1

Global AcquiringGeoffrey Barraclough

Head of Proposition - InternationalPayments Knowledge Forum - October 2016

Network Value

* Direct operations in 7 countries with processing capabilities in 50 countries.

EVO Snapshot

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Global Player

Countries

Currencies Authorized

Transactions Processed

Settled Volume

Merchants Served

InternationalNorth America

64% 36%

Revenue Mix 2016

50

>130

>1.5B

~$80B

437,000

Top 4

2012 2015

Markets USA / Canada 50

Volume $30b $58b*Merchant outlets served 212,000 534,000*

International revenue 6% 36%Transaction currencies 2 >130

Employees 500 1,488

Office locations 3 14

Expanding Internationally

3Source: Nielson

Strong Global Presence

4

#6USA

Office locations

Headquarters Direct market presence

Pan European acquiring license

#4Spain NEWIreland #5Europe #1Poland #2Mexico

Every market is different

5

0 50 100 150 200 250 3000

2000

4000

6000

8000

10000

12000

Belgium

Bulgaria

Czech

Denmark

Germany

Estonia

Ireland

Greece

Spain

France

CroatiaItalyCyprus

LatviaLithuania

LuxembourgHungary

Malta

Netherlands

AustriaPoland

Portual

Romania

SloveniaSlovakia

Finland

Sweden

UK

Usage of payment cards in the EU (2013)Size of bubble indicates relative value of total payment card transactions at points of

sale

Average number of transactions per head (2013)

Aver

age

num

ber o

f tra

nsac

tions

per

poi

nt o

f sal

e pa

ymen

t ter

min

al (0

00)

The world’s a big place and shopper behaviour is different in each country

6Source: PWC Total Retail Global Report

62%

24%

CHINA CHILE

I shop online because it’s

cheap

63%

36%

CHINA CHILE

I shop online because it’s convenient

Cross-border e-commerce set to grow

Between 2014 and 2020

• Xborder share of e-commerce grows from 15% to 29%

• Shoppers who buy x-border grow from

25% to 45%

7Source: Accenture

International expansion still attractive for store-based retail too

8

One week’s headlines…

There are a variety of strategies

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Retailers can grow internationally or online or bothD

omes

tic

Inte

rnat

iona

l

Pure Online Store focused

Gra

phic

Foo

tpri

nt

Three use cases

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Domestic Multi-national store focused

X-border e-commerce

LandscapeDomestic technology deploymentSimple payment needsTypically buys from bank

International technology deploymentUses integrators for standardized solutionsStrong HQ functions

Strong export focusLocalisation of web content

Payments Challenges PCI

Domestic debitManaging multiple protocolsStandardising servicePCI

Managing dozens of APsAcceptance ratesFraudCost of x-border Interchange

Decision maker Finance Director or treasurer Treasurer / CIO Head of payments

Value of Global Acquirers? None Yes – economies of scale

Yes – offer domestic Interchange, higher authorisation levels

Retailer needs

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Domestic Multi-national POS based X-border e-commerce

Terminal Anything that works Standardised international deployment (reality may be rather different) n/a

Payment acceptance

Local debit + international schemes Local debit + international schemes All relevant

VAS Market specific eg installments, DCC, TFS

Market specific eg installments + standard deployment of DCC, TFS n/a

Service Local languageTerminals – integrated to local market IT helpdesks in local languageSettlements – to HQ

To HQ teams in home langauge

Billing Local language Consolidated bill to HQ Single bill in local language

Management Information n/a Comprehensive reporting suite,

configurable by country/site/hierarchyComprehensive reporting suite

SettlementTo local bank account in local currency according to local convention (T+?)

Single settlement to HQ bank account in home currency (T+?)

Single settlement to HQ bank account in home currency (T+?)

The value propositionSave money, improve operational efficiency and offer better customer service by implementing a single payment service for all your international operations

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• Save up to €500 pa per POS

• Buy in bulk• Rationalise supplier

contracts• Consolidate cash

management• Open new markets

faster

• one ePOS interface

• one payment terminal

• one PSP

• one telecom supplier

• one acquirer

How to become a global acquirer

• Get a Visa/MasterCard licence

• Get a Payment Institution licence (or equivalent)

• Join local debit scheme (directly or via partnership)

• Open local bank account

• Settle in local currency (at reasonable cost) which may involve joining local settlement scheme

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Do this for each country in the world

• Certify local terminal and protocols, recruit logistics partner

• Establish local service centre

• Write (and keep updated) local contracts in local law

The EEA is a single market…. but

European Visa/MCI licences cover all EEA

PI licences can be passported to all countries

SEPA payments make T+1 possible for eurozone 14

• Local debit schemes persist• Visa/MCI regions are not contiguous• Visa/MCI charge extra fees for new markets• Not all European countries are in the EEA - Monaco,

San Marino, Channel Islands etc• Local bank accounts needed to make T+1 elsewhere• Multiple terminal protocols persist• Local contracts needed de facto if not de jure• 14 currencies & 24 languages used in the EEA

Brexit’s not making things

easier….

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Buy vs build - strategies to become a global acquirer

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Strategy Detail For Against

Build Set up capability from scratch No legacy systems

High risk – investment is made before customers signed.Getting to scale is difficult - proposition likely to be only attractive to x-border merchants

PartnerRefer transactions to a local acquirer in return for commission

Low riskQuick No differentiation

Risk of disintermediation

Acquisition Buy a local acquiring business

Brings all capability you need in a single transactionGives scale in-market

Slow and only addresses one market at a timeLikely to bring legacy technology