Making Progress Pay

01 January 2013

Jim Deignan doesn’t see his children ever writing a cheque. He’s not sure that they’ll visit a bank on a high street either.

Technology, and the drive from consumers to pay for goods and services in a convenient way, is on course to make such things feel archaic. ”Consumers today are used to managing technology through social media channels and interacting online, and that’s bound to have an impact on how future generations transact in years to come. They won’t want to go into a bank”, he says.

Deignan’s insight on changing consumers’ behaviour is worth noting. As Managing Director of Payzone since 2002, it’s his job to keep in tune with how consumers want to pay for goods and services. “Consumer appetite to transact on their terms is a fundamental drive r of our business”, he explains.

The demand for fast-moving payment technology is coming from organisations as well, he says. “There is a huge focus on efficiency, innovation and cost effectiveness, as well as substantial effort to lower costs of transacting in the market coming from corporate Ireland – at the same time, it is widely understood that the consumer has to be at the centre of any solution. There’s no point in having all of those things in place and then disenfranchising customers”, he observes. “Consumers themselves are demanding convenience; they’re demanding easier access to solutions.”

AT THE CUTTING EDGE

Payzone itself has experienced impressive growth in its 13 year history, all against the backdrop of rapid technological development. The company has a foothold in six European countries – Ireland, THE UK, Germany, Sweden, Greece and Romania - and a network of 66,000 retailer point of sale units. Today, it processes 380 million transactions of a year worldwide, and a million transactions a week in Ireland alone. That number is growing as Payzone adds new service and gains more traction with consumers.

Deignan is able to shed light on the early history of the company. “We originated as a telecoms business and were involved in maintenance and support for credit and terminal infrastructure in the market”, he explains. “We were involved in maintaining credit card terminals on behalf of the banks and we identified an opportunity at that stage: that the same infrastructure could be used to provide other services. Obviously, we were restrained from doing that as it was the banks’ own infrastructure we were maintaining. So at that stage, we basically started building our own platforms. We put in our own terminals and we built technology so we could switch these transactions between various companies.”

A SUITE OF SOLUTIONS

The core business in the early days, of course, was facilitating mobile phone top up payments. “We provided a more cost effective and secure solution for mobile operators to access and reach their consumers predominately across our retail network at the time”, Deignan recalls. “If anything, we drove the mobile phone payment market across Europe with our electronic solution – we were very much to the fore of that. The last number of years, though, has seen us focus on more of the branded payment networks, where we’re not just depending on the mobile phone top-up market. Today, we have a suite of services so, over the last three to five years, we’ve really become a service company. Our focus has been on deepening the level of service we offer through market range and variety”, he continues. “I have a team of people focused on the telecoms’ industry, on the transport industry, on the utility space and on the financial services sector – they’re all dealing with multiple clients who are seeking opportunities to add value to their payment solutions.”

One of the first steps after cracking the pre-pay mobile market, of course, was facilitating easy payment of bills at retail stores. “We saw an opportunity to use the same footprint, the same relationship between retail and customers to provide other services, so we incorporated utility bills into our systems. Now, consumers can scan and pay for their utility bills at the point of sale”, says Deignan. “We take care of the scanning technology so, when a bill is scanned, the technology behind knows what to do. It routes payment to the final point destination, so it comes into our post here and we forward that to the utility provider. “

More recently, the company has been involved in other innovative ways to make life easier for consumers and organisations. One of the most exciting areas of growth, Deignan believes, is the parking payment by phone. “The parking of today is based on mobile phone payment.  It pre-registers your credit or debit card so when you park your car in any of the 35,000 on-street spaces in Dublin, you can pay for it using your mobile phone”, he explains. “Dublin City Council has a lot of parking metres on the street and by using this technology they’re able to reduce the cost associated with planting, maintaining and securing them, while at the same time provide a better customer experience. It’s a marriage between the availability of technology and the capacity that consumers have to operate under new terms, because consumers find it much more convenient and much more accessible. We can text to let them know that their parking is about to run out so they don’t have to run to a meter: they can top up remotely and, from the City Council’s perspective, the cost is markedly lower. It’s a win-win situation.”

Another solution to removing cash from the equation is the long-awaited Leap Card, which gives Dublin commuters the opportunity to manage their travel costs more efficiently. “We’re reducing the amount of cash used on buses with the Leap Card, so there’s no cash required”, Deignan says. “There are fantastic security implications: the reconciliation process, the management of all that cash, that’s going to disappear over the next few years. One can expect that, as technology moves on, buses won’t need to accept cash at all – it can all be moved electronically”, he believes. In essence Payzone’s growth has come from satisfying a hunger for more convenient payment methods – and the willingness of organisations to facilitate this. Interestingly, both the private sector and public bodies have been participants in the process.

SURVIVING TOUGH TIMES

Happily, the enthusiasm to create a win-win for consumers and organisations alike has been stymied by the difficult economic climate. “We have a very robust business”, Deignan explains. “I’m not saying that all our services are recession proof, because they’re not – mobile top-ups, for example, have declined.  But with the addition of further services, we have replaced that. An ability to pay comes more into focus for utility companies, so demand for our services has increased. Also, pre-payment becomes more available as a solution. Many utility companies have had situations where customers have had their electricity or gas switched off because they haven’t been able to pay their bill at the end of the month. But what’s happening now is a transition where many consumers become pre-pay customers, coming in each week and paying through the Payzone network”, he reveals.

“I wouldn’t say the recession is good for our business because it’s not good for anybody in the market. But in many ways, recession crystallises and makes more relevant the consumer’s ability to pay. It brings into focus the alternative channels that are there, and goes back to convenience. If somebody runs out of electricity or gas on a Friday evening for example, they need to have a network available. Convenience and the ability to transact comes back into focus then”, notes Deignan.

NEW OPPORTUNITIES

Even with an air of caution, it’s no wonder that Payzone sees growth and expansion opportunities and is keen to take them. Working in the smaller Irish markets also benefit for trialling new services, Deignan explains. “Ireland is almost like the sandbox of Europe: you can build things up and if they don’t work, you can break them down again relatively inexpensively.” The company’s key challenge, he notes, is to continue innovating and reacting to the technological advancements appropriately and promptly.

In the short term, Payzone has targeted scaling up and extending its parking solution. “There’s no reason why that product couldn’t reach fuller communities in Ireland – it generates significant revenue for local authorities too”, Deignan notes. “We see it as a significant opportunity.”

Looking to the future, Payzone continues to invest and develop new products and payment methods which will support its network in meeting customer needs. The Payzone technology is ideally placed to cost effectively rollout a broader range of payment collection solutions for both existing and new charges/ taxes in the public sector, including Motor Tax, TV Licenses, Fines, Household Charges and Water Charges when they come in as expected. Payzone claims its three-way services using a combination of the retail outlets, online and mobile, can halve the cost of collecting payments for local authorities and government bodies. As a company dedicated to embracing opportunities, it’s clear that Payzone will have plenty to do for the foreseeable future.

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