Today’s Payments Industry — An Overview

Interconnected domains in the payment ecosystem (Image source: The Payers)

1. Domain 1: Digitalisation of payment infrastructure: Infrastructure encompasses ‘instruments’ (initiating money transfers via payment methods such as cards and SEPA Credit Transfers (SCT)), ‘processing’ (consisting of netting and clearing payments) and ‘settlement’ (settling funds via central banks).
2. Domain 2: Platforms on top of payment infrastructure: Domain 2 covers payment platforms, which facilitate the ‘purchase’ step in the customer journey of the payer. Besides initiating the required money transfer via connected traditional payment instruments (facilitating ‘payment’), payment platforms enable different variations on the ‘transaction trinity’
3. Domain 3: Online Banking ePayments: Domain 3 covers the development of banks and banking communities offering online banking services to initiate electronic Payments (OBeP) from one bank account to another. Overall, there were two types of OBeP solutions: monobank solutions and multibank schemes (such as iDEAL)
4. Domain 4: Payment Service Providers offering simplicity to merchants: Domain 4 covers the role of Payment Service Providers (PSPs), and mainly focuses on aggregating payment methods and offering easy access to these methods for payment acceptance by merchants
5. Domain 5: Mobile revolution: The rise of mobile as a consumer channel for payments initiation is the focus of domain 5. The Mobile app has replaced the online web banking environment as the preferred channel for interaction with the bank
6. Domain 6: Online continents: Domain 6 covers the rise of online platforms (GAFA & BAT*) for social interaction and commerce. With increased presence in every daily aspect of consumers, these platforms offer their own dedicated payment solutions integrated into their respective platform offerings
7. Domain 7: Payment solutions; previously wallets: Previously, domain 7 covered wallets (aggregating cards) aimed at reducing checkout complexity for consumers. Recently, new payment solutions have entered the market and the wallet domain has expanded beyond card aggregation: P2P payments have really taken off, PSD2 payment services are increasingly emerging and wallets incorporate non-payment related services to further support consumers.
8. Domain 8: Alternative transaction infrastructure: The evolution of the payment landscape as described in domains 2 to 7 always had the initial payment infrastructure from domain 1 as the backbone for innovation. Nowadays the payment infrastructure itself is the subject of innovation, facing potential disruption. While traditional players have initiated new infrastructure initiatives such as instant payments, and are looking at the possibilities that technology such as blockchain can bring to the financial system, non-traditional players are also looking into the development of infrastructure that may heavily impact the traditional financial system
9. Domain 9: Alternative services: The traditional payment infrastructure serves as the foundation for payment-related services. A variety of services exist in a certain layer, but in the end, they result in a traditional payment such as SCT or card transaction.

Reference: From ‘The Payers’ — Who’s Who in Payments 2020