Seamless Payment Systems

Kai Lindström, Vice President of Payments at SOK

Kai Lindström, Vice President of Payments at SOK

Kai Lindström is a senior payments industry professional with strong leadership, human relationship, communication, and innovation skills. With two decades of experience in the payment industry, Lindström has held development, sales, and leadership roles in multiple organizations. As the Vice President of Payments at SOK, his responsibilities include ensuring the reliability, compliance, and partner management of payment acceptance services within SOK.

In an exclusive interview with Banking CIO Outlook Europe, Kai Lindström shares his valuable insights on the importance of ensuring 24/7 payment acceptance, managing partnerships and vendor management, and adhering to compliance requirements from card schemes and authorities.

As the vice president of payments at SOK, how do you anticipate the technical advancements to impact of cards and payments the industry?

From my perspective, there are two key developments we are observing—the rise of mobile payments and the increasing popularity of "buy now, pay later" (BNPL) services.

Mobile payments are becoming more prevalent. We have noticed that people are no longer carrying purses but only their phones, aiming to minimize the number of cards they carry. For retail chains with loyalty programs that rely on physical cards, this becomes a challenge. Customers prefer using services like Android Pay or Apple Pay and skip using loyalty cards.

To address this, we recently collaborated with Apple to integrate our loyalty card into the Apple Wallet. This allows the payment terminal to read the loyalty card from Apple Wallet, enabling customers to pay with our bank card through Apple Pay. This innovation aims to counter the reduction in loyalty card usage. Mobile payments in our stores have increased from 5-6 percent a year ago to over 10 percent last month, and we expect this number to rise significantly now that our bank card and loyalty card are available in Apple Pay and Apple Wallet.

Another development, the BNPL model, is popular in e-commerce for attracting many customers. However, it poses challenges for merchants, as BNPL providers gain access to purchase data and can offer competing deals, potentially diverting customers away from the original merchant. In addition, there are concerns about credit issues among young adults, who may not understand the implications of deferred payments.

“Embrace modern service providers and innovative solutions to ensure a seamless and flexible payment experience for customers.”

Account-to-account payment is another technical development that helps merchants save money. Unlike card payments that incur scheme and interchange fees, account-to-account payments use bank transfer rails, potentially reducing transaction costs by up to three-quarters. However, this poses a challenge for banks earning revenue from interchange fees. Consumers enquire the benefits they receive from switching to account-to-account payments over traditional debit or credit cards. Merchants will need to consider providing incentives to encourage this shift. Although still in its infancy, account-to-account payments could significantly impact the payment landscape in the coming years.

Is there any particular technology that you think might change the shape of the payment and card sector?

Artificial intelligence (AI) is a popular topic nowadays in the payment and card sector. One significant application of AI is in fraud management, where it can make fraud prevention more effective. By analyzing customers’ current and past behavior before processing payments, it can help reduce fraud rates. AI can also enhance customer purchasing experiences by streamlining the identification and background check processes.

For instance, if AI identifies a customer as loyal, the system might ignore strong customer authentication for small purchases. The loyal customer who has paid on time consistently can enjoy small purchases such as a cup of coffee without any hassle. On the other hand, for new customers, AI will strictly enforce authentication to verify the legitimacy.

Is there any recent project or initiative that you have undertaken and is an integral part within your organization?

SOK is currently working on a significant migration project with Adyen, where we are replacing and rebuilding the company’s entire payment architecture. It is a large-scale project with a sizable team working on it in Finland and the Netherlands. Over the next three to four years, this project will focus on moving all of our business areas to a new platform. This shift will involve implementing new acquiring services, payment service provider (PSP) services, a complex payment platform, and upgrading 12,000 payment terminals.

What piece of advice would you give to the budding professionals in the industry?

For fellow merchants, my advice is to explore and partner with modern service providers. Do not feel confined to legacy products from outdated service providers. Consider implementing an orchestration layer, which provides flexibility to work with multiple service providers simultaneously.

For payment-related service providers, it is crucial to be proactive in serving customers, especially merchants. Beyond regulatory compliance, strive to be innovative and develop value-added services. Offer these actively to merchants to enhance the purchasing experience for consumers. By doing so, it contributes to making the purchasing process as seamless as possible for everyone involved.

AI

Fraud

Retail

Artificial Intelligence