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Why Payments Are More Than Plumbing

A version of this article was first published on UK publication, IT Pro Portal, on April 10th, 2017. It is republished here with permission from IT Pro Portal.

Transactions are the foundation of business, but too often in our line of work we see payments treated as an afterthought.

As a consumer, we’ve all gone through an online checkout, only to find they don’t take our card or our preferred mobile wallet; spotted a product online and struggled to find a place we can buy it; had to leave an app, or, worse still, download one to buy something; or landed on a confusing checkout page that looks completely different to the rest of the website.

As a merchant, perhaps you’ve spent time refining your website to look beautiful, but the data needed for compliant billing can’t always be gathered in a way that fits the site. Maybe you’ve found that your audience loves to shop on social platforms, but had to entice them away to a different site to buy. Or you’ve needed to pay other merchants selling via your online marketplace, or other service providers contributing to your platform, but can’t manage the settlement and disbursement quickly enough.

In all of these, the transaction is tacked on at the end of the experience, like an awkward yell of ‘Wait! You have to pay for that!” as customers depart the store.

Clearly, the payment is more than just transacting or getting paid.

Improving conversion

About 69 percent of all online transactions are abandoned.1 Business Insider calculates that this costs retailers around $4 trillion a year.2 Imagine if that was a physical store. One hundred people walk in, fill their baskets, walk up to the checkout, and then 69 of them just leave.

Now, in all fairness, a large portion of cart abandonments are simply a natural consequence of how users browse ecommerce sites -- many users will be window shopping, comparing prices, saving items for later, exploring gift options, etc. This is largely unavoidable. However, a substantial portion of these could be converted into a sale through a better experience. Baynard Institute has suggested that around 35 percent are convertible -- just by improving the checkout and payment process.3

These changes include things like a shorter and clearer checkout, surfacing the relevant payment options that people want to use, and stronger security. Research shows that around 42 percent of millennials currently limit their own mobile transactions because of security concerns.4

It’s clear that cracking online and mobile payments is a huge priority to improve business sales; however, it has an impact beyond conversion too.

Finding new customers

By making payments a core pillar of a business’s commerce strategy, you can open yourself up to a brand new customer base. This could be as simple as plugging into new online marketplaces or embedding buy buttons within social experiences. Or it could be as involved as creating APIs or custom partnerships with new platforms to deliver new services to audiences you’ve never encountered before.

For merchants, making payments and being paid have and will always be a core part of doing business, often outright determining success or failure. This means monetisation is never an afterthought. You’re enabling new audiences to buy where and when you find them.

As a consumer, payment often comes down to trust -- do you trust the site, app or experience you are about to pay. If you are a repeat customer, the answer is probably yes, but for new customers, trust must be earned. That means presenting simple processes, payment experiences consistent with the rest of the customer journey, and payment options that are familiar to the customer. That includes everything from different currencies to ensuring that their credit card or digital wallet of choice is an option.

Seeking new markets

“Online” essentially means that all retailers are international from the outset. PayPal’s most recent data shows that tens of thousands of UK SMEs started to sell online to a new country between July and December 2016. The top 5 online export markets for British SMEs during that period were the US, Germany, Australia, France, and Italy.5 In each of these markets it’s not only currency and taxes that you have to consider; each have different customs and approaches to payments, whether it’s credit card providers, invoice systems, or digital wallets. If you don’t provide a familiar experience, customers in those markets are unlikely to buy.

This doesn’t mean you have to become an expert in international payment systems, currencies, customs, and taxes. As a merchant you’ve probably got more immediate priorities when it comes to growing your business.

Scaling your business

The good news is that by embedding payments within your strategy, scaling payments becomes an automatic by-product of the strategy. Payments is a complicated subject, so becoming an international payments expert probably isn’t worthwhile, considering you have a business to run. Fortunately, you can work with partners that will help you get where you want to be.

By using APIs (an Application Programme Interface that provides a set of routines, protocols, and tools for building software applications) and SDKs (software development kits) from an experienced payments provider, you can essentially allow them to run the show, using their compliance and developer/integration expertise to build and scale the best possible payments experience. This ease may also open avenues to embark on new partnerships and integrations that may help you scale your business.

For the CEO of a company, a CFO looking at costs, or even a marketer optimising user experience -- the payments experience can influence a business’s entire ecosystem. How, where, and when a user pays and gets paid is a powerful asset, and one that should be interwoven through a company’s entire strategy from the start.

UK online retail sales reached £133 billion in 2016, an increase of just under 16 percent, year-over-year.6 Mobile commerce accounted for much of this growth and with the expected growth of mobile transactions reaching 74 percent over the next two years, merchants have a short window to tap into that growth, or be left behind.7

  1. From "The Remarketing Report,” published by SaleCycle in 2016, available at https://blog.salecycle.com/stats/infographic-remarketing-report-q3-2016

  2. From “The Shopping Cart Abandonment Report,” conducted by Business Insider Intelligence in 2015, available at https://www.businessinsider.com/intelligence/research-store#!/The-Shopping-Cart-Abandonment-Report/p/51811174

  3. From “E-Commerce Checkout Usability,” published by Baynard Institute in September 2016, available at https://baymard.com/checkout-usability

  4. From "The Millennial Influence: How Their Love of Mobile Shapes Commerce,” conducted by Osterman Research in 2016, available at https://www.ostermanresearch.com/

  5. From “Open for Business: PayPal Reveals Online Exports Boom,” published by PayPal on March 6, 2017, available at https://www.paypal.com/stories/uk/open-for-business-paypal-reveals-online-exports-boom

  6. From “IMRG Capgemini e-Retail Sales Index,” conducted by IMRG in January 2017, available at https://www.imrg.org/data-and-reports/imrg-capgemini-sales-indexes/sales-index-january-2017/

  7. From "TrendForce Says Global Mobile Payment Market to Reach US$620 Billion in 2016 with Apple and Samsung Staking Large Claims in the Ecosystem," published by TrendForce on February 1, 2016, available at http://press.trendforce.com/press/20160201-2298.html#TOBK2hePGhDxVtXO.99

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David Nunn David is Head of Braintree Europe. Since 2013 he's built the team from scratch. He is passionate about company culture, payments optimisation, and finding solutions to power businesses’ growth. More posts by this author >>

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