White label solutions for payment schemes Free your payments White Paper December 2020 3 Table of contents Free your payments Free your payments 03 Choice and convenience key to The typical payment process The payment scheme, that acts as the Why would someone create a private label the future of digital payments intermediary between the bank and the merchant, is a critical part of the The digital revolution has transformed or national scheme? 04 payment ecosystem. A payment scheme the way we pay for goods and services. not only facilitates the transaction, it What is a white label scheme? 05 Wearable technologies, digital wallets also defines the rules and procedures and the internet of things enable Creating a payment scheme in-house: Key challenges 07 that govern that transaction. Any issuing consumers to have more freedom and Customer purchase goods or bank or business that signs up to the The benefits of a good white label approach 08 choice to pay for things in the way services and uses a card to pay scheme gains the ability to process that works for them. According to the The EMV standard 10 payments through the scheme but must US Federal Reserve, the average US also agree and adhere to the rules of A new approach to white label schemes: consumer uses 3.6 different payment that scheme, such as processing times methods every month1. This consumer The White Label Alliance 11 and payment processing fees. Payment requirement for choice, convenience and schemes break down into four different Evolving payment standards 13 flexibility has required the payments categories: The founding WLA partners 14 ecosystem to innovate and focus on providing flexible, scalable solutions. The merchant’s aquirer • International schemes G+D’s white label solutions 15 Advances in payment speeds such as processes the transaction These are the schemes that facilitate instant payments, blockchain-powered payments on a global level and are cryptographic security and the growth the ones we are all probably the most of contactless payments following the familiar with: VISA, American Express COVID-19 crisis have enabled these and Mastercard, for example. changes, but in general card payments remain one of the main payment • Regional schemes methods of choice, and still generally Depending on the card type, the These facilitate transactions across follow the same process: relevant payment scheme mediates regions, such as the EU’s SEPA system between the merchant and the or the East African Payment System issuing bank to allow the payment to go through (EAPS) – designed for payments across national lines. • Domestic schemes These are country-specific implementations of payment standards, such as China’s Union Pay or Russia’s MIR scheme. The bank/credit card provider releases the funds to be • Private label transmitted to the merchant via A scheme owned and branded by one the payment scheme business that sets its own business model, services and rules. There are more than 50 private label issuers worldwide. 4 White label solutions: for payment schemes 5 Why would someone create a private label or national scheme? Payment card schemes such as VISA, Additional services Lower costs Mastercard and American Express are Global schemes such as VISA Private label or national What is a white label approach? undoubtedly some of the most well- or Mastercard may not offer schemes can be more cost- known brands in the world today. other services that private effective than international However, the private label payment label schemes can provide. For schemes. These savings come White labelling is the provision third-party solution as their own. scheme market is extremely valuable example, national or private from more frugal attitudes of goods or services under the From a payment services perspective, and makes up a significant proportion of label schemes may be able to cost control and less need brand of one company, that have white label solution allows the overall global payments market. In to integrate bill payments for a high profit margin when been created or produced by governments, banks and businesses the United States alone, purchase value for other services into the compared to global schemes another company. The producer to create domestic or private label through private label cards increased to scheme or enable access to which are dependent on the creates their product or service in a payment schemes that meet specific $210 billion USD in 2018, a 3% increase transportation ticketing. stock market. Higher marketing brand-free way, and then licenses needs. These schemes use technologies year on year, and the rest of the world’s As these services are often and sponsorship costs coming another company to release the built by others but are branded by markets reflect a similar story2. However, extremely country or region from these global schemes service. This practice happens for these organizations and are created these schemes are designed to address specific, global schemes often are also a considerable factor both physical hardware, such as for specific markets/territories. A white the entire world’s payment needs and do not wish to provide the in calculating this cost- phone manufacturers producing label approach allows rapid deployment work in particular ways, that are not specific processes needed. effectiveness. devices to be released under the of new schemes without the initial always suitable for every circumstance. branding of network operators, upfront investment or ongoing In addition, certain markets may have Local decision-making Political or socio-economic and software and services, such as operational requirements of a self- specific requirements for political and As global schemes are privately- purposes loyalty management applications for created solution. economic purposes that makes relying on run enterprises, decisions Sometimes, private label retailers, where the retailer brands a global schemes problematic. taken by these schemes may or national schemes are run counter to the interests specifically designed to achieve A business, government or organization of nations or businesses. By a particular social outcome or may choose to produce a private label creating their own payment cultural change. For example, scheme (or national scheme in the case of schemes, these organizations in 2019 the Central Bank governments) for many reasons: can operate their scheme of Egypt, supported by the in the best way for them, Egyptian government, created Independence without having to adhere to Meeza, a national payment This may be a requirement global decisions that could scheme designed to promote for organizations that want be detrimental. For example, the acceptance of non-cash to use different rules or make transaction fees and processing payments throughout the different decisions in the times can be configured country, to increase social payment process. Also, changes to better match the local inclusion5. The scheme issues in the geo-political landscape economy. physical debit and pre-paid may make relying on a global cards, as well as facilitating scheme difficult or dangerous. eCommerce transactions on For example, Russian banks Egyptian websites. were threatened with a cut off from the SWIFT international payment schemes due to the conflict in the Ukraine. This led to Russia developing a competing scheme among sanctioned nations to avoiding reliance on global schemes3. 2 https://www.packagedfacts.com/Private-Label-Credit-Cards-Edition-12443463/ 3 https://uk.reuters.com/article/russia-banks-swift/russia-backs-global-use-of-its-alternative-swift-system-idUKL8N2163BU 5 https://fintech-egypt.com/news/Meeza-E-Payment-Cards-Push-for-Financial-Inclusion-in-Egypt/ 6 White label solutions: for payment schemes 7 Creating a payment scheme in-house: Key challenges Although creating a private label or Cost Time to market national scheme may offer significant advantages to organizations looking to Although operational savings can be Another consequence of the reduced offer differentiated payment services, the realized over time, implementing a resources that private or national scheme challenges inherent in either upgrading new scheme can be extremely cost and creators face is the longer lead time to existing payment systems or creating a resource intensive. Product and service deliver products or services. With reduced new scheme in-house from scratch should development, infrastructure creation and expertise and resources, new products not be underestimated. The reason deployment, servicing and maintenance, and services can take longer to bring to that global schemes have become so all need to be created and maintained. market. popular is that their reach, influences and Additionally, the entire payment Interfacing with wider ecosystem resources can massively outweigh any the ecosystem will need to be updated to capabilities of any country or business accept a new standard, from merchants Another challenge that private and looking to implement a scheme: to banks. national scheme creators face is the Expertise requirement for their payment services to interact and interface with other schemes Often, creators of new payment schemes and providers. For example, customers will struggle to acquire the expertise to may want to use your scheme to pay innovate or create the depths of services for goods and services from abroad or that they are looking for. Top technical transfer money to non-scheme members. staff and experienced personnel tend To facilitate