E-commerce is just a sliver of the Polish payments market, but that's likely to change quickly, and Raiffeisen Polbank is partnering with EVO Payments International to form a new company to compete for merchant clients as development cycles shorten.
Raiffeisen Polbank is transferring its existing services business into a company that will be managed by EVO Payments International once the deal is finalized in the third quarter.
"Mobile payments is getting more popular, and we're thinking of the level of infrastructure readiness for mobile acceptance, which should grow in the future due to its convenience to consumers," said Katarzyna Zubrzycka, the head of transaction banking and capital markets sales for the Warsaw-based Raiffeisen Polbank.
Zubrzycka is anticipating fast uptake for mobile and other payments technology given the addressable market in Poland. There are more than 3,200 merchants equipped for e-commerce, making up only 1.5% of non-cash payments, according to the bank. There are 400,000 merchant terminals in the country, and about 75% accept contactless and mobile payments. Recent decreases in interchange fees should boost card acceptance among merchants, and also increase mobile contactless payments, Zubrzycka said.
The European Payments Council is also addressing mobile and electronic commerce, and these moves should encourage additional action from merchants, while creating compliance challenges at the same time, Zubrzycka said.
"There are many EU initiatives which aim to standardize and regulate more issues in regard to the financial arena," Zubrzycka said. "Obviously the banking industry is strictly scrutinized. New legislation requires continued investment in IT systems, and partnering with EVO will reduce our internal operational complexity in acquiring."
The bank and EVO will also work together on joint projects, said Lukasz Januszewski, a board member at Raiffeisen Polbank. "[The partnership] brings us a unique experience in the acquiring area and gives opportunities to implement product innovations that can be bundled with our banking products in order to deliver customers attractive benefits of the joint offer," Januszewski said.
The bank expects EVO's experience in acquiring and payment services in North America and Europe will help it keep abreast of changes in card acceptance methods and alternative payment options.
"There's a lot of changes for banks in Europe, where there are a lot of competing priorities among card originators, so merchant services doesn't always get the investment that it needs to make sure the bank stays current with the times," said Kevin Hodges, the chief financial officer at the Melville, N.Y.-based EVO.
In Europe, EVO has worked with banks such as Banco Popular in Spain, as well as financial institutions in Ireland and PKO BP, a large bank in Poland.
EVO tracks new merchant and payments technology through its own research and participation on standards and technology boards and committees. EVO has recently added technology to serve direct response merchants, for example, and has also partnered with Ingenico's Roam to build mobile point of sale capabilities
"There are a lot of unknowns now, and rather than the bank having to think about new POS technology or Apple Pay or EMV or the next flavor of EMV, we take care of that," Hodges said.
As part of the new company, EVO will have a support and sales team on the ground in Poland, and the bank will refer merchants to EVO. EVO and Raiffeisen Polbank did not reveal the name of the company they are creating. It will be majority-owned by EVO, though both partners will contribute to the management by working through a steering committee.
EVO also did not say if the specific Raiffeisen Polbank subsidiary business model or structure was new, though EVO often makes an investment in the merchant acquiring portfolios of the banks that it works with.
Providing traditional card acquiring services to merchants is often no longer enough in the current payments environment, said Zilvinas Bareisis, a senior analyst at Celent.
Merchants want to operate across channels and accept a variety of payment methods, he said, and they may want help with accounting, customer or inventory management.
"As a result, traditional bank acquirers often seek partnerships in order to provide broader merchant services," Bareisis said. "For partners, such as EVO, these deals give access to new clients and distribution capabilities."