CEO insights: Five minutes with PXP Financial’s Kamran Hedjri and DaoPay’s Peter Krapfl

After more than five years of effective collaboration, bringing the latest innovations and industry expertise to customers in the online retail space, PXP Financial and Daopay have announced a new joint solution and strategic partnership.

With burgeoning demand from consumers for a greater variety of alternative payments methods, and merchants battling to improve their share of voice as competition ramps up, putting a spotlight on the payment process has never been more crucial to a retailer’s success.

Kamran Hedjri, CEO of PXP Financial, and Peter Krapfl, founder and CEO of DaoPay, sat down to share their thoughts and explain how this latest step in the partnership will help merchants galvanise their approach to payments, streamline their businesses and confidently expand into new markets.

What do you want to accomplish with this strategic partnership?

Kamran

The new joint solution will take our successful partnership with DaoPay (since 2017 when they acted as our payment facilitator) to a whole new level. It will give customers access to acquiring services with greater flexibility and less friction in the payment process. This strategic solution will be deployed in two phases which will optimise the checkout experience for both the retailer and the customer.

Peter

We are innovators. We will develop new solutions, which will benefit merchants and users alike. DaoPay and PXP already maintain a close and trusting relationship with merchants, our work with them will widen the merchant segments and expansion into new markets. We will continue to use our joint expertise to create benefits for merchants and customers across the board.

What benefits does this partnership bring to your B2B clients?

Kamran

The new partnership will significantly benefit merchants by unifying all their services related to acquiring into a single source, i.e. accepting card payments and receiving money. Thus, administrative efforts will be minimised, and the payments process will be frictionless and flexible. The enhanced payment experience for customers will also reduce the risk of checkout abandonment.

Peter

Again, innovation. Better flows, faster and easier payments. This new partnership will offer merchants a plethora of services which will boost their conversion rates and make payments easier for their customers. Merchants will benefit from an enhanced card acquiring service in the first phase of the launch. It will enable card acquiring with Mastercard, Visa, and Diner. An alternative payment method (APM) aggregation service in Europe will also be available for merchants in the second phase.

Any benefits for the customers, B2C?

Kamran

For customers, the partnership will ensure a smoother payment process with less friction and give them a wider variety of payment options to choose from. It has a positive impact on the checkout process since it reduces the number of players in the value chain with less technical issues and a higher conversion rate. As well as adding more payment methods for customers, we’ll be providing the best-in-class customer service based on our strong client relationships. That way, customers feel valued and secure whilst using their preferred payment methods.

Peter

The customers will also benefit from having better flows and faster payments. Our aim is to keep customers happy at checkout while experiencing faster frictionless payments. Through our single API, ecommerce businesses can offer a vast selection of payment methods for their customers all through a single platform.

How do you view payments in Europe as opposed to North America?

Kamran

Currently, Europe is ahead of the curve compared to North America in terms of APMs. Since Europe is not a homogenous market, there is an abundance of local payment options, payment preferences and local acquirers. A good payment partner needs to understand this to ensure customers have a smooth experience and merchants can increase their conversion rates.

Europe is also ahead of North America in terms of regulation. The PSD2, for example, has been at the forefront of regulation for open banking. That way, it can boost innovation and help banking services adapt to new technologies.

Meanwhile, North America is more reliant on cards, especially Visa, and has a highly banked population who take on more debt. As of 2020, US consumer debt balance grew $800 billion, reaching a record high of $14.88 trillion, according to Experian data. This was an increase of 6%, being the highest annual growth recorded in over a decade.

Peter

In Europe, we’ve seen the use of APMs such as contactless proliferate over the past decade, and this accelerated even further during COVID. These including mobile wallets, account-to-account payments, Buy Now, Pay Later (BNPL) schemes, and other forms of payments. Many government schemes have come into play to foster this growth. For example, the European Payments Initiative (EPI), aims to create a Pan-European payment scheme to compete with Visa/Mastercard.

On average, contactless transactions made up 48% of all payment transactions made at points of sale (POS) each month in Europe, according to Statista. However, it can be very diverse since 83% of consumers used contactless in Poland in 2018, whereas only 4% used contactless in Belgium that same year.

Despite being a highly banked population in the US, younger generations who grew up with digital products are more likely to use digital wallets, APMs, BNPL, etc than traditional banking services. In the US, more Millennials (46%) were eager to pay with digital and mobile wallets when shopping online than Baby Boomers (22%), according to a Statista Survey in 2020. We predict North America is on the brink of massive shift towards alternatives.

What has been the biggest breakthrough in payments today?

Kamran

Open banking has certainly been one of the biggest breakthroughs recently. It first came to prominence in 2013 as part of the European Commission's PSD2 proposal and it is now estimated that by September 2023, 60% of the UK population will be using the technology.

Many banks in the US have also started collaborating with fintechs like PayPal and Intuit. American regulators have taken a more relaxed approach compared to Europe. This is allowing the industry to move more quickly towards standardisation and various initiatives, such as the Financial Data Exchange, aim to standardise open banking practices.

Peter

Instant payments. Whether it’s peer-to-peer or business-to-business, transactions that once took 2-3 business days are now happening within seconds.

How do you see the world of payments changing? What will be the next big thing in payments?

Kamran

With the global payments landscape constantly evolving, we’ll see customers shift away from cards and gravitate more towards APMs, such as in-store contactless payments, open banking, biometrics, AI & ML, and hyper-personalisation. Cryptocurrencies may also become the norm for payments as it has gradually started to catch up with regulation.

With contactless transactions on the rise, digital wallets and QR-based options will become more prominent in physical stores. In-store contactless payments via mobile wallet exceeded cash or card payments for the first time globally in 2020 and are expected to account for around 1-in-3 in-store transactions by 2024.

Peter

First, one-click payments within built authentication without codes or other steps. As a payment service provider for online ecommerce platforms, we are seeing payments become more personalised for retailers. As stores implement AI, customers will be able to log into their online shopping account and be presented with a range of recommendations based on their personal preferences and previous purchases. This enhanced payment experience will not only meet new consumer expectations but give them a competitive edge over other retailers.

Card or APMs?

Kamran

Both payment methods have advantages. Although traditional card payments have been the safer option in the past, merchants need to be prepared for the increasing uptake in APMs. Since we provide payment solutions for new innovative technologies, we will embrace the surge in APMs and embed them in our current solution.

The use of cards or APMs also differs in different markets. Whilst cards remain the most mainstream form of payments in North America as previously discussed, APMs are already firmly established in Europe. We may even see a gradual shift towards APMs in the US among much younger generations. As we expand into the US further, we will be focusing on market expansion with our new cutting-edge features and tailored products.

As APMs become more significant across the globe, we will be at the forefront of this by keeping ahead of the payments with the use of these innovative technologies and new solutions that create a first-class payment experience for its customers. Our POS solutions will support the stores of the future!

Peter

While cards are still mainstream globally, there is an abundance of opportunities that APMs will bring. As markets become increasingly global and more consumers demand faster payments, APMs can meet their needs, if implemented correctly.

APMs are highly advantageous since they offer more choice for customers. Whether it is BNPL, digital wallets, customers can pay with their desired method. Moreover, in an increasingly connected global economy, merchants are now able to reach new customers and markets which were not available through traditional card acquirers. Other advantages include increased conversion rates and reduced payments in friction. In all, there are several advantages in card payments and where markets or consumers have no access to cards, APMs fulfils those needs.