There has been much speculation about how the payments landscape will evolve. For example, increasing competition has accelerated the need for merchants to reduce fees for e-commerce, necessitating acquiring banks to decrease their costs and increase revenues by providing value-added services at the point of sale.
Today there are only a handful of acquirers that are truly able to address such needs in addition to being able to operate across multiple countries and regions. It has become quite evident that acquirers need to deliver compelling services for all payments stakeholders globally across all service points, including e-commerce, m-commerce (mobile devices), physical POS (point of sale) devices, MPOS (mobile point of sale), self-service payment points, and other kiosks.
Give customers what they want
Payment service providers (PSPs) and merchants want more from their acquiring banks. They want them to be able to create value that extends innovation beyond the invention of something “new,” but instead tailors the product, service, or proposition to yield a positive business impact.
The findings of our global research show the top-seven scenarios that PSPs and merchants grapple with most:
1. How best to leverage cross-border business opportunities while containing associated inter-/intra-regional processing costs.
2. How best to manage multiple acquiring relationships, each with different output and functionality, across multiple countries.
3. How to improve operational efficiencies and control the overall cost of payment processing by not having to maintain multiple vendor relationships with different processes and reporting systems.
4. How to gain a consolidated view of all payments through intuitive online reporting and simplified reconciliation that includes statements and an operations dashboard.
5. How to determine what technology to use to attain one single accurate view of the customer in order to optimize revenue growth and market penetration initiatives.
6. How to achieve higher authorization rates to increase the bottom line.
7. How to develop a secure end-to-end payments process that eliminates the headaches and delivers better client experiences.
Smart acquiring banks will be wise to invest in offering value-added services that can be deployed in e-commerce environments cost-effectively and, most importantly, quickly.
The cross-border consideration
The major cross-border e-commerce “corridors” between the US and UK account for approximately $25B of payments flow. Effective acquiring banks want to offer their customers plenty of opportunity to expand into new global markets. However, the unique dynamics of the cross-border e-commerce market do require careful consideration and planning. Understanding where major e-commerce corridors occur will be instrumental in helping merchants to focus on their business and align their products, services, and functionalities needed for specific markets without the risk of diluting their core focus across all markets. This obviously poses an implication on the choice of their payment products, gateway functionality, and back-end acquiring capabilities.
For any cross-border consideration, selecting the right payment mix per country is necessary. Acquiring banks should work in tandem with forward-thinking merchants to act on such macro-trends as changes in the regulatory environment or in consumer behavior and expectations. Merchants today are finding the need to actively analyze and optimize their business through aggressive fraud management and the application of big data analytics.
This is especially true in order for banks to provide merchants the tools they need for mobile devices with online shopping and payments. Sweden and the UK are matching global leaders in Asia-Pac and North America in regards to mobile shopper penetration. Chinese shoppers who buy from foreign websites represented about $18.5B in 2012, but that figure is growing by more than 60% year-on-year. More than 60%, or $11B of that volume, comes from US and UK websites.
5 steps to success for international payment processing
It’s important for acquiring banks to be expert in all aspects of the international payment process, including international law and local legislation. This allows e-commerce merchants to profit in partnership with these acquirers to reach various geographic regions.
The five key steps needed to support merchants with a successful cross-border payments initiative are as follows:
1. An acquirer should be capable of providing a global platform, yet local processing through one unified setup. This lowers costs and increases efficiency.
2. Setup and activation should be quick and straightforward. In today’s e-commerce markets, lost hours can translate to losing millions.
3. The solution should ensure that a merchant’s partners are enabled to team up with little to no effort. This is especially vital at times when a new product or service is launched, when a new market emerges, or when promotional campaigns are released in order to leverage the opportunity at hand.
4. The acquiring bank’s solution should deliver global and relevant data on the spot and be formatted in such a way as to allow for quicker and better decision-making.
5. This should be a flexible, adaptable solution that can scale easily as merchants’ businesses grow while the solution continues to ensure the best possible customer care and service.
A global network in which stakeholders carefully define responsibilities can mitigate risk while profits through exciting business opportunities in emerging markets can be shared. Such a smart acquiring approach will allow banks to benefit as their merchant clients focus on their own core business. The trend for merchants to grow their business beyond existing boundaries will accelerate.
Koen Vanpraet is Chief Commercial Officer for Credorax. He has more than 25 years of experience in technology service markets. Previously, he served as Chief Commercial Officer at GlobalCollect, a payment service provider processing payments for more than 600 of the world's ... View Full Bio