Merchant payments in focus | An interview with John Drechny and Mark Shaw

Following the MAG Payments Summit in London, we sat down with John Drechny, CEO of the Merchant Advisory Group (MAG) and Mark Shaw, Managing Director at Flutter Entertainment, to hear what's actually on merchants' minds right now.

What's changing most in how merchants think about payments right now?

John Drechny, CEO of the Merchant Advisory Group: from a UK and European vantage point, the big shift is that payments are now treated as a commercial lever, not a back-office utility. Merchants are asking: ‘what does this stack do for my incremental approvals, margin, and customer lifetime value?’ rather than simply ‘does it work?’

Across MAG's members with UK and European exposure, we see a decisive move toward orchestration and control. Merchants want the ability to route by issuer, geography, and risk profile, to own their data, and to avoid being locked into a single, vertically integrated provider – especially as regulation and consumer expectations diverge between the EU and the UK.

We're also seeing payments become a far more strategic discussion within organisations. Decisions that may once have sat solely within payments or treasury teams are increasingly involving technology, digital commerce, finance, and customer experience leaders. The payments stack is no longer viewed simply as infrastructure; it's recognised as a driver of conversion, operational efficiency, customer satisfaction, and ultimately competitive advantage. That shift is changing both investment priorities and how merchants evaluate their payments partners.

Mark Shaw, Managing Director at Flutter Entertainment: the most fundamental shift I have noticed over the past several years is that payments are no longer seen simply as an operational function of money movement, or a cost to be managed. They are now firmly seen as a core part of the product experience and are managed with a much keener focus on the trade-offs between cost, growth and revenue, compliance, and customer experience.

For much of the industry's history, payments sat firmly within the finance or operations function, evaluated almost exclusively on transaction fees and settlement timelines. That framing is now giving way to something far more commercially sophisticated. Payments are increasingly understood as a strategic revenue lever - one that directly influences whether a customer completes a deposit or payment, returns for a second session, or churns entirely.  

Alongside rapid changes in regulation, technology, payment methods, and customer preferences, the role of a merchant’s payments team is now vastly more complex and challenging.  

At Flutter, that reorientation has had real consequences for how we resource the function, how we measure success, and where we invest. When you operate across brands like Paddy Power, Betfair, FanDuel, and PokerStars, each serving distinct customer segments across dozens of regulated markets, the commercial stakes attached to payment performance become impossible to ignore. 

From transactional infrastructure to customer intelligence

Alongside that strategic repositioning, we are seeing a growing recognition that payment flows are among the richest sources of customer intelligence available to a merchant. Every transaction carries behavioural signals – preferred payment method, deposit frequency, average transaction value, response to friction – that, when properly surfaced and acted upon, can meaningfully inform retention strategy and lifetime value understanding. The integration of real-time data analytics into payment infrastructure is no longer a technical aspiration; it is becoming a competitive differentiator. Operators who can identify, in the moment, that a customer is experiencing unnecessary friction at checkout – and seek to respond dynamically – are protecting revenue that their competitors are losing quietly and without visibility. 

The omnichannel imperative 

There is also a growing emphasis on consistency of experience across touchpoints. In gaming and gambling, a customer may move between a mobile app, a desktop platform, and in some markets a retail environment, sometimes within a single session. The expectation, increasingly, is that payment credentials, preferred methods, and verification status travel seamlessly with them.

Fragmented experiences at the payment layer – where a customer must re-enter details or re-authenticate unnecessarily – introduce drop-off risk at precisely the moments of highest commercial intent. Building solutions that meet these needs while constantly responding to changing market and customer conditions requires deep integration work and sustained investment, but the retention and conversion benefits often make the case compelling. The merchants who are winning this argument internally are the ones who have learned to speak the language of customer lifetime value, not just basis points. 

Which regulatory or scheme changes are creating the biggest operational burden for merchants?

John Drechny, CEO of the Merchant Advisory Group: for large merchants, the real strain is the accumulation of regulatory and scheme change across the EU and UK, rather than one headline rule. In Europe, the transition from PSD2 to the PSD3/PSR package, with its focus on harmonisation, fraud, SCA, and Open Banking, is already driving new technical workstreams and customer journey redesigns.

At the same time, the UK is pursuing its own path on Open Banking, APP fraud reimbursement, and payments supervision, which means pan-European merchants must now maintain distinct compliance, routing, and fraud strategies for the EU and the UK. Layer on top of that scheme mandates, changing rules around exemptions, and fee updates, and the operational burden becomes a constant re-platforming exercise simply to stand still.

