to simply update our payments terminals from PCI 3 to PCI 4 remotely via a software update. It also satisfies our lowest total cost approach.
Worldline offers a new service available on our terminals, “The Bluetooth LE SAM”, can you tell us more about this service?
Firstly, unlike SIM, SAM (Secure Authentication Module) enables strong authentication. Additionally, the addition of a Bluetooth LE (Low Energy) chip permits smarter applications usage on payments terminals, but for other needs than payment. For example, it could enable targeted communications on customers’ smartphones who are in the store. It could also help emit communications through a mobile phone, via the screen or the loudspeaker, for hard-of-hearing or visually-impaired persons. These communications would be more personalized and it could help during payments. In conclusion, the “Bluetooth LE SAM” opens up an application scope, not only in the value-added services, but also to facilitate payments.
In your opinion, how will payments terminals evolve in the coming years?
A few years ago, everything involving payments was handled by banks: banks were issuers, acquirers, and so on. Today, we clearly see that other groups are emerging in the payments industry, such as telecommunications operators or big companies, such as Google or Apple.
Also, new tokens are emerging: the most typical one is the credit card with an authentication chip. Secured authentication requires the combination of at least 2 or 3 authentication factors: factors can be something that we own (a card), something that we know (a password), or something that we are (a fingerprint). These factors are also evolving, with new tokens such as smartphones or smartwatches, but it could also be a chip in a device or even in our body, similar to the technology used to identify animals.
Payment is a service that we sell to retailers, and as needs and retailers’ stakes evolve, so will our payments terminals: in a few years, we will talk about devices with strong authentication through which payments will still be possible of course, but also with new services and new tokens that will go beyond payments. Payments terminals will also probably change in form and design. For example, consumer authentication could be made when he/she arrives in the shop and an automatized products list could be added to his/her shopping basket or trolley, thanks to the mobile phone or other RFID (Radio Frequency IDentification) solutions. It could allow a decrease in purchase time to only a few seconds because the consumer will already have been authenticated as well the products that he/she is likely to buy. It means that there will always be a need for strong authentication for payments, but that authentication may come from a different device than the payment terminal (smartphone for example).
What will be the added values for consumers and retailers?
In the past, the payment terminal was considered as an investment or a cost for retailers. From now on, a multitude of value-added services will be offered on future payments terminals. It will be a way to offer other possibilities than payment to consumers, but also to simplify the payment process and to go faster. Finally, it will offer the possibility for the retailers to offer more services to consumers.
Thank you for your time today, Antoine. I will leave you with one final question: in your opinion, what will be the invention/innovation that will change our world in a century?
I think that there will be a merger between IoT and communications, and this merger will probably change the world. With the rise of social media and IoT, we could, for example, receive goods almost instantly without needing to go to the store, or even without ordering them. Another example would be a car running out of gas that could automatically go, during the night, to a gas station. I think that we will live in an ultra-connected world.