Six Payment Services Case Study Solution
Introduction:
This case depicts the disruptive impact of modernization on a well-known leading processing company for payments based in Europe with the brand name Six Payment Services incorporated in 2001 which is basically a subsidiary of Six Group. The parent company is mainly dealing in payment transactions, financial information, trading and securities services. Moreover, Six Payment Services has a wide geographical presence capturing customers in 33 counties by building offices in 13 locations and employing around more than 1300 people as its employees.
The company has a diverse product line by offering different products like acquiring, commercial acquiring and processing issued such as paying through electronic mediums and products enabling options by providing value-added services and terminal solutions related to the Point of Sales(POS)(. The performance of the company is evaluated for the year 2013 and it shows that the company has the workforce which works full time and is around 1320 people.The major revenues of the company are generated through digital mediums. The company has processed payments through SIX amounting to around CHF 50,649 million, whereas it is relatively very low for the processing of transactions through credit card or debit card amounting to around CHF 2,981 million.
The operating profit of the company in the year 2013 is around 743.6 million CHF which is around 15% higher than the last year’s operating profit. Moreover, if we analyze the Earnings before Interest and Tax (EBIT) of the year 2013, it is around 89.6 million CHF which shows ahuge decline in the profits of the company.
Overview of the traditional European Payment Industry:
The European payment industry has the largest segment of paying through cards in the market and it shows the statistics by offering around two trillion euros out of which only 738 million cards have been used for the payment, which constitutes around card transactions of 40 billion. Average value per transaction spent is around 50 euros per card because the population is around 500 million people which spends almost 1.5 transactions on average from their cards after taking the average of all the spending through cards divided by the population of Europe.
The transaction through the card contains fees charged for the facilitation of the transaction and the arrangement was carried forward among issuer, the card company, the acquirer and processors. They charge fees based on different factors such as the type of the card (VISA, MASTER CARD, UNION PAY, etc.), a country of origin, mode of business either purchasing from the shop or through e-commerce and the last factor which is taken into consideration contains usage of the Point of Sales terminal category.
There are two major fees charged such as fees for interchanging the transactions and it forms around 65% of the merchant service charge. Moreover, MSC is charged on the debit card of around 1.6% in Poland and around 0.1% in Denmark, whereas the credit card transaction charges a commission of around 1.8% commission in Hungary and 0.5% in France.
Analysis:
Modern Payment Industry towards non-traditional payment card processing:
The digital disruption has emerged the payment card industry from traditional cards towards mobile network operators, internet companies and manufacturers of devices since 2014. This led to increase in the payments through electronic mediums and mobile which became famous with the acronyms e-payments and m-payments. Moreover, the major digital disruption from the innovation in payment methods occurred because of the new entrants.
Mobile networking operators which are also known as telecommunications through wireless started to increase in European market and received great acceptance and technological adaptation by the companies as well as the consumers because they provided value added services such as internet connections via mobile data, call forwarding, voice call, text messaging and voicemail options. The method of the revenue generation for the company was in the form of subscription of the monthly bill charged by the company from its users...................
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