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COVID-19 has finally introduced the era of ‘digital first‘. The world is moving beyond channels and so are customer expectations, as they expect digital comfort, connectivity, and efficiency from all retailers. This new digital reality can be descirbed as ‘Holistic Commerce’. While many merchants flogged to digital marketplaces amidst the crises, these immediate solutions only served as a temporary fix to stay in business. A major overhaul of their commerce infrastructure is required in the long run. This digital make-over will be characterized by two guiding principles:

1. Digitization
2. Flexibility

A tale of two mindsets

In an increasingly complex world, merchants of all sizes are looking for agile partners that can help them to modernize. For a long time, merchants sourced their commerce infrastructure channel independently from their payment infrastructure. In times of holistic approaches, merchants large and small are turning to different types of FinTech challengers that adopt a digital mindset to create relevant, flexible solution sets, supporting their merchant base with streamlined processing across channels, and employing data and AI to add additional value to their relationship.

SMB merchants increasingly are turning to business solution providers to source their complete business and payments infrastructure from them. Larger merchants and global businesses are engaging the services of payment as a service (PaaS) provider to help them consolidate and orchestrate their diverse international payments operations across channels.

Woken by the imminent threat of those new age FinTech challengers, face-to-face (F2F) incumbents increasingly employ partnership models and/or M&A to expand their services through vertical and horizontal expansion.

This market consolidation is driven by 3 distinct strategies:


Leverage cost reductions to be more competitive.


Serve their integrated payment partners more efficiently.


Engage in business solutions themselves.

 What all players in this highly cooptative industry realize is that in a world of eroding payments margins, the focus shifts towards the intelligent use of payments data to create value for the stakeholders. While this is easy to achieve on the digital side, it is significantly harder in F2F.


A systemic failure proves to be the industry’s Achilles heel

The problem with buzzwords is that they produce a lot of talking with hardly any action. For years everybody talked about “omnichannel“, but in truth F2F and digital channels were operated for the most part independently from each other, especially when it came to the customer checkout process.

To understand the challenge of truly merging the channels, one must look at their origins. Electronic F2F payment acceptance was introduced to merchants almost 40 years ago and has undergone only minor upgrades. Built on an analogue mindset, payment devices were developed as data fortresses, focusing only on speed and security. Though the acceptance model spread across the globe, with merchants operating locally, it saw regional variations that over time developed into the fragmented, inflexible infrastructures still prevalent today.

That stands in stark contrast to the digital side, which developed at the beginning of the millennium. As eCommerce faced the challenges of the customer not being present while being open to the world at the same time, it was built on the foundation of openness, integration, and data. The result was solution sets that are highly flexible, connected and partner oriented.

While these models could co-exist over the last 20 years, the two channels are merging to provide holistic commerce that promises digital efficiencies to F2F merchants and access to real customer touchpoints to digital ones. Nevertheless, what stands between merchants, solution providers, and the interconnected world of efficiency is a barrier of crusted interdependences that sits between checkout and payments on the physical side, limiting the free flow of payments and data and choice of partners.


Industry solution needed

While the rigidity of the F2F world was accepted and even appreciated by various stakeholders for a very long time, as it kept the status quo and protected its local preservers, the game has completely changed. Resistance is no longer an option, neither for merchants nor or solution providers.

The market is looking for a solution for this systemic challenge. Some stakeholders are looking at Android-based smartPOS systems, while others are focusing on industry standards, such as nexo, to open the F2F checkout flow. While all these solutions offer necessary and relevant steps towards a more open and agile F2F commerce environment, they all individually fall short of the bigger picture, as they are either too exclusive, complicated, or regional.

To truly change the game in time, the industry requires a combination of open industry standards (such as ISO 20022, nexo and Android) and the execution speed of a private entity to deliver an open, neutral platform, accessible to and respecting the role of each stakeholder, while offering freedom of choice and speed of execution for all industry players.

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