2018 commerce and payments outlook - reliant solutions€¦ · 2018 commerce and payments outlook...

2018 Commerce and Payments Outlook

First Data Information and

Analytics Solutions

This document is a collection of opinions that are offered solely as a courtesy, and they do not represent

business or legal advice. The research is gathered from a wide range of industry publications, analyst reports,

white papers, websites, and interviews. The statements in this document related to future business or financial

performance may constitute forward-looking statements and actual results or performance may vary.

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We understand Big Data

Our capabilities position us to provide more robust analytics than our competitors

3,000 transactions per second,

24/7/365

Acquiring Merchants

More Transactions

Data spans the most networks and

product sets

Broadest Coverage

Ability to source data directly, and efficiently,

from our own environment

Seamless Integration

Based on 45 years of operating

excellence

Trusted Expertise

leading share in:

#1Banks

6 Million+ 600+

20%+

Business locations Merchant categories

U.S. consumer volume

50%U.S. retail volume

$2.4 TrillionCard volume processed

93 BillionTransactions

Our capabilities position us to provide an end-to-end analytic solution set

Networks

Payment and Card Types

2

3

2018 Payment industry outlook

Top trends

Retailer and

Technology

Partnerships

Augmented Reality

and Virtual Reality

Delivery Changing

Physical Retail

ArtificialIntelligence

Banking

Environment

On-Demand Services

in Physical Retail

Retailers TryingSmaller Stores

Mobile Only

Bank Accounts

RetailDigital Deals

Rental &

Subscription

Services

PSD2

Alipay & WeChat pay

Chinese Mobile Wallets

IoTCollaboration

P2P 2.0

FinTechs Eye

Bank Status

Blockchain

© 2018 First Data Corporation. All Rights Reserved.

All trademarks and trade names referenced in this material are the property of their respective owners.

4

Retailers – smaller is better?

Retailers testing smaller physical stores Why small-stores?

▪ Response to shifting consumer demands, growing

populations in metro areas, and increased online shopping

▪ Scaled-back spaces can be more profitable

per square foot

▪ Forces retailers to be smarter about inventory and can

serve as a location for online pick up/returns

▪ Allows retailers to tailor product offerings to the local

area, making the experience feel more personal

▪ Overall, retailers are aiming to become a more desirable

place to shop

Sources: Company websites; “How Department Stores Will Re-Invent Themselves in 2018,” CNBC,

December 2017.

In the rise of online shopping, big-box retailers are experimenting with smaller brick-and-mortar stores



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Delivery changing physical retailing

Retailers with Same Day Delivery

16%

51%

Selected Retailers

2016 2017

Changing the Retail Experience

▪ Consumers expect convenience both online and offline

▪ Retailers leverage their local, physical footprint

▪ Developing new services for in-store pick up and fulfillment, delivery

logistics, and real-time inventory management

▪ Pay-off is significant: slows the march of competitors and allows for more

advanced pricing, margin management, and incremental service fees

Delivery Partner Services

of Retailers Offer

3rd Party Delivery

Services

32%+

Acquired by a RetailerSources: “Digital Commerce Survey 2017,” BRP Consulting, 2017; Company websites;

press releases.

Same day delivery is the latest battleground for physical retailers



…to offer home improvement

professionals and advice to customers.

…a marketplace of service providers

where customers can shop for

professional service help.

…to create an omnichannel tech

services platform to provide IT support

services to business customers.

…to strengthen its digital customer

service capabilities and expand its

home goods and installation offerings.

acquires… acquires…

offers… partners with…

On-demand services meets physical retailing

The “gig” economy

(on-demand services)

coming to more stores

near you

6 © 2018 First Data Corporation. All Rights Reserved.


Sources: Company websites.

7

The rise of rental and subscription retail

The concept gained prominence with startups… …and is now spreading to larger retailers

+



Consumers want value, flexibility, and personalized discovery

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Retail deals for digital

Add digital capabilitiesStrengthen eCommerce reach Connecting with customers

Online shopping

Product selection

Logistics

Mobile

Chat / messaging

Personalization

AR / VR / 3D

Big data

Robotics / automation



Sources: “The state of the deal: M&A trends 2018,” Deloitte, November 15, 2017.

Increasingly retail and digital/technology are converging

Traditional retailers are turning to startup M&A to catch up on the retail transformation

9

Retailer and technology partnerships

Why partner? – If you can’t beat them, join them.

▪ Increase customer traffic and expand online presence

▪ Ensure a position on the next generation of platforms (i.e. voice-ordering, smart home products)

▪ Partnerships highlight retailers’ willingness to increase dependence on shopping and payments technology

Notable new partnerships made between retailers and tech giants:




Unexpected partnerships are formed as competition increases, particularly in rise of voice-ordering



10

All aboard for IoT collaboration

Industries working

together through

connected commerce to

reach more households.

RetailersTech

Banks

Auto

Third Party

Developers

Devices &

Appliances

Travel &

Entertainment

Grocery &

Restaurant

Insurance

Content

CONNECTIVITY

11

Augmented reality and virtual reality in retail

Augmented Reality: It’s Real

But Virtual

Reality…?

