Stuck in the Mud:

Why Face to Face Acquirers are still struggling with CNP

eCommerce is Growing - +15% to Sept-2011

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One Pound in Ten or One in Four?

• No competition from

cash online

• Data from Visa

suggests ecommerce

>25% of their volume

today

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Source: ONS

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Overwhelmingly SMEs are the Laggards

Source: UK Government

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1000+ 250 - 999 50 - 249 10 - 49

Businesses selling over the internet

2008

2009

Acquiring Margin Greatest for SME

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6 14

29

48

69

91

182

0

20

40

60

80

100

120

140

160

180

200

$500M+ $50M-$500M $10M-$50M $1M-$10M $500k-$1M $100k-$500k $0-$100k

Acquiring Margin by Merchant Turnover (bp)

Source: Anapolis Consulting

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Wet Signature

• Merchants want:

– The instant gratification

of immediate signup

• Acquirers require

– Pen and ink

e-signature?

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Know Your Customer

• Merchants want:

– To trade immediately

• Acquirers require

– Photo-id

– Utility Bill

Electronic ID, exemption

limits

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Application Form

• Merchants want:

– Simple online process

• Acquirers require

– Paper…

– … and lots of it

Electronic application

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Website Inspection

• Merchants want:

– To trade immediately

• Acquirers require

– To see the site before

granting a MID

Compliance check after

1st transaction

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Acquirers are Slow

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PayPal

• Instant Signup

• Electronic

Signature

• Accept before

disbursement

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The New Paradigm is ecommerce

• All of the growth in retail is ecommerce

– One pound in four and increasing

– Sooner rather than later the majority of card

volume will be CNP, mostly ecommerce

• but…

Acquirers are still stuck in the mud of paper

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