For merchants operating internationally, the challenge is rarely implementing a single regulatory change. It is coordinating multiple changes simultaneously across different jurisdictions, each with its own timelines, technical requirements, and operational implications. That complexity places greater emphasis on flexibility within the payments architecture and on working with partners that can help simplify rather than add to that burden.

Mark Shaw, Managing Director at Flutter Entertainment: the honest answer is that it is not any single regulation that creates the greatest burden – it is the compounding effect of operating across dozens of jurisdictions, each with its own compliance framework, its own interpretation of shared principles, and its own timeline for enforcement.

At Flutter, we operate across markets spanning the UK, Ireland, continental Europe, the United States, Brazil, and Australia, among others. What looks like a coherent regulatory landscape from the outside is, in practice, a patchwork of overlapping obligations that our payments and compliance teams must navigate simultaneously.

Strong Customer Authentication under PSD2 is a clear example: the underlying principle is consistent across the European Economic Area, but the practical implementation – which transaction flows require exemptions, how issuers are applying friction, what constitutes a valid risk-based exemption – varies considerably by market and by issuer. Building a single optimised checkout experience that satisfies every local interpretation while remaining genuinely frictionless for the customer is an enormous operational undertaking. 

However, it is also a lack of change in some areas that is creating challenges for operators. As the global market for gaming and gambling has evolved, certain scheme setups (e.g., MCC Codes, high risk merchant designations, issuer authorisation systems) have failed to keep pace with the increased regulatory and operational maturity of the industry. Leading operators now have extensive (bank-like) customer controls, exceptionally low fraud rates and sophisticated, multi-layers approaches to payments. Yet, in many cases, such payments are still treated as they were decades ago before regulation created the industry we know today.  

Gaming-specific regulatory complexity 

The gaming and gambling sector carries an additional layer of regulatory obligation that sits on top of standard payment compliance. KYC and AML requirements are not uniform – what satisfies a UK Gambling Commission audit will not necessarily meet the standards applied by a US state regulator or an Australian jurisdiction. The pace of change compounds this considerably.

Regulatory bodies across multiple markets are actively tightening their frameworks around affordability checks, financial risk assessments, deposit limits, and customer verification at the point of deposit/withdrawal. Each update requires not just a policy response but a technical implementation – changes to payment flows, customer journey modifications, and updated monitoring logic. The resource intensity of continuous adaptation is significant, and for operators managing multiple brands and product verticals, the coordination overhead alone represents a material cost.   

Scheme rules and processor requirements 

Beyond government regulation, scheme-level changes from the card networks add a further layer of compliance overhead that is often underappreciated in industry discussions. The major schemes periodically update their merchant category code frameworks, their chargeback dispute rules, and their requirements around transaction data and authentication.

For gaming operators specifically, certain scheme rules around how gambling transactions must be coded, processed, and reported have evolved materially over recent years, and staying current requires dedicated resource across legal, technical, and commercial functions. Yet despite this, other aspects of the scheme rules have been unchanged for many years and not kept pace with industry development, creating an inconsistent landscape in which to operate. 

Processor requirements add yet another dimension – as acquiring banks and payment service providers respond to their own regulatory obligations, they introduce additional documentation requirements, enhanced due diligence processes, and changes to processing terms that flow downstream to merchants, often with limited notice periods. 

The cost of standing still 

What makes this environment particularly challenging is that non-compliance is not a theoretical risk – it carries direct commercial consequences, from transaction declines and processing restrictions through to regulatory fines and reputational damage. The operational burden, therefore, is not simply the cost of implementing changes; it is the cost of the continuous monitoring infrastructure required to identify what is changing, assess its impact across a complex multi-market operation, and prioritise the response.

At a business of Flutter's scale, that demands dedicated regulatory intelligence capability, close alignment between payments, legal, and technology teams, and a governance framework that can move quickly without sacrificing rigour. The challenge for the industry more broadly is that smaller operators face the same regulatory complexity with a fraction of the resource, which creates meaningful competitive differentiation that regulators and schemes alike would benefit from acknowledging more explicitly. 

Where are merchants getting real gains from optimisation, whether that's authorisation rates, cost, or fraud, and where has it been harder than expected?

John Drechny, CEO of the Merchant Advisory Group: in this market, the clearest gains are coming from data-driven optimisation of approval and fraud performance. Merchants that have invested in issuer-specific routing, network tokenisation, SCA-aware checkout design, and smarter retry logic are seeing meaningful lifts in authorisation rates, particularly in EU ecommerce where SCA friction used to bite hardest.