Sources: Warby Parker app; Amazon app; The Verge 10/25/17; “Lowe’s Introduces In-Store Navigation Using Augmented Reality,” Lowe’s

press release, 3/23/17; Dailymail; “VR: The Brands that are imagining a new commerce reality,” Forbes, March 7, 2017.

Two powerful technologies could reshape commerce, but we believe

AR may be the winner



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Artificial intelligence boosts retail and banking

Trading

Process

Automation

Chat

Bots

Contact

Centers

Fraud

Detection

Loan

Underwriting

Identity

Verification

Personal

Financial Mgmt.

uses AI to target ads to individuals based on what

they are talking about on social platforms.

uses AI-based machine learning to offer consumers

a personalized clothing subscription service.

uses AI-based voice technology in its call centers

to route customer complaints to the appropriate experts.

uses AI to enhance real-time fraud detection and to

increase the accuracy of transaction approvals.

Sample Uses Cases




Utilizing machine learning and AI to strengthen products and services and streamline operations

Fashion &

Beauty

Recommendations

Chat

Bots

Local

Experiences

Voice-activated

Assistants

Sales

forecasting

Targeted/

Personalized

ads

Promotion

Management

Merchants Banks

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Alipay and WeChat pay

MOBILE WALLET USERS

Undisputed Mobile Wallet Leaders WeChat Diving into MicroPayments Alipay Expanding Throughout Asia



Sources: Press releases; web sites; China Academy of Information and Communications Technology.

Chinese mobile wallets are forging into new frontiers

600M

529M

210M

87M

60M

WeChat Pay

Alipay

PayPal

ApplePay

Klarna

Tips often range from as little as

$0.15 to $1.50

+10%Of WeChat users have

micro tipped

14

Blockchain’s great uphill climb

Enterprises Moving out of the

Research Lab

Technical

AdvancementBlockchain’s Challenges

Blockchain’s Hope

Too often blockchain experiments

are tech solutions in search of a

business problem

Massive speculation in

cryptocurrencies creates noise and

negative connotations

Solving for the fiat currency

on/off ramp

✓ Advancements in speed

(Layer 2)

✓ Development of so-called

“interledgers” to connect disparate

ledgers (bitcoin, XRP)

✓ Flood of capital into cryptocurrency

markets could drive accelerated

innovation

Sources: Forrester: Predictions 2018.

Corporates on the

Hype Machine

80% of Blockchain projects

fail to meet expectations



Distributed ledger gains are being overshadowed by the cryptocurrency hype cycle

P2P Payments to

Exceed $120B this YearZelle Makes

it Debut

Big Banks Show

Major P2P Growth Venmo Now Accepted

at 2M MerchantsUS Bank Announces

Disbursements via Zelle

PYPL Buys Tio

Networks for $223M

15

P2P 2.0: In pursuit of financial relevance

P2P 1.0 – Consumer Only, Limited Revenues P2P 2.0 – New Ways to Pay

Businesses Consumer

P2P Apps

Merchants

Billers



Sources: Press releases

Venmo, Zelle, et al pivot towards merchant and biller payments

First Data® Enterprise Analytics

Campaign Effectiveness

In-store Purchases

Household-level Analysis

Card-based Transactions

Advertising effectiveness

First Data® measures the impact of your ad campaigns using actual payment data

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Measurement process

Household-Level Analysis

Ad Agency

Experian®

First Data® Match

Exposed Devices and

Million Impressions

Matched

Experian IDs

(cardholders)

Cardholders/

Households

Agency to fill #

18

Measurement in action: Use case

Control Group

(76,723

households)

Exposed List

(76,724

households)

Households 6,522 (8.5%) 6,105 (7.8%)

New

Customers

(Households)

2,288 (35%) 2,308 (38%)

Transactions 34,367 41,393

Transactions

per Household

5.3 (7.0 for returning

households)

6.8 (9.6 for returning

households)

Total Spend

at Store

$1,812,543

($278 per customer);

$28.9 per exposed

household

$2,218,405

($363 per customer);

$23.62 per exposed

household

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Marketing to look-alikes

Client needed

profiles of their

best customers

in order to acquire

more customers

like them

How can we

acquire more

customers?

Insights

The client’s best customers

were suburban women, 40-50

years old, living within 15 miles

of the a client location, owning

luxury vehicles and having an

interest in international travel

Action

1) Tailored messaging to best

customer audience

2) Purchased lists from local

luxury car dealers to target

their customers

3) Placed social media

messaging to target

international travelers

ResultNew customer visits increased

17%

Potential Opportunity Areas

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Benefits of First Data’s Ad effectiveness service

52%, only 4% are newly-issued cards (that had no transactions in Q4, 2017)

Visibility down to MSA level; share of wallet

calculations; market growth calculations;

new/returning customer spending patterns

Improved ROI

Calculations

Control groups developed based on spending

patterns, geography, and other demographic attributes

More Accurate

Measurement

Independent and aligned with your best interests;

multiple options for delivery timing

Trustworthy,

Timely Results

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2018 commerce and payments outlook - reliant solutions€¦ · 2018 commerce and payments outlook...

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