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Who is who in the payment ecosystem 2020. Part 1

Do you know how the world of payments is organized, and who is who in this entire large ecosystem? .. Today we are publishing a translation of an article by Innopay analysts on mapping key players in the space of those who help their customers buy and sell online with their IT infrastructure. Infographics attached - everything at a glance.




Nota bene: some of the developments mentioned in the article are related to the European payment market and (so far) are not directly related to Russia. However, we hope that the translation of this article may still be useful to you.

The speed and capabilities of Internet connections are growing, the variety of payment services is increasing - all this leads to the fact that the payment system continues to transform. As a result, new “areas” are added to the existing “landscape”. So, for example, alternative layers are being introduced into the infrastructure, and the list of traditional services is replenished with new payment services.


Fig. 1 - Interconnected areas in the payment ecosystem

Area 1: Digitalization of the infrastructure of payment systems


Infrastructure includes:

  1. «», (, SEPA Credit Transfers (SCT) — ),
  2. «» — , ,
  3. «» – .


Fig. 2 - The traditional infrastructure is supplemented with new elements.

If the infrastructure of the traditional payment system is designed for batch processing and involves time constraints (for example, processing stops after 17:00 or on weekends), then the rapidly growing instant payment system is capable of transferring the necessary funds to real time and, if possible, around the clock and daily basis (24/7).

The transition to instant payments modernizes systems, reduces costs and makes it possible to provide new services, simplifying transaction processing 24/7 and 365 days a year. To date, more than 45 countries have already switched to the quick payment system and about 25 more are in the process of transition to them.

The gradual transition to real-time payments is a phenomenon that is already more than ten years old (for example, the British Faster Payments system was launched in 2008). However, the recent launch of the European SEPA SCTInst scheme (instant credit transfers) and the SWIFT GPI service marked a significant development in the direction of cross-border payment services. Instant payments are an important step in the development of Europe as a key strategic element in response to the dominant position of card schemes and the growing popularity of alternative payment networks.

Area 2: Platforms at the Top of the Payment Infrastructure


The second area is payment platforms, which are responsible for the convenience of the “purchase” phase on the way of the buyer. In addition to initiating a money transfer with the help of connected traditional payment instruments, payment platforms allow various variations of the “trinity of the payment transaction” consisting of the agreement, payment and delivery stage - as shown in Figure 3. Although the agreement and delivery are usually not part of the actual payment, payment platforms provide more and more options for managing time, payment and delivery procedures to ensure the reliability of the operation between the payer and the recipient. This may be, for example, withholding payment to the seller until the goods are delivered to the buyer.


Fig. 3 - Payment platforms control the payment and delivery of multiple streams of “purchases”

The functionality of payment platforms allows you to support a wide variety of types of payment transactions, for example, peer-to-peer payments through Yandex.Money and consumer lending PayPal.

Along with functional developments, platforms are consolidating to increase the reach and volume of payment solutions (for example, PayPal bought the Chinese company GoPay to expand its presence in the Chinese market and increase its importance for Chinese sellers). Increased competition between platforms promotes such consolidation and erodes borders. To stay in business, market players choose various strategic paths - expand their geographical presence, specialize in specific business segments or expand their portfolio with additional services (for more details, see 4th area).

Area 3: Online Banking of Electronic Payments (OBEP)


The development of banks and banking communities offering online banking services for electronic payments from one bank account to another is all about 3 area. In general, there are two types of OBEP solutions: single-bank solutions and multi-bank schemes.

An important addition is the emergence of an opportunity that allows third parties to use bank interfaces safely, as required by the revised Payment Services Directive (PSD2). Banks are required to provide at least one interface to facilitate the initiation of payments by licensed third parties. These third parties, in turn, require a special PSD2 license for the role of a payment initiation operator (PISP), regulated in accordance with PSD2.

Other developments in this area improve the quality of customer service both by non-bank organizations and banks - this is shown in Figure 4. Currently, banks are developing their mono-banking solutions with improved capabilities, such as peer-to-peer payments directly in the application (P2P).

Another noteworthy development is the use of OBEP in physical points of sale (POS) - banks and non-bank organizations are developing proposals for including payments in POS through the mobile bank application. For example, the development of offers for payments in POS using QR codes that can be scanned through the company's mobile application.


Fig. 4 - Peer-to-peer systems simplify the payment experience of customers

Area 4: Payment service providers make shopping easier


This part is about the role of payment service providers (PSP - payment service provider), which mainly focus on the aggregation of payment methods and providing sellers with access to them.

The market for payment services for basic payment processing services is growing rapidly. This is evidenced by the growing price pressure faced by hundreds of existing services. Staying on top in the ever-changing needs of buyers and sellers is not easy. Payment aggregators choose various strategic ways to cope with the changing dynamics of the market:

  1. Leadership through global reach and scale, flexibility and backward integration
  2. Search for niches, offering the best-in-class services for a specially selected horizontal or vertical market and seller size.
  3. Exploring the options before, during, and after the payment phase of the purchase process to provide a comprehensive commercial offer, as shown in Figure 5. Examples include acquiring iZettle's PayPal and obtaining a Adyen banking license to increase the multi-channelity of seller offers.

Also, new players enter the market, owning a variety of service portfolios of various world payment services, that is, in fact, aggregators of such services. Among the services provided, there are usually optimized payment routing (choosing the most suitable payment service for a particular payment), visualization and analysis of key indicators.


Fig. 5 - Growth Strategy - the study of pre- and post-payment services before, during and after payment

Area 5: Mobile Revolution


The focus of the fifth area is the transformation of mobile platforms into a special payment channel. Mobile versions of banks have replaced browser versions as the preferred channel of interaction, as shown in Figure 6. The

orientation of users to mobile services has led to an increase in the number of competing banks that pay special attention to mobile channels. Banks like N26, Revolut and Bunq do not have physical offices, providing almost all banking services exclusively through applications.


Fig. 6 - Traditional channels are replaced by new, exclusively mobile channels.


The next part of the transfer will consider online platforms (GAFA - Google, Apple, Facebook, Amazon and BAT - Baidu, Alibaba, Tencent), wallets, cryptocurrencies and new services.

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