The digital transformation of our society is accelerating and payments services are playing an increasingly important role, directly enabling that evolution. The dynamism of the payments landscape in Luxembourg reflects the strength of the country as a leading global financial center and a key player within the European single market. The number of payment services providers established in Luxembourg continues to grow, representing a range of different technologies, business models and positioning along the payments value chain.
In this context, the ABBL Payments Cluster is a platform for its members to discuss payments services and instruments, to share their experience of the evolution of this highly dynamic market and to exchange on critical policy issues underlying growth, innovation and competition. It lays the foundations for a unique collaboration between banks, payment institutions, electronic money institutions, support PSF, payment infrastructure providers, firms of lawyers and consultants, reflecting the diversity of the ecosystem in Luxembourg which makes its strength.
We spoke to Claire Alexandre, Head of Government Relations, EMEA with PayPal Luxembourg and Chair of the ABBL Payments Cluster, and to Serge Wagener, Vice President & Head of Business Unit Payments with Spuerkeess and Vice-Chair of the ABBL Payments Cluster about the particular challenges of 2020 and beyond, and their key findings during the health pandemic.
How did your organisation respond to the pandemic?
Claire ALEXANDRE: “PayPal is a digital payments company, established in Luxembourg in 2007. We have a Luxembourg banking license, which we use to provide services to both consumers and merchants across the EEA through passporting. We facilitate digital payments for more than 377 million customers globally. We at PayPal reacted quickly and enabled 99% of our global workforce to work remotely. It is fair to say that we had a head start on working from home. Many employees had already been working digitally before, collaborating with teams across different time zones around the world. This meant that they were able to switch to working from home very quickly and smoothly.
However, working from home full-time is not the same as working from home now and then. We paid special attention to employee well-being, from advice on office furniture to virtual yoga sessions and regular team meetings, intended to help with the transition to working from home and the challenges that come with it. Throughout the first lockdown, the company conducted a regular wellness survey, to monitor employee wellbeing and take actions where necessary. In December, PayPal organized a virtual end of year party with concerts and experiences for all employees around the world, no matter where they are based. Other benefits that the company has introduced to address the wellbeing of its employees include crisis leave, which is the opportunity to take additional days off to take care of children or family members, and global wellness days. The later are fixed days where the whole company enjoys a day off, which is a great way to get away from your desk and to recharge.”
Serge WAGENER: “Spuerkeess is a bank with a large branch network and therefore a major effort had to be made to welcome customers safely and in compliance with health regulations. Via opening and meeting times, the development of reception areas, among other things. We have also implemented new processes to be able to exchange electronic documents with our customers, instead of paper documents. But these measures relate more to our banking services in general. In terms of payment services, we have seen a strong increase in subscriptions to digital channels and Luxtrust certificates for authentication and electronic signature.”
How did you help clients continue to operate?
Claire ALEXANDRE: “Borders between online and offline commerce were already blurring before the advent of the pandemic, but since March 2020, this overlap has increased exponentially. As the confinement unfolded, we at PayPal began offering small businesses the possibility to receive payments using QR codes, a measure put together very quickly to solve an immediate problem. We also focused on ensuring they can access the money in their PayPal account instantly, waiving certain fees to increase cash flow, increasing protections against refunds and chargebacks, and allowing our most affected small business customers to defer repayments on business loans.
Many businesses were already operating online. Nevertheless, the pandemic also led to a very large number of small businesses moving their whole operation online, which is a big change. We tried to facilitate this by simplifying the onboarding process and providing extra support to make the transition easier for them.”
Serge WAGENER: “Payment services are a core business for society and it is only “normal” for them to be available 24/7. This is why systems are built redundantly to remain operational even in the event of major incidents. The pandemic required organisational adjustments to surveillance teams, but that was all. We haven’t seen a particular increase in fraud attempts, which doesn’t mean the risk has decreased. But the implementation of new security measures such as 3Dsecure for remote card payment, the implementation of more reliable means of authentication such as LuxTrust Mobile provide better protection against fraud.
What particular trends have you identified?
Claire ALEXANDRE: “Customer behaviour has of course changed. Consumers who were already used to order online have increased their take-up of online services, but more importantly, a large part of the population who had never ordered anything online before, changed their habits and began to use e-commerce. This was forced behaviour because of the lockdown, but we expect these habits to remain. We have noted a particular increase in the 50+ age bracket, who have a high purchasing power, and are very demanding in terms of security, simplicity and service.
Cybersecurity is a real issue. There was definitely increased activity from bad actors trying to take advantage of vulnerabilities, with many instances of cyberattacks, from email scams to price gouging. Fraud prevention is an area where at PayPal are constantly innovating and also have many years of experience. This has allowed us to stay ahead. Protection of both the buyer and the seller has always been a key element of our services, as our business is built on trust.”
Serge WAGENER: “As a result of the pandemic, the appetite for remote / contactless services has increased dramatically. Out of necessity to respect social distancing or avoid contact, but also through habits that change very quickly. Modern and practical solutions are there and it is the first time you use them that you notice them. We are seeing an interest from our customers in contactless payment methods, whether it is the “contactless” card, Apple Pay or Digicash by Payconiq. The pandemic is a real boost to get customers to try something new.”
Did you suffer any disruption to services at any time during the last year?
Claire ALEXANDRE: “Not really. A survey across all members of the ABBL Payments Cluster reported only minor glitches, but overall, transactions continued to be settled normally and without incident.”