Transparency in the Payments Value Chain | Nexi Group, Torus, DNA Payments | The Paytech Show #83

Unlocking transparency in the payments value chain.

The Paytech Show is back and this time Kirill Lisitsyn from Torus, Nurlan Zhagiparov from DNA Payments and Tommaso Ulissi from Nexi Group discuss the transparency of fees in the payments value chain, and how unique local payment methods are changing the way we pay.

Rising processing costs and regulatory pressures mean things are tough for merchants and acquirers alike. Innovative, omnichannel solutions and technology-driven efficiency are needed to meet the demand. Find out how these industry leaders are approaching the challenge.

Complex Card Transactions and Fee Transparency

Kirill Lisitsyn, co-founder and CEO of Torus, believes there is a need for greater transparency in card transaction fees. It’s a significant issue for both payment players and merchants and isn’t always touched upon.

As cashless payments grow, merchants face increased costs from processing fees, primarily driven by interchange and scheme fees, which are often opaque. The UK’s payment services regulator found Mastercard and Visa increased their scheme and processing fees by more than 30% over the past five years. Lisitsyn explains that merchants struggle to understand these fees, which are passed along the value chain with added margins, often resulting in confusion or distrust. This lack of clarity strains relationships between merchants and acquirers, as merchants suspect potential overcharging while acquirers grapple with unpredictable fees from card schemes.

The booming card payment industry adds another layer of complexity. Although the market sees stable double-digit growth, competition remains fierce, particularly in e-commerce, leading to squeezed margins. To stay profitable, acquirers must finely tune their understanding of revenue and cost drivers. However, limited control over these costs—particularly scheme fees—makes it challenging. Tools like those Torus offers aim to provide payment companies with insights to better predict, analyze, and optimize these fees, ultimately helping them deliver fair pricing and build stronger partnerships with merchants.

Challenges of Supporting European Merchants

Nurlan Zhagiparov, co-founder of DNA Payments, adds further context to the hurdles European merchants face, particularly around funding. He points out that many merchants also struggle to access capital due to market fluctuations and rising borrowing costs, pushing payments companies to consider incorporating lending solutions. By facilitating lending, payment firms can not only enhance merchant support but also diversify their offerings in a competitive market.

Zhagiparov also emphasizes the importance of operational efficiency in an environment of rising labor costs and demand for multiple payment methods. To stay viable, payment providers must streamline operations, reduce costs, and support an increasingly varied range of payment options to meet European merchants’ needs. He observes that more players are adopting omnichannel solutions—platforms that seamlessly combine in-store and online payment capabilities. Such solutions provide merchants with the flexibility they need while enabling payment providers to keep costs down.

Adapting To The Local Market

Tommaso Ulissi, Group Head of Strategy and Transformation at Nexi Group, highlights the significance of adapting to local preferences. Each market presents unique payment methods, regulatory demands, and customer expectations, all of which must be factored into a payment provider’s strategy. Local adaptation not only supports compliance but also resonates with merchants’ needs for effective, relevant payment solutions, helping them succeed in their own markets.

Alternative Payment Methods (APMs) continue to grow, spurred on by global and post-pandemic shifts. However, despite predictions about the “death of cards,” Lisitsyn argues that cards remain dominant in most markets. While APMs have seen success, particularly by capturing a share of cash transactions, they have not yet outpaced card usage. This ongoing evolution of payment preferences means that while payment providers must keep pace with trends, cards will likely continue to play a central role.

Regulatory Pressures and Market Consolidation

The other major mover is the tightening of regulatory environments. Zhagiparov notes that Open Banking initiatives are increasingly becoming a popular payment method. These regulations, along with market consolidation through mergers and acquisitions, are reshaping the payment landscape, offering cost savings and efficiency. He observes a clear shift from traditional banks to tech-driven payment providers. Many banks are divesting from payment processing to focus on core banking services, opening up opportunities for tech-forward companies to step in with modern, often cloud-based, solutions.

Merchants, for their part, are urged to remain vigilant about payment pricing, advocating for transparency to avoid hidden costs and complex pricing structures. This transparency push is in line with broader industry trends, where merchants are increasingly demanding straightforward and competitive solutions from their providers.

Enhancing Innovation Across the Payment Value Chain

Of course, there’s rarely a one size fits all solution. Due to the multifaceted nature of the ecosystem, no single player can serve all needs. From terminal management and authentication to routing and processing, the chain is highly segmented, necessitating a cooperative approach to innovation. For merchants to benefit, innovation must be scalable and tailored to practical use, with solutions designed to enhance conversion rates and make transactions smoother. By delivering cutting-edge solutions across the value chain, providers can add value and ensure fair remuneration for each participant.

Lisitsyn further discusses how Torus’s globally scalable platform integrates with card scheme data, offering tailored insights for issuers, acquirers, and e-commerce acquirers alike. The approach aims to empower payment players to expand without sacrificing focus, supporting their growth while addressing their specific challenges in various regions.

Watch the episode to find out more, and stay tuned to further episodes of The Paytech Show on our website.