FinTech Connects… with Rajesh Vohra, Director, Sarova Hotels
PSD2 is here, SCA is coming and the merchant will have to update tired process and practice as much as the financial institution. We hear a hotelier’s fears and forecasts for the shifting PayTech space.
This week we bring you an interview with Rajesh Vohra, Director of Sarova Hotels. A seasoned hotelier, Rajesh has been in the industry for over 25 years. During this time, he’s served as an active member in a number of industry organisations, covering finance, bookings and technology. Perhaps unusually then, for a man in his profession, Rajesh has kept a keen eye on the pace of PayTech change and development.
In this feature, Rajesh talks up the law of unintended consequence, predicts the proliferation of mobile wallets and laments legacy.
What are the key trends in merchant payments in 2019?
I can only really talk from a hospitality service provider’s point of view.
On the B2C side, we see that consumers are going to have a heightened expectation of their ability to use alternative payment methods as they move on from credit cards.
The impetus for this change will come from 2 stimuli. Firstly, an increasing number of consumers are carrying their electronic wallet in their pocket, on their smart phones. Using these to pay is no longer considered something exotic and awkward. Secondly, we believe that with the advent of PSD2 and in particular SCA, that there will be a slow migration away from use of credit cards by consumers to alternate payment methods.
It is already clear that using payment wallets is going to be a significantly lower friction method than the credit card since there will be no requirement to learn any new second factor authentication methods.
On B2B, the relentless march of the use of single use VCC is the key trend. This comes with its own set of challenges, but perhaps this is for another time and another chat.
Do you see checkout conversion taking a hit from Strong Customer Authentication?
Sadly we see this as an inevitable consequence of SCA. Especially in the short run as consumers, issuers and merchants struggle to understand what the new, post 14th September 2019; payment landscape is going to look like.
Systems are as yet not integrated, those that are seem largely untested, and, most importantly, the expectations and attitudes of issuers and regulators is still very unclear. We know that 3DS version 1 created a high degree of attrition in the booking process, with consumers abandoning baskets on a regular basis.
Without seeing how consumers are going to deal with 3DS version 2 merchants have to be concerned that history will repeat itself.
I do hope that I am being overly pessimistic.
Who will benefit from Two Factor Authentication?
With the advent of any new regulation or process there is always the law of unintended consequence so I am sure that there will be many winners and losers which we will find it difficult to envisage at this pre-PDS2 world.
As I said before, I think that the big winners will be alternate payment methods particularly phone based wallets like ApplePay and the like. Hopefully, issuers will also be winners by reducing the amount of fraudulent credit card use that they have to cover.
Perhaps the whole eco-system will win in the long run as the volume of fraud that has to be accounted for in the overall cost of credit card transactions will materially reduce, let’s see!
How do you see the use of alternative payments evolving – will they replace credit and debit cards?
Replace is a strong word. Certainly company credit cards, non EU credit cards, and virtual credit cards, all of which are not going to be subject to SCA, will remain as popular, with perhaps VCC getting an increased use as a way of circumventing PSD2 regulation.
But, as I say I am expecting for merchants to direct, already willing, consumers towards alternative payment instruments such as PayPal, AndroidPay, etc. as being the best way to minimise friction in online transactions.
All of this being said, there is a lot of behaviour to unlearn and this will not be a quick change.
What can solutions providers do to create a more seamless payments journey?
It really depends who you mean by “solutions providers”. In hospitality there is a lot of legacy technology.
Payments have been integrated into the process in a rather haphazard and non-standardised way. This has been acceptable over the years where the primary/only payment methods were either ledger, cash or credit card and changed very little.
As we all know, this methodology is no longer fit for purpose, and there are going to be growing pains to be overcome over the next few years.
I guess from a merchant’s point of view we would really like the hospitality payments industry to start to improve their communication and create some standardisation in the way information is passed up and down the chain.
How can the hospitality industry future proof their payment process?
A number of technology vendors are looking to create a middleware interface layer where the legacy technology only has to communicate with this one middleware piece. This middleware will in turn provide a set of APIs with which new and evolving payment solutions can communicate.
This one-to-one-to-many relationship will hopefully help in future proofing the industry. It is a method which the hospitality industry has used successfully for ARI (availability, rates and inventory) and reservation delivery over the last few decades and so is a proven formula.