Interview with Horst Forster, Research Director, Payments Cards & Mobile

Horst Forster is a European payments expert with decades of experience in payments consulting and financial technology research. He runs PCM’s Digital and Card Payments Yearbooks, as well as working on bespoke consulting projects for clients. We spoke to him to get his interpretation of this year’s statistics:

PCM: We’ve heard a lot about the arrival of mobile wallets in the last year, especially from merchants and the major Asian players. But it looks like the card business continues to dominate in Europe?

HF: That’s broadly correct. What’s changed is the switch from consumers using an EMV card + PIN at POS to the use of contactless cards and, of course, a rapid rise in e-commerce and m-commerce as a result of the pandemic. At the same time, it’s been good to see the continued roll-out of Strong Customer Authentication (SCA) for e-commerce, which is going to help allay security concerns and reduce consumer friction in lots of cases. 

PCM: So do you think we’ll see wallets as the future of payments, or will they simply become part of a broader mix of payment types?

HF: Connected consumers are going to continue to embrace mobile as a convenient way to pay – linked to a card. However, that will happen in concert with other developments. We’ll see contactless cards continue to be popular, as well as click-to-pay functions online. Established players like PayPal, Apple Pay and Google Pay will continue to grow, and the Asian giants of course. The more interesting story is mobile IBAN-based digital payments direct from the bank account, which could provide future competition for cards. I predict we’ll also see domestic schemes continue to matter, especially since many of these have introduced instant payments and mobile wallets as part of their product mix.

“Mobile IBAN-based transfer payments direct from account could provide real competition for cards… and domestic schemes will continue to matter.”

PCM: Branch numbers and indeed the number of banks across Europe are in decline. Are we moving to a purely digital banking system with “robo-branches”, or will branch networks still have a role?

HF: The move towards digital card payments and mobile banking is going to exacerbate consolidation in the banking sector, which has been a long-term industry trend in any case. In the future, I think we’ll see more shared ATM networks, and cash advances delivered through POS devices at retail locations – as well as what you call “robo-branches”, or unattended remote machines capable of many branch functions. We’ll continue to see branch numbers decline – it’s all part of the move towards digital banking hubs and the future, which is open banking. This means the capacity for non-bank FinTech players to take over digital account-to-account banking services from traditional legacy banks. 

PCM: What do you think the payments industry’s priorities should be in the next 12-18 months?

HF:  I think industry needs to continue with the roll-out of SCA for online card payments, including the introduction of 3DS Secure v2, and EMVCo’s Secure Remote Commerce technology. At the same time, we need to adopt fresh approaches to tackling novel fraud methods such as mobile account takeover and synthetic user ID, since these are behind some of the recent increase in fraud.

Finally, we should also be thinking about the introduction of smart “automatic chargeback” apps, which can help to reduce fraud and boost consumer confidence in the system, as this is going to continue to be a key factor. 

For more information about the Digital and Card Payment Yearbooks, or to order your copy, please visit: www.paymentyearbooks.com.