Ecommerce is growing. Global ecommerce was worth $1.9 trillion in 2016 sustaining double-digit gains year-on-year. Many tech companies are now capitalizing on growth by providing merchant services to ecommerce businesses.
Among these services, it’s payments that have gotten much attention from companies. Payments are central to building ecommerce ecosystems. Providers are in a fierce race to become the most widely accepted payment service across markets.
Competitors include incumbents like PayPal, tech giants like Google and Apple, traditional institutions like banks and card companies, and a growing number of tech startups. It’s interesting to observe how all of this is changing ecommerce.
More payment methods demanded
Customer experience has become central to ecommerce. The shift of consumption to mobile has created opportunities for companies to offer new and improved payment experiences. However, according to the Baymard Institute, payment issues continue to be among the top reasons why shoppers abandon their carts. Many consumers are still discouraged by slow checkout processes and lack of available payment methods.
Addressing this demands the availability of quick and easy-to-use payment solutions for both merchants and customers. As such, providers are now offering more variations of payment services such as apps, digital wallets, and other contactless technologies.
The problem is, each market would have its preferred way of paying. Credit cards are the preferred method in highly banked markets such as the US, UK, and South Korea. Leading providers in these markets, such as PayPal and Apple Pay, readily support cards as funding sources. Many consumers in parts of Europe prefer debit and fund transfers so services such as Trustly use bank accounts for payments. A few months ago, Trustly introduced Direct Debit payment to allow merchants to replace paper-based forms and credit cards with a simple signature.
In markets with low banking and card penetration such as India and Southeast Asia, merchants are compelled to offer cash-on-delivery options.
Because of this diversity, those looking into cross-border business would benefit from partnering with a payment services provider that processes a wide range of methods or at least covers the preferred methods in their target markets. A business may be able to work with supporting the most preferred method in its local market. However, this may become a limiting factor once the business decides to offer their products in other markets.
Betting on digital currencies
Most of these payment methods are still dependent on traditional financial instruments such as cash and credit. In an attempt to provide a more ubiquitous means of transferring value, other payment services are focusing on using cryptocurrencies such as Bitcoin for ecommerce payments.
However, not too many businesses are shifting to such payment methods opting for the more established ones. In addition, access to cryptocurrencies is still beyond the typical consumer. Some markets already struggle with methods such as credit cards or online banking so compelling these consumers to seek out ways to acquire cryptocurrencies just complicates matters.
Other merchants are now riding on the idea of digital currencies. Many of the larger retailers such as Amazon, Walmart, and Starbucks now offer gift card or store point balances effectively creating their own currency.
Improving customer experience
Aside from covering a variety of methods, payment services are also attempting to improve the overall experience by making the process faster. However, this is where many continue to struggle.
Most customers still have to enter card details or be passed on to an external interface to process bank fund transfers. In the off chance that customers have existing accounts with payment providers, they still need to provide login credentials to authorize payment during first use. All of these added steps prolong the checkout process.
Digital wallets and mobile payments are supposed to address this since users’ financial details are already stored beforehand and authorizing payment could be done with a tap or swipe.
Security is also a growing concern by all ecommerce stakeholders. For users, rejected payments due to suspected fraud can be frustrating especially if the transaction is legitimate. Such strict rules are a result of merchants taking extra care not to assume all the risk from fraudulent transactions. Thankfully, many services are now also developing better fraud detection algorithms to protect merchants from chargebacks or loss from non-payment.
As digital consumer behaviors change, so should the technologies and services that support ecommerce. These developments in payment technologies greatly affect how business is done digitally. Due to a broader array of payment methods these services can support, businesses could now conveniently explore cross-border business. We are now also seeing quicker ways to complete transactions thanks to digital wallets and mobile payments. Ecommerce stakeholders are all working to provide customers an overall experience that’s speedy, secure, and satisfying.