GLOBAL TRENDS IN THE CARDS AND PAYMENTS INDUSTRY 2020 2 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited Contents Foreword .......................................................................................................................................................................................... 4 New payments ecosystem on real-time payment rails ................................................................................................... 5 Embedded, ubiquitous and standardized payments .....................................................................................................10 AI- and Ml-led digital transformation...................................................................................................................................15 Technology innovation to scale up payments offerings ...............................................................................................20 Embracing innovative fintech business models ..............................................................................................................24 Product innovation-led differentiation in payments offerings ...................................................................................29 References ......................................................................................................................................................................................34 Infosys contributors ....................................................................................................................................................................37 External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 3 Foreword New technology and competition startups have used distributed from fintechs have rapidly ledger technology to reduce costs disrupted the financial services and increase reward program industry, especially cards interoperability across merchant and payments. Payments chains. Such initiatives increase are increasingly ubiquitous, consumer adoption of loyalty embedded, standardized, programs and brand stickiness. and secure, reducing friction Rajneesh Malviya The rapid adoption of real- in processing and ultimately Senior Vice President, time payments has fueled that Financial Services, Infosys transforming the customer transformation worldwide, experience. including across borders. With Global Trends in the Cards more than 50 real-time payment and Payments Industry 2020 schemes now live globally, analyzes this new ecosystem of companies are focused on real-time payments, including building overlay and value-added ways to scale solutions, simplify services for all segments. Firms payments, and monetize data. are also investigating innovative The report also provides insights business models that tap into on how industry players are unmet consumer demand and transforming their businesses allow incumbents to fend off by utilizing technologies such as disruption by fintech companies. distributed ledger, cloud, artificial For instance, traditional banks Ashok Hegde intelligence, machine learning, have explored peer-to-peer Vice President, big data, digital, conversational lending, noncard lending at the Financial Services, Infosys commerce (e.g., smart speakers), point of sale, and escrow services wearables and analytics. for consumer digital commerce. These trends and technologies The 2020 edition of this report have profoundly changed the covers these industry trends, and cards and payments industry. more, which we believe will play With resiliency powered by out in the next few quarters. We cloud computing, transaction offer this analysis to you to help processing platforms can now guide you through cards and handle spikes in traffic and payments decisions. ensure banks stay open 24/7. The rapid growth of cross-border e-commerce and expansion of global operations makes the Vijay Anand concept of peak and lean hours Head, Cards and Payments, in bank IT platforms less relevant. Financial Services, Infosys Industry leaders and fintech 4 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited NEW PAYMENTS ECOSYSTEM ON REAL-TIME PAYMENT RAILS The adoption of domestic and cross-border real-time payments has risen rapidly across the globe. There are 54 real-time payment schemes that are live globally, with many planned in the near future (see Figure 1). Industry estimates project the real-time payment market to grow at a compound annual rate of between 50% and 80% from 2018 to 2023. Trend 1: Rapid rise of real-time payments With technological and business • Use additional optional services • Design layered architectures advancements, real-time (AOS) to cater to country or with core settlement layer, payment schemes are also region-specific needs overlay services and AOS evolving. The focus of institutions • Use extended remittance • Industry participation in governing real-time payment information to promote use defining the payment message scheme rules are focused on key cases in business-to-business guidelines and overlay services tenets, such as: (B2B) payments • Sandbox environment for • Move from net or deferred fintech startups to connect • Support digital payments settlement mechanisms to real- and test real-time payment and new modes of payment time settlements platforms using APIs initiation – e-channels, wallets, • Enable the use of aliases and third-party providers, etc. addressing services • Adopt ISO 20022 message formats for end-to-end payment flows External Document © 2020 Infosys Limited Global trends in cards and payments industry 2020 | 5 Figure 1. Real-time payment schemes are increasing across the globe Sweden – BIR 2012 Denmark – Straksclearingen Poland – Express ELIXIR 2014 2012 Czech Republic – RTPE Iceland – Greidsluveitan 2018 2001 Norway – Straksbetalinger 2019 South Korea – HOFINET P272 2011 SEPA EU1 – SCT Inst Canada UK – FPS 2008 Switzerland – SIC Hungary 1987 Romania – PlatiInstant US – RTP 2018 2017 Turkey – RPS China – IBPS 2012 2010 Japan – Zengin 1973 Bahrain – Fawri+ Taiwan – CIFS 2016 Saudi Arabia 1995 Mexico – SPEI 2019 Hong Kong – FPS 2004 ARPS India - IMPS 2018 (covering 22 2010 Thailand – Prompt Pay Vietnam Arab countries) 2017 Cambodia - FAST Philippines – InstaPay Colombia Sri Lanka - CEFTS 2014 2018 Ghana – GIP Malaysia - RPP ASEAN’s RTP 2016 Kenya – PesaLink 2018 (covering 10 countries) 2017 Peru Brazil – SITRAF Singapore – FAST 2002 Nigeria – NIP 2011 2014 Indonesia - TBD Australia – NPP Chile – TEF 2018 2008 South Africa – RTC 2006 1 SEPA EU Countries (22) live with SEPA SCT Inst- Austria, Belgium, Bulgaria, Croatia, Cyprus, Estonia, New Zealand Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Monaco, the Netherlands, Portugal, Slovakia, Slovenia, Spain 1P27 (4) Sweden, Norway, Denmark and Finland Live Upcoming Source: Infosys SWIFT gpi has significantly payments and have been a huge Open banking APIs will help improved cross-border payments success with retail and corporate unlock the value of processing across the existing payments (see Figure 2). real-time payments. correspondent banking network. The immediacy factor in real-time SWIFT has done successful trials Recommendations for real- payments and the large volumes with gpi and domestic real-time of data generated require payment schemes for real-time time payments adoption scalable IT systems for processing cross-border payments. Apart Real-time payments provide a and storage. This need will be from the industry initiatives, platform for institutions to make amplified by open banking and traditional players and fintech the user payment experience indirect participation models. startups also offer real-time more valuable, and ensures Cloud-based offerings can be payment services. Blockchain- 24/7 availability and real-time considered for varying volumes, based technology companies settlement. For institutions, lower costs, greater availability like Ripple are offering instant the real value lies in leveraging and compliance requirements. cross-border payment services. opportunities to monetize real- The company leverages its time payment rails by developing The ability to receive or transfer advanced blockchain technology overlay services. These include money on a real-time basis RippleNet to reach trusted P2P payments, request to pay, requires the existing payment institutions across the globe. payment aliases, Confirmation infrastructure to be significantly Fintech startups like Zelle, Interac, of Payee, liquidity management upgraded. Financial institutions Transfast and Earthport offer real- solutions and cross-border P2P. without a significant market share time domestic and cross-border 6 | Global trends in cards and payments industry 2020 External Document © 2020 Infosys Limited in payments offerings are most and handle large volumes of support end-to-end payments likely to use a targeted approach the payments data that will processing including connectivity that will help them meet customer be generated. to scheme processing systems. expectations and regulatory Fintech startups offer P2P, demands without completely Solutions for real-time contactless payments and overhauling their technology. merchant payment solutions by Many of these banks will pursue a payments connecting multiple networks and solution that will not only coexist The ubiquitous impact and services, or offer their platforms as with their existing