Issuers & Acquirers Can Only Survive by Becoming Multi-Brand

Legal and business developments in the ATM and payments card business obviously have an effect on both issuers and acquirers. The first development in this respect relates to schemes making inroads into Europe.

The acquiring side is where the inroads that these international schemes are making is most obvious, which is serendipitous  for acquirers because there is also a growing desire for them to be able to offer as many brands as possible. Merchants then only have to sign one contract for multiple brands with an acquirer, making card acceptance both easier and more cost-effective at the point of acquisition.

Acquirers have a clear vision in most cases: they offer one contract with merchants, and let them tick the boxes of all the brands they want to accept. If we look at some of the largest issuers in Europe, we can see that this process has already started.

Table 1 lists some of the more active acquirers in this respect. As we mentioned before, acceptance is key for these international brands as their customers travel outside their home country or market.

Table 1 : Acquirers Are Becoming Multi-Brand

Judging by the number of brands in Table 1, the Acquirer that has gone furthest in this respect is SixPay; they acquire all of the most active international brands.

I remember my first credit card – it was a VISA card because that was all that Barclaycard had to offer. Had I been a client of Credit Agricole – it would have been a MasterCard. Next, the concept of duality was introduced, allowing the choice of two issuing brands, and now what we see is that more and more issuers want to be able to offer the client an ever broader portfolio of products. If the customer wants Amex or JCB then it should be made available to them.

(Duality is not such an old concept, and certain markets (notably Canada) still operate under an either-or arrangement with choices sometimes depending on which bank the cardholder is with.)

Table 2 shows the emergence of multi-brand issuance across some key European players:

Table 2: Issuers Are Becoming Multi-Brand

So, what are the significant forces for change?

Shaping the Future of the Cards & Payments Industry

There are several key factors that will influence the ongoing development of the industry:

• Survival of the largest and most motivated domestic schemes;
• Banks abandoning duality to offer a portfolio of card issuance products;
• Multi-brand contracts leading to Acquirers being able to offer merchants acceptance choice;
• Hybrid payment schemes (of which PayPal has emerged as a front-runner) where schemes are not limited to cards as payment methods.

Of course, there are also some unanswered questions. For example, what effect will offering multiple issuance brands have on co-branding, and how will issuers with strong brand recognition react to effectively losing their corporate identity on a card?

Answering such questions will likely be dependent on some other forces for change which will help to further colour the decisions taken as the industry embraces new paradigms and technologies:

• Regulatory and/or legal intervention;
• Changing economics and business dynamics;
• Influence of schemes that are demutualising.

These are complex issues on their own, and only time will tell how much of an effect they have on the ongoing multi-brand and hybrid payment developments in the industry. As a multi-brand processor, Trionis is in an excellent position to observe and comment upon the changes as they occur, so be sure to bookmark this blog and keep abreast of an exciting industry.