«This is a permanent process of transformation»

An interview with Dr. Markus Braun, CEO of Wirecard AG, on the opportunities which connected and data-driven commerce offers retailers.

You often talk about how Wirecard will respond to and drive forward
changes in the retail and payments space. What will the new world of shopping and payment look like?
Necessary purchases will increasingly move to virtual space. At the same time, high-street stores will offer consumers completely new value. Offline shops can be turned into showrooms to display select items in the product range, introduce items that need further explanation, and of course showcase the latest innovations.

Products do not necessarily need to be in stock at the shop at all, because retailers can order a whole range of products digitally via a computer or tablet. This represents the Endless Aisle concept which the internet facilitates. Even if a high-street stores retailer continues to position itself in the market for necessary purchases, it can turn the store into a self-service operation by reversing the checkout process. In doing so, the retailer becomes more cost-effective and productive. Consumers expect quick delivery. With shops as logistics centres, deliveries can be made locally much faster than they can by large marketplaces, for example. This gives retailers a major advantage over large marketplaces, which have to build a logistics centre if they want to deliver everywhere within an hour. Retailers that have big offline footprints can do so much more easily.

So the store itself takes on a whole new meaning?
With the relevant digisation technologies, it is possible to develop an integrated omni-channel logistics concept. This enables retailers to easily order products digitally in store as part of the Endless Aisle concept or to control the digital ordering process so that logistics processes can be handled efficiently from the store itself.

This full integration in every area is what we understand the phrase connected POS (point-of-sale) to mean. It enables retailers to reposition themselves and decide which part of the product range they should offer online and which part in-store.

Will reimagining the store also change retailers’ understanding of consumers?
Nowadays, consumers expect high-street shops to offer them real value added in comparison with online shops. If they don’t get it, they will end up shopping online more and more. Consumers want to have a holistic experience. They get this from stores that are experiential and offer something that isn’t available online. Shopping out of pure necessity only makes sense if consumers are able to get products they want cheaper or much faster offline.

Wirecard is known for helping retailers sell successfully online. But it’s getting harder to differentiate between online and offline. How does Wirecard bring the advantages of the internet to high-street retailers?
Today, high-street retailers enjoy greater strategic flexibility on account of the possibilities offered by the internet. They can capture consumer purchase behaviour in real time across every channel and then offer certain products that feed into real-time reporting systems or pricing.

These days, we are able to help retailers with the digitisation of their high-street stores without a great deal of disruption. One example of this is the Wirecard Connector, which makes it possible to accept Alipay or alternative payment solutions at the point of sale. It can also be used to offer data-driven value in loyalty and couponing and fully integrate ePOS into the online sales channel. In doing so, it’s important that retailers set up their product management, logistics and entire product catalogue for connected commerce. Merchants are therefore able to offer consumers real value added, for example because consumers buy online and can pick up the products they ordered soon afterwards in-store. If the desired products are not already in stock, the merchant can order one for the customer immediately via a tablet as part of the Endless Aisle concept. But retailers only reap the rewards of connected commerce across all sales channels when they restructure the entire ERP and logistics system, not just the front-end.

Wirecard can help retailers along this entire journey. We can show them what is possible in the payments space and how they can use data. But they have to reconfigure their own logistics and that is often the bottleneck. It’s not easy for large retailers to replace their whole infrastructure as well as their logistics process. These are massive changes. This is why we offer to work with retailers, whatever stage they are at, and guide them at every step of this journey and at a pace determined by them to reach their full potential.

«We create a vision together with the retailer and accompany them every step of the way to achieve this aim. We offer them fully integrated solutions across all channels.»

How can Wirecard help retailers master these changes successfully?
We gradually build what we call data-driven retail on top of the fully integrated sales channel. It presents the biggest challenge and also the biggest opportunity. We offer high-street retailers true added value across all channels, since we’re able to provide everything from a single element to a fully integrated payment solution. We also provide data that can inform completely new services.

To what extent are we talking about global trends, and are there / will there continue to be regional differences?
This is a global trend. Generally speaking, digital innovations are playing an important role in emerging markets. Because the process of digitisation started much later there, intermediary steps are often skipped over, unlike in developed countries.

«We work with retailers, whatever stage they are at, and guide them at every step of this journey.»

With all the excitement about big data, there are also concerns about
what it means for customer and payment data protection and other information shared by shoppers. How do you deal with these risks in the payments space in particular?
Whenever internet technology is used, regardless of sector, the relevant protective measures are necessary. When you’re dealing with big data or data-driven retail, however, you also have to make sure that the rights of consumers are considered and protected in the legitimate process of collecting data. As a specialist, we understand the need to deal with data professionally, if only because we have to comply with all regulatory requirements. We know which data we can use and which data we cannot use, or more precisely, which data we have to abstract before using. That means removing any links to a specific person. It’s one of the complex steps that retailers can let us deal with. This is our area of expertise and we can implement the technology in such a way that individual employees don’t have to make a decision about whether to use data or not. We use algorithms to store data according to clear rules that are based on data protection laws. All our solutions comply with these requirements. To paint a picture: we know exactly what’s allowed on the pitch, and we use the entire pitch. Due to the amount of data available to us as payment experts, we can define rules and logics that give retailers an enormous advantage. Much of this data is abstract and therefore statistically interesting. We are allowed to use almost all of it. As an independent service provider with more than 27,000 customers and 14 years of experience in the online sector, we have a completely different level of expertise than the average retailer, including major ones. We are already using real-time data in this space in order to protect retailers and consumers. Much of what we offer in the data-driven retail space is just an evolution of what we have been doing in risk management to prevent fraud for years. Now we are also using the data for sales and more positive aspects of our business.

27,000 customers and 14 years of experience in the online sector

Looking to Wirecard’s future: You have set a goal to grow faster than
the market in the next three years. What strengths does Wirecard already have that will support this growth?
Wirecard is one of the strongest companies in the electronic payments space. What we can achieve in the next ten years will outstrip what we have achieved in the past. We are growing ahead of the market. Our strategy, which was based on providing value from very early on, has enabled our success. Today we cover the entire payments ecosystem, from issuing through to acquiring, as well as value-added services. Data-driven services can make the payment process more relevant. Retailers wanting to digitise their high-street stores can outsource the process to us and get it done faster. From a retailer’s perspective, payments are often not a differentiator. When a payment goes wrong, consumers respond negatively. When it goes right, consumers take it for granted. This makes it ideal for outsourcing. We enable merchants to digitise much more quickly, because we can offer them everything from a single source, offline, online and in every country. That’s why we have a good opportunity to continue profiting from this sector.

«The digitisation trend is only just beginning. This is why we are expecting that the next ten years will see growth which will far exceed that which we have observed so far.»

Where will the opportunities and challenges potentially lie in three years’ time?
All of these topics will be trends for the next ten years: conversion from point-of-sale to ePOS, self-checkout in the POS space, fully integrated sales channels and logistics processes. These topics won’t just be important for the next three years. The transformation process will last well into the 2020s. Only then will we be satisfied, having reached a comparable level to the ERP of today. Just 15% of all global transactions are carried out electronically. The digitisation trend is only just beginning. This is why we are expecting that the next ten years will see growth which will far exceed that which we have observed so far. But even so, you simply have to look at how high the share of cash transactions still is. 75% of the world’s transactions are still made in cash. In the USA, for instance, cash flow is 45%. Imagine how massive that growth will be based on an economy growing at a yearly rate of between 2% and 3%. That means the entire market for electronic payments could triple in the coming years.