The harder part is turning those technical wins into a structurally lower cost of acceptance. Interchange and scheme fees do not stand still, and new fraud and security expectations often come with their own cost and complexity. Many merchants are discovering that what used to be ‘set and forget’ tuning is now an ongoing test-and-learn discipline that requires strong data, experimentation capability, and genuine collaboration with issuers and PSPs.

Leading merchants increasingly recognise that optimisation is not a one-off project but a continuous process. Those achieving the strongest results are constantly measuring performance, refining routing strategies, and adapting to changing issuer behaviour, customer expectations, and market conditions. Maintaining that level of agility is becoming a competitive differentiator in itself.

Mark Shaw, Managing Director at Flutter Entertainment: the honest answer is that the gains are real, but they are unevenly distributed – and the hardest problems remain stubbornly hard.

On authorisation rates, the progress has been genuinely meaningful. Intelligent routing has moved from a theoretical capability to a core operational discipline. At Flutter, we continue to invest heavily in  decisioning infrastructure that allows us to present payment methods and route transactions  based on issuer behaviour, time of day, payment method, and market-specific performance signals. The results speak for themselves: even marginal improvements in authorisation rates at our transaction volumes translate into material revenue recovery and increased customer satisfaction.

What has made the difference is not simply having multiple processor relationships, but building the analytical layer that tells you which path gives a specific transaction its best chance of approval. That shift – from static routing tables to genuinely adaptive decisioning – is where operators with the scale and technical investment to execute it are pulling ahead.

Cost reduction through scheme optimisation has been another area of tangible progress, though it demands ongoing attention rather than a one-time fix. Strategic processor partnerships, leveraging global scale, interchange optimisation, and a more disciplined approach to transaction categorisation have collectively delivered measurable savings.

In a business operating across dozens of markets and multiple brands, those savings compound quickly. The discipline here is in the detail: understanding exactly how your transaction mix maps to payment cost structures, and operating your processing relationships accordingly. It is unglamorous work, but the commercial return is consistent.

Fraud detection has benefited enormously from advances in machine learning and behavioural analytics. The ability to distinguish between a genuine customer making an unusual deposit and an account takeover attempt has improved substantially. We are catching more fraud earlier in the transaction lifecycle, which reduces both financial exposure and the downstream operational cost of disputes and chargebacks. 

Where it has been harder than expected is at the intersection of fraud prevention and customer experience. Reducing friction for legitimate customers while maintaining robust controls for high-risk transactions is not a problem that machine learning solves cleanly. Different customer segments – recreational players, high-value depositors, VIP customers, customers in markets with strong consumer protection regulation – have different risk profiles and different tolerances for friction.

Calibrating that balance requires continuous iteration and segmentation, and the regulatory environment adds further complexity: responsible gambling obligations, strong customer authentication requirements, and Open Banking mandates all interact with fraud controls in ways that can inadvertently create friction for exactly the customers you most want to retain. That remains one of the central unsolved tensions in payments optimisation for operators in our space.

There's a lot of innovation coming from payment providers. If you think about where merchants most need help right now, where would you want payment providers putting their energy?

John Drechny, CEO of the Merchant Advisory Group: from a merchant standpoint, the priority is not ‘more innovation’; it is better aligned innovation that cuts through complexity in a fragmented UK and European landscape. Providers can add real value by abstracting regulatory divergence (EU PSD3/PSR versus UK rules), keeping SCA and fraud controls compliant by design, and allowing merchants to configure experiences by customer segment rather than by regulation.

Beyond that, merchants are consistently asking for three things.

First, interoperability, so they can integrate or switch providers across payment methods, markets, and channels without rebuilding their entire payments infrastructure.

Second, radical transparency on performance, routing, and total economics, allowing optimisation decisions to be based on measurable outcomes rather than marketing claims.

Finally, a willingness to be measured on results – approval uplift, fraud reduction, chargeback performance, and total cost of acceptance – rather than feature lists or long-term lock-in contracts.

Ultimately, merchants are looking for partners that understand their commercial objectives and work collaboratively to achieve them. The providers that succeed over the coming years will be those that simplify complexity, deliver measurable business outcomes, and remain flexible enough to support merchants as both regulation and customer expectations continue to evolve.

Mark Shaw, Managing Director at Flutter Entertainment: the payments industry is generating genuine innovation at pace, and that is to be welcomed. But from where I sit, leading payments strategy across a complex, multi-brand, multi-market operation, the honest answer is that much of that innovation is not yet landing where merchants need it most. For all of the talk of agentic commerce and stablecoins, which will no doubt be highly impactful in the future (and which have their own challenges to overcome – particularly for our industry), too many of today’s problems are left partially or wholly unresolved. 
 
