Interview with Ghislaine Martin: Vice-President, responsible for the banking market, Atos Origin

Communications & Strategies, April, 2007 by Yves Gassot

C&S: What distinguishes the payment industry from the other sectors (administration, health, defence, telecoms, etc.) for which you work?

GM: First of all, this is a very important sector for Atos Origin. It accounts for 20% of the company's turnover and saw 15% growth in 2006. We are consequently the European leader in the field of payments, real estate values and in the outsourcing of financial services. Moreover, this area, which is deemed strategic, is heavily restricted by regulations.

C&S: In most countries, the payment industry is facing several challenges, including the substitution of payment cards for paper transactions, the mechanisms related to electronic commerce on the internet and via mobile telephones, the emergence of new players from outside the banking sector and the set-up of a trans-border payment infrastructure in Europe. Which of these transformations has the greatest impact on your company's activities?

GM: All of the changes that you mentioned have a major impact on our company's activities due to our entity Atoswordline (AWL), which is a channel for all of our expertise in the following areas: online services (ecommerce, web etc. and monetic/payment services. In this capacity, AWL recently acquired Banksys to become a pan-European player in the payments sector, and made this purchase in the context of SEPA.

C&S: What still strongly differentiates between national markets in the European payment industry? Do the major banks hold very different views on technological investment?

GM: The payment industry in Europe is differentiated by the ecosystem of each domestic model. The balance between revenues and investments is not identical in each market. This represents a first barrier to European standardisation on a product by product basis. Overall, technological investment in the payment industries has mainly been governed by regulatory and security requirements, leaving little room for innovation in terms of usage.

C&S: What kind of impact is the implementation of the EMV standard and the SEPA ("Single European Payments Area") expected to have? What are the opportunities / threats presented by SEPA to the payment card model? More generally, which regulations will affect your activities in the sector?

GM: The EVA standard has enabled the technological standardisation of card payments. SEPA should enable the standardisation of business models, which is a lot more difficult in terms of domestic situations. Each player sees what is to be lost, but is unable to envisage the gains to come. In view of this clinginess to existing products is concerned, we have to imagine this as a real opportunity to create new marketing concepts that will comply with SEPA. In more general terms, industrial operators are facing higher demands in terms of security, which are generating a direct added cost without directly benefiting users. We can nevertheless expect SEPA to lead to market concentration that should favour larger payment processors.

C&S: What are the specific problems you face with regard to growth in emerging markets?

GM: The emerging markets are generally pre-empted by local players, mainly banks or represented more globally by the international structures defined by VISA or Mastercard.

C&S: How have you helped to respond to security requirements related to the growth of eCommerce? How do you see the advantages of services like PayPal? Do they compete with the smart card in terms of payment and credit?

GM: We have been investing in remote payment for over a decade, which has enabled us to secure a fairly strong position in the French market, with a 54% market share. We have been PCI compliant since 2006 and have integrated the PayPal payment method into our internet payment offering. For us PayPal is a commodity whose killer application is eBay, but which is founded on an existing domestic card payment value chain. On the other hand, it caters for new market expectations in terms of C to C payment.

C&S: Do you think that we will see the development of contactless payment services in Europe, especially integrated into mobile telephones? What are the barriers to such developments in your opinion? Do you think that the SIM card will play a role in these services in Europe, unlike in DoCoMo's Felica model? What scenarios do you expect to see?

GM: We are convinced that mobile payment caters for proximity payment needs and, via contactless payment, also makes it possible to get rid of major, hardware-related constraints. It should therefore be a great success. On the other hand, user habits need to be taken into account, and in order to change user behaviour, you need to find the killer application related to mobile payment, in other words, an application that does for mobile payment what the cash withdrawal function did for the emergence of the payment card.

Conducted by Yves GASSOT