One of the most transformative things a payment provider could do right now is not launch another Embedded Finance product or a new wallet integration, it is to help us spend less time managing compliance and more time driving commercial performance.

Compliance automation – tools that can absorb regulatory change, update rules dynamically, and reduce the volume of manual intervention our teams are carrying – would represent a step change in operational efficiency. The burden of staying current with evolving Open Banking mandates, scheme rule updates, and market-specific licensing requirements is substantial, and right now that burden falls almost entirely on the merchant. Payment providers who build genuine compliance intelligence into their platforms, rather than simply notifying us of changes and leaving us to implement them, will earn a very different kind of partnership. 

Equally important – both now and for an-AI-enabled future – is the quality of data, analytics and reporting that providers make available. We generate enormous volumes of transaction data across our brands and markets, but too often the reporting tools offered by acquirers and PSPs present that data in ways that are descriptive rather than diagnostic.

What I want is actionable insight and the ability to integrate that with wider business insights to get to the right outcome for our customers – the ability to understand not just that authorisation rates declined in a particular market on a particular day, but why, what levers are available to address it, and how that plays out against other business objectives.

Providers who invest in genuinely sophisticated merchant-facing data and analytics capabilities, with the granularity to distinguish between issuer behaviour, scheme routing decisions, and customer-level patterns, will find that merchants are willing to build much deeper commercial relationships around that capability. 

There is also a significant integration gap that the industry has been slow to address. Payments does not exist in isolation within a business like ours. It intersects with risk and fraud systems, customer data platforms, responsible gambling tooling, and finance infrastructure. Yet payment providers frequently design their technical integrations as though payments is a standalone function.

Seamless, well-documented connectivity with the broader merchant technology stack – including robust API design, real-time data feeds, and flexible webhook architectures – should be a baseline expectation, not a premium feature. When integration is cumbersome, it creates friction that slows down every subsequent optimisation initiative, regardless of how good the underlying payment product might be. 

Finally, and perhaps most fundamentally, I would look for payment providers to reconsider how they define success in a merchant relationship. Transaction volume is a lagging indicator of a healthy partnership, not the measure of one. The providers who have become genuine strategic partners to Flutter are those who understand our business model, who bring market intelligence proactively, who flag emerging issues before they become operational problems, and who align their own success metrics to ours. That means authorisation rates, cost of acceptance, fraud loss ratios, and customer experience outcomes, not just processing volumes. Innovation built around that alignment, rather than around provider-side revenue optimisation, is where I would encourage the industry to focus its energy. 

About the authors:

John Drechny has been CEO of the Merchant Advisory Group since 2019. As CEO, John helps MAG’s merchant members drive positive change and innovation in the payments industry, serving merchants’ interests through collaboration, education, and advocacy. Under John’s leadership, the MAG has grown considerably and launched new efforts including Tech Forum, MAG International, and Merchant Payments self-directed eLearning series.

Prior to joining the MAG, John enjoyed a 20-year career at Walmart holding various leadership positions in Payments Acceptance, Marketing, and Financial Services. As part of the leadership of Walmart’s Payments team, John helped shape and implement a comprehensive strategy increasing the ease of payments in an omnichannel environment while ensuring Walmart could deliver on its brand promise of helping its customers save more so they can live better.

 

Mark Shaw is Managing Director, Global Payments Strategy at Flutter Entertainment, the world's largest online sports betting and iGaming operator. With 25 years of experience across payments and financial services, he has held leadership roles at Flutter, Spotify, Visa, Mastercard, Vocalink, Barclays, TSB and LEK Consulting. Mark leads Flutter's global payments strategy, driving innovation, scale and growth across the group. He holds an MEng from the University of Bristol.

 

About the MAG:

The Merchant Advisory Group (MAG) is a global organisation dedicated to driving positive change and innovation in the payments industry through merchant collaboration, education, and advocacy. Representing over 200 of the world’s leading merchants across many industries, including airlines, retail, restaurants, insurance, amusement parks, grocery, and software, the MAG facilitates strategic engagement across North America, Europe, and Asia.

About Flutter Entertainment:

Flutter Entertainment is the world's leading online sports betting and iGaming operator, with a portfolio of globally recognised brands serving millions of customers across multiple markets. The company combines local market expertise with global scale to deliver innovative, responsible entertainment experiences.